(03) 9020 2905It’s not my “elevator pitch”, or what I spout when someone at a barbecue asks me what I do. But the fact is simple: I deal in death.
More precisely, I help people prepare for death at financially inconvenient times. Dying too early. Living too long. And having a cruddy time during that period when you’re not so dead.
That’s life insurance (to cover carking it too early), superannuation (to fund hanging around longer than the government expected) and investment (in case you want to party in between).
Living legend Dr Karl Kruszelnicki reckons that amongst those walking planet Earth now will be either the last generation to die, or the first generation to live forever.
Kinda cool. Except for one thing.
Cue Simply Red: “We’re talking ’bout money, money.”
Do you have a clue how much dough you’re going to need if you’re going to live forever?!
“Houston, we have a problem … no, no, it’s a big one. This trip is going to be longer than anticipated … no, you morons, we can’t make any more fuel up here!”
Dr Karl, Gen X’s equivalent of Julius Sumner Miller, is a bright guy. We’re not there yet, nearly a decade after he uttered his phrase. Does he look stupid? No. For the young’uns of today, he’s got around 100 years to get that bet wrong.
He won’t have to pay up.
Whether Dr Karl is right or wrong, a few facts are clear.
Dr Karl won’t be around to collect, or pay out, on the bet. Every decade, we’re living a little longer. And if he’s right, your retirement plans are a poofteenth of what you’ll need.
Alternatively, your concept of “retirement” will have to change. If you’re going to live even to 200 (top-of-the-lifespan for a few species of ocean-going creatures), do you really think you’ll be able to, or want to, retire at 65?
If yes, you’re either intending to be LOADED or are plain selfish. Those who remain in work would have to be taxed at around 80 per cent of their wages, just to cover the government pension.
Governments are onto this. And they’re a little panicked.
A few years ago, they lifted the minimum age for receiving the government pension from age 65 to age 67. Anyone born in 1957 onwards has to wait until they’re 67.
When it comes to accessing super, they’ve done the same. If you were born before mid-1960, you can begin to access your super from age 55. If you were born after mid-1964, then you have to wait until you’re 60.
Access to your super will, probably, eventually be tied to five years of the age pension, which means it will shift to age 62 probably soon. And then increase with the pension age.
When we start living to an average of 100, expect the government to increase the pension age to higher than 67. What will it be when the age is 120, 130 or 150?
If you’re not part of that generation who gets to roam the planet forever – but is likely to hang around a few decades longer than you’re expecting to – can I ask … what’s your plan?
Here’s what you need to do.
Shovel more into super. Earlier.
Anyone in their 40s should now be putting more into super. The rules have changed in regards to contribution limits. They won’t be changing back to the “good ol’ days”. Ever.
If your employer is putting in 9 per cent and that doesn’t hit the $25,000 contributions limit, start salary sacrificing a bit. Even a few thousand a year.
Don’t panic about the ever-changing rules of super. This I can reasonably safely guarantee: No matter how much the rules change, superannuation will still be a better taxation bet than non-super investments.
Sure, putting more money into super when you’ve got a monster mortgage and midgets to educate can be painful. But what’s a little extra pain in that department?
It’s got to be better, way better, than the alternative. Live on a diminishing government age pension for as long as 150 years?
Let’s not consider living on the equivalent of $367 a week.
That would lead into voluntary euthanasia laws. And that’s an area of death that’s probably too political for me today.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au), a licensed financial adviser and mortgage broker. bruce@debtman.com.au.