(03) 9020 2905Go ahead, Canberra. Raise the pension age. Delay me access to my super fund. Do what you think you’ve got to do.
But mark my words, Tony. And, Joe, can you hear me? Let’s get one thing very clear … you will not determine when I retire.
I’ll make that call. I’ll choose when I retire. At some point in the future, after decades spent working as hard as I can (which started in the “burger mines” of a fast food chain at age 15), I’ll nominate when I’ve had enough. I might decide on 50 or 55. I might continue through until 60 or 70.
But I will not be consulting you on whether my date is suitable. I won’t be asking your permission. Your input into my decision will not be sought. I couldn’t give a toss about your timetables or any age-based restrictions you might declare or impose.
It’s my decision, not yours.
Does that mean you’ll cut me off? I don’t care. I’d rather it that way. I’ll owe you nothing. And I won’t expect much in return.
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Two weeks ago, Canberra sent out a “big picture” message in it’s Budget. It was largely translated as: “Australians will have to work longer”. If you want the age pension in 2035 (those born after 1965), you’ll have to wait until 70.
The previous government had already lifted it from 65 to 67.
Then Treasurer Joe Hockey hinted at raising the “preservation age” – the age at which you can access your super.
It’s currently 55, but is marching northward. Those born after 1 July 1964 can’t access super until they’re 60.
It’s expected that will move to 65, to maintain the current five-year gap between accessing the age pension and a super pension.
The upside is that your super will be bigger when you finally get access to it. The employer contributions are on the move from 9.25 per cent to 12 per cent. And if we can’t touch it until 65, we’ll benefit from an extra five years of compounding.
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But screw that. Like I said, I’m not waiting until 65 for my super or 70 for a piffling age pension.
I’m taking matters into my own hands. I’m going to give myself options about my retirement date. And you can too.
It’s called “financial independence”. It will require some sacrifice. It’s not as hard as it sounds. Start and it will become a habit soon enough.
Your plan needs to be … cook yourself a money pie outside of super. A pie that can be accessed when you want it, not when a government decides you can have some of your own pie (super) or another pie you contributed to (pension).
If you’re 35 and you intend to retire at 50 or 55, then need enough money to last you at least a decade before touching super.
How do you do that? Invest hard. Invest early. Invest as aggressively as you can stand. For as long as you can. Take on some gearing for your investments if you think you can. Give everything enough time to make it work.
Every year, make a reasonable-sized investment. What’s reasonable? At least five, preferably 10, per cent of your income.
If you’re earning $80,000 a year, make it $8000 a year. Every year.
Shares. Property. Shares. Property. Shares. Property. Rinse. Repeat.
Super is an awesome vehicle for retirement savings. It’s barely taxed and it compounds in that low-tax environment. But the goalposts have shifted. And they probably will again.
Do yourself a favour. Aim to be in a position where you can ignore what Canberra is thinking.
Give yourself independence. Not because it’s what the government wants us all to do (which they do), but because you want a lifestyle that’s not dependent on what the government giveth or, as Treasurer Hockey’s Budget did, taketh away.
The age pension? Do you seriously want to live on that? It’s $383 a week, if you’re single! Less per person if you’re a couple.
The writing is on the wall. Does the government want us all to work longer? No. They want people who are going to be relying on the taxpayer to fund their retirement incomes to work longer.
Act now to make sure you’re not part of that group.
Bruce Brammall is the principal adviser with Castellan Financial Consulting (www.castellanfinancial.com.au). E: bruce@castellanfinancial.com.au.