Retirees suffer!

[bojan]

This discussion is meaningless.
It will be what will be...

And next time don't compromise on elections and don't vote for people who you think do not represent properly your long term interests.

[Kunama]

Investment interest is a double edged sword.....
I know my money isn't building up as it once was but I take solace in the fact that my children aren't paying 17.5% interest on their home loans like I was 30 years ago.

Being a self-funded retiree isn't all beer and skittles but it sure beats the hell out of working.......

[MortonH]

Originally Posted by gts055

None of the big name financial "advisors" predicted the crash, yet that is supposedly their specialty. I have yet to hear just one financial expert tell me what the market is going to do tomorrow. They are all experts on history Mark

What the market is going to do tomorrow is irrelevant. What matters is the long-term outlook. But no-one can predict the future with certainty - financial or otherwise.

Part of the problem is the "set and forget" mentality, where you choose your investment strategy (or don't choose and end up in the default option, which is most people) and then never change it.

I suspect most of us spend way more time researching astronomy gear than we do researching our super. There's also an unrealistic expectation that things will always be on the up.

Having said all that, the financial services industry is, like any other area of business, about making money. And this means it is full of people trying to line their own pockets and not really caring much about the real individuals out there.

[Chee]

Very true. Most so Call financial advisers are more interested in lining their pockets foremost than their customers.
Also, the super funds management collect their fee regardless of whether they make a profit or not on your behalf!
I hope the government will legislate, so that, they are only allow to charge a certain, fixed percentage of the profit, they made on your super, instead of a percentage of the current balance. In other words, if they make a loss on your super, they forfeit their fee. That way, they will be be responsible in their investment choices.
My super balance lost close to two hundred thousands during the GFC of 2008 and and have not recovered even now. For close to retirees, this is a huge loss that upset your retirement plan.

[uwahl (Ulrich)]

I stayed with shares until 5 years before retirement and then swapped to all cash in the bank following advice from one of those financial advisers plus stuff I had read. Now I am retired I have about 20% in moderate risk stuff and 80% cash in the bank. The cash only pays 2 to 3% and the moderate risk stuff has resulted in a small loss so far this year so I count myself lucky.

The adviser charges about $3,000 pa but he has proved to be one of the few I have come across who is worth his fees. Very hands on and keeps in close touch explaining what is happening and what he believes the best course of action is.

[Merlin66 (Ken)]

I agree with Chee......
"no profit performance - no fees paid"

[MortonH]

Originally Posted by Merlin66

I agree with Chee......
"no profit performance - no fees paid"

That's impossible unless you stick all your money in cash. In a GFC situation almost no-one makes a profit yet the superannuation investment managers are still doing the same amount of work, in fact probably more work than in the good years.

Bear in mind that the managers who choose where to invest your super are not the ones causing the GFC.

Also bear in mind that if your assets have a significant holding in shares (which most do) you will lose money in a GCF scenario no matter what the investment manager does.

It might seem counter-intuitive, because we view a reduction in our money as a "loss" in absolute terms, and not as compared to the whole market. For example, and this scenario is real, if your fund returned -10% but the market average was -15% then your manager has achieved "good" performance.

You will always be able to find a few managers that avoided a loss altogether and actually made a small profit in those years, but those managers are so cautious that they probably missed out on the big returns in the good years because they were playing it safe.

[AndrewJ]

If "investment managers" were truly worth their salt, they would take out a large personal loan and manage it for themselves, vs work for a salary/commission dealing with lots of narky customers.
The fact is that they know they are going to lose almost as much as they win, so rather than risk their own money, they go into business where they get paid, win lose or draw, managing "other peoples money".
Bit like in the gold rush days.
The ones who made the money "on average", were those that sold supplies and information to those who were looking for the gold.

Andrew

[Chee]

Whenever your employer or you make a contribution to your super fund, the monies are proportion into the various funds and shares by software,
There is little interaction by the fund managers. Come rain or shine, whether the market goes up or down, they will still collect their fees.
Say, you have $300k at the start of the year and ends the year with a balance of $260k, the fund will still collect $5200 or more as their fee, and without any word of apology or remorse.
Super fund management is big business and the fees amount to tens of billions of dollars. It is small wonder, that the super funds are in favor of the suggestion, to extend the withdrawal age to 70 years. Then, you cannot withdraw your money, and they continue to profit from it for another ten years!
Sure, they need to be paid. I would even agree to pay them 10 percent of any profit, that they will make on my super. But having them take 2 or more percent from my super when they make a loss without a word of regret or apology, surely sucks.

[Merlin66 (Ken)]

Chee, et al,
We're not talking about additional contributions....
It's what's in the box now.....and how long it may last.

[doppler (Rick)]

Well I am setting up now with astro gear, because my box is pretty small and not likely to get much bigger in the next 8 years before I am allowed to retire, I'll probably be made redundant before that anyway, but the house will be paid off and I will have some sort of obs and that = simple but happy me.

[alpal]

After the GFC in 2008 I put my super money in capital guaranteed with Aussie super.

I think I've done better than having it exposed to the share market.

Shares are dangerous - they lull you into a false sense of false security
as they slowly build up in price over years but then -
in a few days they can go down 40% in value wiping out all the dividends you've collected.

I don't like the way that Super funds charge fees every year
even though the money is just in the bank -
it's money for nothing - daylight robbery &
there's nothing we can do about it.

I am sure that if I didn't keep contributing to super that my account balance would go down over time.
It would be safer under the mattress.

[Merlin66 (Ken)]

Rick,
Sounds good....until you have to sell the home! To downsize and acquire more funds to "put in the box"

[doppler (Rick)]

Originally Posted by Merlin66

Rick,
Sounds good....until you have to sell the home! To downsize and acquire more funds to "put in the box"

I am in Mackay, property here is already downsized after the mining crash, some people would have sell at a $100,000 loss. Downsizing here only means you are moving to a smaller dwelling not necessarily a cheaper one.
They always make the rules for capital city dwellers who tend to have bigger incomes and high priced houses.

[Merlin66 (Ken)]

After you retire you can take all the funds out and invest them directly into your favourite bank - 30day or more investment account.
Minimises ongoing fees.......BUT if the subsequent interest takes you above the threshold you end up paying tax....
No win - always pay.

[doppler (Rick)]

I have another 8 years to work and I'm sure that the Govt. will change the rules a few more times before that.
When I first started working, the company I worked for had an employee super plan and as a bonus if you put your own money into it as well they would match that amount. With that plan I would have been able to retire at 50 with a tidy sum. The ATO jumped in an said that I was exceeding "reasonable benefits limits" (which was x times your annual income) and had to stop putting the extra money in. Basically what this meant was that because I was on a lower income I was not allowed to retire rich, (using super). Now it is totally opposite, they want everyone to have as much super as possible?

[multiweb (Marc)]

Originally Posted by Chee

It is small wonder, that the super funds are in favor of the suggestion, to extend the withdrawal age to 70 years.

I think that's the age pension that might be set at 70 in future, not super. Super is accessible at 62 right now I believe, sometime earlier depending on circumstances.

[Merlin66 (Ken)]

Rick,
I remember those days....
There are still restrictions on what you can contribute to super (tax free).

[bugeater (Marty)]

My understanding is you can still contribute more, but it isn't tax deductible or something. There are legitimate reasons for this. People were abusing it to evade tax.

I'd like to know what has really been done by government that has retrospectively damaged your superannuation. I think the accusation that government will just take your super at some point is utterly ridiculous. It would make no economic sense for them to do so. They do change the rules from time to time, but that more around how superannuation funds are regulated and managed.

[Merlin66 (Ken)]

Marty,
One concern is that they will change the tax free withdrawal status and start charging say 15% tax on the super balance.

Re topping up super...
""People were abusing it to evade tax."" Hmmm no, not to evade tax but to take advantage of the legal opportunity to put additional funds into super which is then effectively "locked up" until retirement. The idea, I think, was to reduce the dependency on the Gov. pension.