According to BetaShares, retirees who lift their savings to between $350,000- $600,000 may ironically see their income diminish.
BetaShares senior investment specialist Dr Roger Cohen said, “Common wisdom tells us that accumulating more savings through our working lives should result in higher income in our retirement years.”
“However, our analysis shows that, for certain people, under the current system, accumulating more money can actually produce the reverse.”
The current retirement system in Australia sees retirees drawing income from a combination of superannuation, the Age Pension and external assets.
The pension is means-tested, with the level of entitlement calculated using an income test and an assets test. These entitlement levels and associated reduction in the pensions are the primary drivers behind the “trap”.
More specifically, for an individual, there is an income range between $174 and $2,026 per fortnight, where for every additional dollar earned, the pension is reduced by 50 cents. This effectively halves the value of additional earnings for retirees in this range.
Retirement trap??
Why don’t they spend some of their own (tax concessional) super – rather than asking for bigger hand outs from their kids generation.
I agree, spend the kids inheritance and leave them nothing. The current generation get tens of thousands in government handouts the boomers didn’t receive, why leave them anything.
Whinging dole bludger type comments.
The age pension is welfare for those who were unable to save enough. It’s not an entitlement. Where is your pride? It’s not there to “disincemtivise” self sufficiency.
Pull your weight baby boomers.
You didn’t pay enough tax to claim state funded leisure for 30 years. And keep all your super and your house and get free aged care. For f&£@‘s sake!
Whilst I agree with the gist of your comment I would like to point out this has nothing to do with baby boomers. The reluctance to save transcends all ages. Younger people complain that the 9.5% SGC is ‘theft from their wages’. Add to that a culture (across all age groups) of always blaming Someone Else for their predicament and you’ve got a huge cohort of whingers.
The age pension is too generous. A $ for $ income test on it and fringe benefits is required. My kids can’t afford to feed their kids, buy a home and pay for whingers on public charity.