Changes to the Superannuation age : thoughts?

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Forums › Finance and wealth management › Changes to the Superannuation age : thoughts?

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#1733093 8-Mar-2017 15:00

sidefx:
BTR:

The average life expectancy isn't increasing so why increase the retirement age.

Statistics NZ would seem to disagree...

http://www.stats.govt.nz/browse_for_stats/health/life_expectancy/NZLifeTables_HOTP10-12.aspx

I think what they were meaning is that just because the average age maybe increasing, that doesn't mean that people are capable of working longer as a result . Also it is an average, but doesnt take into consideration that people maybe Ill with age related illnesses, where even though they may live longer due to drugs etc, it may not be a great quality of life. People can literally live for decades in rest homes and be totally out of it.

mattwnz

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#1733099 8-Mar-2017 15:06

reven:

every year or so it should be moved up 1 month IMO. I'm fine with 67. 70 is too long a wait IMO.

I do want it when I hit retirement age (34 now). I dont believe it should be stopped if youre still working, if you've paid taxes all your life, you deserve it IMO. And we all know old people vote like no others, so yeah, hard to take it away completely.

And I really dont think your personal situation should effect how much each person gets, it should be the same, only way its fair IMO.

I wouldnt be surprised if it went away by the time I hit 67 though....

Yes this annoys me that it is occurring within a very short window. Not sure of the exact ages of people affected, however if you are 45 you may get it at 65, but if you are 40 you won't get it until you are 67. This means that the gross amount extra you will need to earn to make that up, could be up to 60k before tax (very rough calculations). Although that could be more with inflation. That is a heck of a lot that people have lost as a result of this change, and means that we have to fund that shortfall from somewhere. . That is assuming that that both the 40 and 45 year old were both working until 67 anyway. I think the younger generation 40 and under do have the right to feel annoyed by this change.

tdgeek

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#1733107 8-Mar-2017 15:31

mattwnz:
reven:

every year or so it should be moved up 1 month IMO. I'm fine with 67. 70 is too long a wait IMO.

I do want it when I hit retirement age (34 now). I dont believe it should be stopped if youre still working, if you've paid taxes all your life, you deserve it IMO. And we all know old people vote like no others, so yeah, hard to take it away completely.

And I really dont think your personal situation should effect how much each person gets, it should be the same, only way its fair IMO.

I wouldnt be surprised if it went away by the time I hit 67 though....

Yes this annoys me that it is occurring within a very short window. Not sure of the exact ages of people affected, however if you are 45 you may get it at 65, but if you are 40 you won't get it until you are 67. This means that the net amount extra you will need to earn to make that up, could be up to 60k before tax (very rough calculations). Although that could be more with inflation. That is a heck of a lot that people have lost as a result of this change, and means that we have to fund that shortfall from somewhere. . That is assuming that that both the 40 and 45 year old were both working until 67 anyway. I think the younger generation 40 and under do have the right to feel annoyed by this change.

Yes, or another way to look at it, is that if you have to work another 2 years you haven't lost any money, as in needing to raise more, but you habve lost 2 years of retirement, and I am sure there are many who see those 2 years in the twilight of their life as very important.

mattwnz

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#1733112 8-Mar-2017 15:46

tdgeek:

mattwnz:
reven:

every year or so it should be moved up 1 month IMO. I'm fine with 67. 70 is too long a wait IMO.

I do want it when I hit retirement age (34 now). I dont believe it should be stopped if youre still working, if you've paid taxes all your life, you deserve it IMO. And we all know old people vote like no others, so yeah, hard to take it away completely.

And I really dont think your personal situation should effect how much each person gets, it should be the same, only way its fair IMO.

I wouldnt be surprised if it went away by the time I hit 67 though....

Yes this annoys me that it is occurring within a very short window. Not sure of the exact ages of people affected, however if you are 45 you may get it at 65, but if you are 40 you won't get it until you are 67. This means that the net amount extra you will need to earn to make that up, could be up to 60k before tax (very rough calculations). Although that could be more with inflation. That is a heck of a lot that people have lost as a result of this change, and means that we have to fund that shortfall from somewhere. . That is assuming that that both the 40 and 45 year old were both working until 67 anyway. I think the younger generation 40 and under do have the right to feel annoyed by this change.

Yes, or another way to look at it, is that if you have to work another 2 years you haven't lost any money, as in needing to raise more, but you habve lost 2 years of retirement, and I am sure there are many who see those 2 years in the twilight of their life as very important.

Although if you do continue to work at the moment up till age 67, you do also get 2 years of Super on top of your wages. So those people who do this are about $25k gross, better off per year depending on whether they live alone or a couple. So that is more money that they can put towards retirement costs. So this change for people who are 40 and below, means that they will miss out on a lot of money inthat scenario, compared to someone who is 45 years old. It is a significant amount to lose just because you are 5 years younger. To put it in perspective, at the moment, the government will pay kiwisaver participants 20k over an entire 40 year working life, as I presume those $500 annual contributions will stop at age 65, and not 67, as they currently do. But this is a 50k of loss over just two years due to the sudden change that will occur, so that benefit from kiwisaver from the government is seriously eroded. It would have been far more fair to spread the change out over 10-20 years to prevent this age cut off problem occurring.

Geektastic

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#1733113 8-Mar-2017 15:47

BTR:

Personally I like the idea of 65. We already spend most of our lives working why make it even longer? People should be able to enjoy retirement not reach the end of their working life and only have 10 years until they kick the bucket.

The average life expectancy isn't increasing so why increase the retirement age.

You can retire at 35 if you can arrange it. It's not a compulsory retirement age...!

MikeB4

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#1733121 8-Mar-2017 15:55

Geektastic:

BTR:

Personally I like the idea of 65. We already spend most of our lives working why make it even longer? People should be able to enjoy retirement not reach the end of their working life and only have 10 years until they kick the bucket.

The average life expectancy isn't increasing so why increase the retirement age.

You can retire at 35 if you can arrange it. It's not a compulsory retirement age...!

yep, I retired in my forties.

marej

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Master Geek

#1733143 8-Mar-2017 16:22

According to this, life expectancy has started to decline in the US

https://www.theatlantic.com/health/archive/2016/12/why-are-so-many-americans-dying-young/510455/

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JimmyH

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#1733216 8-Mar-2017 18:56

I think it was inevitable. With the aging population, the costs were climbing sharply and this is one way to soften the hit the government's finances take.

Personally, I would rather have the age raised to 67 or 68 and have some confidence that the scheme was affordable and would be there when I eventually need it, that run with a much lower age and risk something more drastic having to be done. Also, I would greatly prefer rasing the age to other options like cutting the rate or a complex and expensive (and potentially avoidable) system of means testing being put in place.

Plus, the rising age doesn't mean that you have to wait longer to retire. If you save your pennies then you can retire earlier if you can afford it. I'm trying to arrange my affairs so that it would be feasible for me to retire at 60 if I want to. Irrespective of the super rules. Whether I can manage it is, or course, another question.

The rise from 60 to 65 a few years ago didn't seem to be too problematic. I don't see why the increase to 67 should be.

Geektastic

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#1733219 8-Mar-2017 18:57

MikeB4:

Geektastic:

BTR:

Personally I like the idea of 65. We already spend most of our lives working why make it even longer? People should be able to enjoy retirement not reach the end of their working life and only have 10 years until they kick the bucket.

The average life expectancy isn't increasing so why increase the retirement age.

You can retire at 35 if you can arrange it. It's not a compulsory retirement age...!

yep, I retired in my forties.

Although - without intending to be personal - I presume that medical issues may have contributed?

I certainly changed the what and how of my work once I had my heart surgery.

MikeB4

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#1733242 8-Mar-2017 19:43

Geektastic:
MikeB4:

Geektastic:

BTR:

Personally I like the idea of 65. We already spend most of our lives working why make it even longer? People should be able to enjoy retirement not reach the end of their working life and only have 10 years until they kick the bucket.

The average life expectancy isn't increasing so why increase the retirement age.

You can retire at 35 if you can arrange it. It's not a compulsory retirement age...!

yep, I retired in my forties.

Although - without intending to be personal - I presume that medical issues may have contributed?

I certainly changed the what and how of my work once I had my heart surgery.

You are right, and no you aren't being personal, when I became disabled we decided our financial position was such that I should retire to concentrate on getting better, I also decided it was not fair on my employer as I felt was unable to give them what they deserved.

I draw no benefits and my medical treatment is private even though I am one of those dreadful baby boomers.

tdgeek

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#1733244 8-Mar-2017 19:46

MikeAqua:

If there was a tax incentive I would put more into KS. I put the minimum amount in, which is the maximum my employer is prepared to match. That's enough to qualify for the govt tax credit.

Beyond those two, KS has no significant benefits over any other investment scheme and it makes sense to spread the eggs between baskets. I'm trying to build up some alternate cash yielding investments and re-invest the net proceeds but that's proving challenging at the moment and cash yield is mostly poor.

KS should be taxed, and the benefits when paid are tax free (and no forced annuity) or be tax free, and taxed when paid out (and no forced annuity)

Re the 2040 enactment. I cant get that. The issue is the baby boomers, who are 1/4 of the population. Its not their fault. They didn't sign a form while in the womb!. Its a fact of life, so we need to account for that. But to bring in the change to the retirement age when they are almost gone is a tad strange. Kets start thinking about it now.

If this was an individual issue, would we wait 25 years, or start to manage it now, bit by bit?

We need to look after the baby boomers, as they are JUST people, who will start retiring soon, and each gen since.

tdgeek

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#1733250 8-Mar-2017 19:52

Paul1977:

MikeAqua:

If KS is someone's only investment then that's a little scary. Sure, the portfolios are diversified, but you are still with a particular fund management firm.

Investors should be able (and encouraged) to split between a couple of different firms.

I'd be incredibly surprised if KS isn't the only investment for the majority of people (not counting the house they live in).

I don't really agree. For many, they work, they earn, they put into KS, they have kids, kids get married, lots of ongoing costs. So if the majority dont really save a lot, but they are or will be mortgage free, and they both get the pension or whatever its called now, thats probably normal. Many people are good earners, but many are average earners. And I think many are not smart financially, and if they could be, the circumstances and earnings may not allow for much.

tdgeek

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#1733251 8-Mar-2017 19:54

BTR:

Personally I like the idea of 65. We already spend most of our lives working why make it even longer? People should be able to enjoy retirement not reach the end of their working life and only have 10 years until they kick the bucket.

The average life expectancy isn't increasing so why increase the retirement age.

You wont catch me retiring at 65 or 67, for those reasons.

tdgeek

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#1733253 8-Mar-2017 19:57

mattwnz:
tdgeek:

reven:

every year or so it should be moved up 1 month IMO. I'm fine with 67. 70 is too long a wait IMO.

I do want it when I hit retirement age (34 now). I dont believe it should be stopped if youre still working, if you've paid taxes all your life, you deserve it IMO. And we all know old people vote like no others, so yeah, hard to take it away completely.

And I really dont think your personal situation should effect how much each person gets, it should be the same, only way its fair IMO.

I wouldnt be surprised if it went away by the time I hit 67 though....

If it was means tested, humanoids will find another way. And it removes the desire to plan for the future if your hard earned savings will support you, while the neighbour who did nothing gets supported for free. So, you plan for your investments on the basis of deduct the pension that you wont now get, which is a large deductible and return reducer. Put the savings elsewhere. Might improve the second hand stamps markets!

Yes means testing this sort of thing would be a dumb move by any government . It will add complexity and additional costs to the system, and will bring resentment for something that people have paid into for years with their taxes. Also many will work at getting around it using trusts etc.

Yep. Trusts, they can that. Cars, Stamps, overseas bank accounts in kids names, and so on.

Tax everyone, so everyone gets it. Or make it user pays, so everyone is not taxed for super and they provide their own compulsory super, aka KS or other compulsory savings

tdgeek

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#1733267 8-Mar-2017 20:03

mattwnz:
sidefx:

BTR:

The average life expectancy isn't increasing so why increase the retirement age.

Statistics NZ would seem to disagree...

http://www.stats.govt.nz/browse_for_stats/health/life_expectancy/NZLifeTables_HOTP10-12.aspx

I think what they were meaning is that just because the average age maybe increasing, that doesn't mean that people are capable of working longer as a result . Also it is an average, but doesnt take into consideration that people maybe Ill with age related illnesses, where even though they may live longer due to drugs etc, it may not be a great quality of life. People can literally live for decades in rest homes and be totally out of it.

Exactly. To me, it makes a mockery of living. Because of longer lifespans, and Govt debt, make the plebs work longer and not enjoy life as much.

Retire them, get them onto a workable retirement scheme, free those jobs. I can easily see a time where, the retired are taking jobs from the young, as they are better (mature) and accept less pay (topping up super). Thats not great either.

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