The super generations
Which boomer are you? Your answer will tell you a lot about your attitude to superannuation and long-term planning, as Leenane Templeton director Andrew Frith explains
Which generation are you?
Young Boomers’ View
If the government enacts changes as suggested in the Henry Review into Taxation Report, it is likely that young boomers – those aged 52 and below now – will be working until age 67 and not able to access their superannuation until that age.
These latest suggestions have come at a time of expected huge government debt and a huge deficit to boot. But, perhaps it should be remembered that not all baby boomers are responsible for this huge escalation in debt, nor are they responsible for the queues at public hospitals or for the bankruptcies that have occurred around the world. One wonders whether the real culprits could be the oldest boomers, the people who have either already retired at age 55, or started their transition to retirement – slowly entering into retirement on pensions with no tax liability, leaving the workforce and the burden of funding old age to the younger boomers. The younger boomers put in long working hours and by and large have no intention of working to age 67. They could also be termed the angry generation. Angry because this younger generation will be prevented from accessing super, even though they have been contributing on the basis of being able to access it – in part or totally – from the age of 55.
This younger generation also watched a lot of 60 plus year-olds, in very recent years, accessing their super of $1 million – tax-free and fully accessible. The younger generation will be wondering why they won’t have the opportunity of reaping such benefits – where will our tax-free pot of gold be, or will there be one? What other tinkering will successive governments do to the generation that has spent decades saving for a self-funded retirement? When will there be no limits on contributions? When will there be some tax benefits, such as no tax on super contributions? When will governments realise that superannuation is for our retirement and not a government resource to be used in funding government initiatives?
Superannuation is our own money. For many it is money that has been forgone as salary or wages. This is the pot we have been trying to grow so that we don’t have to rely on the government in our older age – but the government can’t keep its hand off it, or resist changing the goal posts. Oh well, I guess we just have to wait until 2025.
An Older Boomer’s View
To be fair, we must also remember that for the most part the older generation has only had a short time in which to accumulate superannuation (unless they have been fortunate enough to be part of a government or large organisation that offered superannuation). And it is not too long ago that people were still working at age 67. I am reminded of a colleague’s great grandfather who held a senior state government position in the early 1900s and who died in office at age 67.
Also, many of those in their mid 60s now are not able to accumulate superannuation and for the most part were a one-income family with very little disposable income. They paid for their own and their children’s university education, only had one car, did not receive first home buyer incentives and they may have been lucky enough to receive a very small child endowment, provided they did not earn too much money.
And it was only the wealthy who may have owned a few shares.
Just as now, their interest on their savings was taxed. So as they aged and governments started rewarding debt, they considered purchasing a rental property or a holiday home with their savings, buying art works, antiques or other collectables to get some use out of their money instead of being double-taxed. So why should this generation not be able to access the age pension to top up their carefully squirreled away savings? They paid their taxes in advance. They are not to blame that there was a continuing baby boom following the end of WWII.
And remember many of them have been loving, built-in baby sitters for their grandchildren and I suspect that will continue way beyond 2025 no matter what generation we talk about.
Differing views or not, all generation have had to cope with constant government changes to superannuation, pensions and taxation. All generations want the ability to achieve their long term planning objectives for their investments.
