A retirement failure

Once again, people who support themselves not only throughout their working life but into retirement are disadvantaged. The emphasis of the current federal government policy is to erode all the incentives to save for their own retirement instead providing disincentives to save - madness.

The people we elect to represent us in the federal parliament have no such issues, their generous parliamentary retirement plans are paid for by the poor saps who vote for them. Even with the new parliamentary standards for newly elected parliamentarians, their benefits are generous by general community standards.

Individuals who either establish a self managed super fund (SMSF), contribute to their industry or retail fund lose when they lose access the publicly funded pension because they hold assets. It's fine to sacrifice during your working life to lead a rewarding early retirement, you still pay tax on your income derived from self funded pension - albeit at a reduced rate.

Reducing your consumption during the accumulation phase is fine insofar as long as you are willing to sacrifice during your working life but individuals need to understand you are likely to disadvantage yourself during retirement, especially if you intend to delay retirement.

The federal government not only saves money every fortnight by paying a pension, healthcare discounts are not available to self-funded retirees with pensioners gaining discounts from government utilities to transport and pharmaceuticals. Many believe they should purchase larger houses, luxury cars, take overseas holidays, boats, jet ski, 4WDs, big TVs or motorbikes to live their lives when they are young and carefree.

The best strategy is to retire at age 60 immediately accessing your SMSF and enjoying life for the next 10 years whilst you are fit enough to travel, gain life experiences whilst possessing the mobility to do so. Currently the retirement age that allows an individual access the public pension is 67; however, by the time my age group is getting close to retirement age it is expected to be raised to age 70.

The average life expectancy in Australia is 82; so an average 70 year retiring has 12 years of retirement so their the average. The average superannuation balance at retirement is $322,000 for men and $180,000 for women; so one expects to pull down $26,830 per year for men and $15,000 for women or a combined $41,830 for a couple - that's actually fairly reasonable.