One of McCarthy Group’s key messages
is that over 90% of Australians are under-provided
for in terms of future retirement, so
an investment strategy based on property
is the only way to ensure a comfortable
retirement.
With the Cooper review on super due in
three months, there is more and more being
written about this massive national problem.
Instead of McCarthy Group saying it, we
thought we would devote an article to
extracts from The Weekend Australian on
13-14 March 2010.
“It’s one of the little
understood contradictions of Australia’s
$1.2 trillion super industry. Despite
nearly two decades of compulsory superannuation,
despite the huge pool of money accumulated
and despite Australia’s international
reputation for its successful and innovative
approach to retirement income, there’s
a very big catch”.
“For most individuals, their superannuation
simply won’t be enough, particularly
for those baby boomers closing in on the
end of their working lives. All the dire
warnings about this haven’t changed
a result that is about to become obvious”.
“Forget all those images of relaxed,
sprightly grey-haired couples strolling
around shops and golf courses and cruise
ships, figuring out to how to enjoy their
tax-free, carefree money. To sustain even
a modest lifestyle, about 80 per cent
of people over 65 are still reliant on
a part or full aged pension to supplement
their super savings, and that percentage
is not expected to drop much over the
next decade”.
“The fact of the matter is that
the vast majority of Australians are going
to retire on less money than they can
live on. They are going to get a rude
shock when they realise that in their
early 50’s”. John Brogden,
Investment and Financial Services Association.
“No wonder most people just shake
their heads in dismay or interest (at
the prospects of super reform) and hope
it all works out somehow”.
“It’s only once people near
retirement that their focus sharpens as
sums start to get totted up, usually without
getting the right answers. Even then,
it’s so horribly complicated that
most people prefer to just stick with
the default option in their fund and wait
and see”.
“It certainly hasn’t improved
people’s enthusiasm about superannuation
to have so many balances showing losses
during the past two years, thanks to the
fall in the sharemarket”.
Chris Bowen, Superannuation Minister,
says that perhaps the nation should be
aiming for something better than adequate
for life post-retirement. “Some
people might say comfortable,” he
says.
“Most people have certainly not
had a lifetime of putting - the present
minimum of 9 per cent into superannuation,
given compulsory super began in 1992 and
reached the 9 per cent figure in 2002.
What is tactfully called the maturity
of the compulsory system will happen only
in the 2030s. For anyone retiring before
then, it’s more like being stuck
in perpetual financial adolescence”.
“According to (Michael) Dwyer
(Head of First State Super), the average
super account for First State Super members
is $30,000. For those over 50, it is well
under $200,000”.
“A widely quoted survey by Westpac
and the Association of Super Funds of
Australia estimated that for those owning
their own home, a comfortable lifestyle,
including the purchase of household goods,
a reasonable car, health insurance and
travel would require about $38,000 a year
in today’s dollars for an individual,
and about $51,000 for a couple”.
“Dwyer points out that a comfortable
retirement would require a super balance
of about $660,000 for a couple and $460,000
for an individual based on an average
6.5% year average return, part pension
and running down of capital”.
“According to figures the Australian
Prudential Regulation Authority, the average
balance for industry and retail fund members
was $18,400 and $16,600 respectively…”.
One final quote: “Do the maths”.
* Hewitt, J. 2010, ‘The
great super delusion’, The Weekend
Australian, March 13-14
If you would like to learn more and
discuss how McCarthy Group can assist
you, click
here.
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