Sooz
23rd July 2014, 08:04
Super is a giant rort and a scam. This confirms what I've always thought. This applies to Australia in particular, but I'm sure it's in the pipeline globally. You will never get to access your own money you've worked hard all your life for.
This article also gives you a few tips.
Sooz
PS: Superannuation or Super is the term we use here in Oz. In the USA, I think it's 410k's or something like that.
You’ll Never See Your Super...
Wednesday, 23 July 2014
Melbourne, Australia
By Kris Sayce
For the past six years I’ve said that if you’re under 30 you’ll never see your superannuation.
I was wrong.
Based on the latest Murray Report into super, I need to change my tune.
As I see it, now if you’re under 60, there’s a good chance that you’ll never see one penny of the money you’ve saved in super.
Let me explain...
.................................................. .................................................. .................................................. .......................
I remember it as if it were yesterday.
When I started writing about the government’s plans to expropriate your super savings, people called me a lunatic.
They said I was a scaremonger. They said it was irresponsible for a qualified financial advisor to say that the government would take privately held retirement savings.
They said that the public would never let it happen. They said that it would take so long for Parliament to pass the legislation that people would get wind of the plan and do something to avoid it.
Well, all this time later, who’s the lunatic now?
The Murray Report confirms everything we’ve ever said about super — you can kiss it goodbye.
Attack the rich
And not surprisingly, the mainstream press has fallen into line.
The press has chosen to focus on what it says is the problem of the rich rorting the super system.
What the press doesn’t realise is that the real rich aren’t doing anything of the sort.If you think the rich would risk putting even one-tenth of their wealth into a heavily regulated system that has strict restrictions on when they can access their funds, then to be blunt, you’re an idiot.
The rich have far more sophisticated and useful ways to maximise returns and minimise tax. That’s why they pay top-notch accountants handsome fees.
I mean really, think about it. Can you imagine Australia’s super-rich going to their accountant asking for tax minimisation advice and the accountant saying, ‘Just put it in your super fund.’
That’s not going to happen. The accountant would be out of business in a flash.
But as with anything involving tax, the mainstream press and politicians will always hold up the so-called rich as a reason to increase taxes and cut out tax breaks.
Naturally, most of the idiots in the middle classes will cheer this on. Only later do they realise that it never had any impact on the rich. The only ones to lose out were, yes, you guessed it, the middle classes. This is how it plays out. Note the quote that the Sydney Morning Herald chose to take from the Murray Report:
‘The large number of individuals with very large superannuation balances suggests the superannuation system is being used for purposes other than providing for retirement incomes.
‘The large number of accounts with assets in retirement in excess of $5 million could each receive annual tax concessions more than five times larger than the single age pension.’
I shouldn’t expect anything less from the Herald. Socialism rules. In typical socialist style, they hate the idea of people being well off. They want everyone to be at the same level — poor. Treat super as an investment
The fact is that what you probably always thought was your retirement money isn’t really your retirement money.
The State views your super fund as a national asset. It’s for the country to decide how to spend it, rather than you.
This is why I’m about to say something that’s very important. It’s financial advice that you won’t get anywhere else.
Your super is under threat from government expropriation. There is an extremely high chance that you will never see even one cent of the money you’ve contributed to super.
It’s for that reason that it’s important that you don’t contribute anything extra to super above the minimum required by law.
I know. Your accountant will tell you that it’s tax effective to salary sacrifice into super. They’ll tell you about the tax benefits.
But let me tell you something. One of the most important rules of investing is that you should never invest in something purely because of tax reasons.
Your accountant probably tells you that super isn’t an investment. They’ll tell you that it’s just a tax structure. That may have been true in the ‘old days’. But it’s no longer true.
Superannuation is an investment, and you need to understand that.
And just like with any other tax effective investment, you need to weigh up the odds of the tax benefits against the chances that you’ll ever get your money back.
In my view, while the tax benefits of super may be great, you’ll never get your money back. That makes it a bad investment.
The patriotism of nationalising savings
The truth is that none of this surprises me.
I’ve written on the subject for years.
I even predicted that the government would effectively nationalise superannuation funds in return for the government providing a guaranteed income stream.
This was one of the Murray Report’s big ideas. Of course, they didn’t put it that way. Instead, the suggestion is for compulsory annuities.
Again, the mainstream has lapped up the idea. Take this from the Sydney Morning Herald:
‘One of what Murray describes as the “braver” options canvassed in the report was compulsory annuities — which are products designed to ensure retirees are forced to budget throughout retirement rather than getting access to a lump sum as soon as they hit the eligible pension drawdown period.’
When I first wrote about this idea I called it the Aged Pension MkII. I said the government would call it something like an ANSAC account — Australian National Savings Account.
I still wouldn’t put it past them to do this...anything to draw on the patriotism line as the government dips its hands into your retirement savings — ‘do it for your country’.
And if you still have doubts about the future of super, take this quote from the same SMH article quoted above:
‘Thus the risks contained in super are that this pool of money (which is forecast to grow to $5 trillion in 30 years) is not being put to effective use to drive economic growth...’
I don’t know about you, but when I look at the money in my self-managed super fund I don’t see it as a pool of money.
I also don’t consciously think about putting it to ‘effective use to drive economic growth’.
As far as I’m concerned, my super money is mine. It’s not the nation’s money. It’s money that I’ve earned during my working life based on the labour I’ve expended to earn it.
Do these two things
And as for helping to grow the economy, only a dunderhead would fail to understand that the direct result of making investments is economic growth.
You don’t have to single out a portion of your savings and give it a good talking to, telling it that it must achieve economic growth. When you buy a share of a company, you become a part owner in that company. You’re supporting its growth and hopefully the growth of the economy as a whole.
Even if you’ve got money in the bank, you’re supporting growth to some degree. The banks can use that as collateral to issue loans to businesses that want to invest and grow (or, sadly, to just build more houses).
But this is the real reason behind the Murray Report. It’s not about you investing in stocks that you think deserve investment.
This is about the government getting its hands on trillions of dollars-worth of private savings so it can pour this money into pet projects that will help it win re-election.
Get this straight: governments don’t give a proverbial about your retirement. It’s about grabbing your savings. That’s why the conversation quickly turns from ‘saving for retirement’ to ‘building the nation’.
Your retirement is an afterthought.
That’s why it’s important you do two things to reduce the impact of the government taking your retirement savings.
The first I’ve already mentioned. Under no circumstances should you contribute extra to your super fund. I don’t care how good the tax breaks are.
If you want to have savings for retirement, you have to build up these savings outside of the super system.
Second, you need to take advantage of the super contributions system. Each year you can split a certain amount of your super contributions with your spouse’s super account.
You should take advantage of this. How? The younger person in your relationship (ie. the person further from retirement) should nominate the maximum amount that you can contribute to the other person’s fund.
This isn’t without risk. But if there is a significant age difference between you and your partner, it makes sense to have as much as possible in the name of the person who is set to retire first.
That way, as soon as they reach retirement they can put in motion the steps needed to get that money legally out of the super system.
The only way to save for retirement
Yes, there will be tax consequences to doing this.
You may end up with a smaller super balance and a lower income.
But the way I look at it, it’s better this way than having no balance or income at all when the government takes your super fund to fund its crazy ‘nation building’ plans.
Rest assured, you will come under attack for following this advice.
Your accountant will object.
Your financial planner will object.
Your spouse or partner may even object.
But that’s the consequence of being an independent investor. Sometimes you have to do things that others don’t like or even approve of.
If you think I’m talking out of my backside, then ignore everything you’ve just read. I wish you luck.
But even if you think there’s a small chance of this happening (remember that I’ve warned about this for years and gotten everything right so far), then you owe it to yourself to take this advice.
Even if I’m right and you follow this advice, you may not be able to save your entire super. You have to stay within the boundaries of the law.
But if you can take the action now to make sure that you have a significant portion of your retirement savings outside of the super system, I have no doubt you will be better off in retirement than if you do nothing at all.
Cheers,
Kris+
This article also gives you a few tips.
Sooz
PS: Superannuation or Super is the term we use here in Oz. In the USA, I think it's 410k's or something like that.
You’ll Never See Your Super...
Wednesday, 23 July 2014
Melbourne, Australia
By Kris Sayce
For the past six years I’ve said that if you’re under 30 you’ll never see your superannuation.
I was wrong.
Based on the latest Murray Report into super, I need to change my tune.
As I see it, now if you’re under 60, there’s a good chance that you’ll never see one penny of the money you’ve saved in super.
Let me explain...
.................................................. .................................................. .................................................. .......................
I remember it as if it were yesterday.
When I started writing about the government’s plans to expropriate your super savings, people called me a lunatic.
They said I was a scaremonger. They said it was irresponsible for a qualified financial advisor to say that the government would take privately held retirement savings.
They said that the public would never let it happen. They said that it would take so long for Parliament to pass the legislation that people would get wind of the plan and do something to avoid it.
Well, all this time later, who’s the lunatic now?
The Murray Report confirms everything we’ve ever said about super — you can kiss it goodbye.
Attack the rich
And not surprisingly, the mainstream press has fallen into line.
The press has chosen to focus on what it says is the problem of the rich rorting the super system.
What the press doesn’t realise is that the real rich aren’t doing anything of the sort.If you think the rich would risk putting even one-tenth of their wealth into a heavily regulated system that has strict restrictions on when they can access their funds, then to be blunt, you’re an idiot.
The rich have far more sophisticated and useful ways to maximise returns and minimise tax. That’s why they pay top-notch accountants handsome fees.
I mean really, think about it. Can you imagine Australia’s super-rich going to their accountant asking for tax minimisation advice and the accountant saying, ‘Just put it in your super fund.’
That’s not going to happen. The accountant would be out of business in a flash.
But as with anything involving tax, the mainstream press and politicians will always hold up the so-called rich as a reason to increase taxes and cut out tax breaks.
Naturally, most of the idiots in the middle classes will cheer this on. Only later do they realise that it never had any impact on the rich. The only ones to lose out were, yes, you guessed it, the middle classes. This is how it plays out. Note the quote that the Sydney Morning Herald chose to take from the Murray Report:
‘The large number of individuals with very large superannuation balances suggests the superannuation system is being used for purposes other than providing for retirement incomes.
‘The large number of accounts with assets in retirement in excess of $5 million could each receive annual tax concessions more than five times larger than the single age pension.’
I shouldn’t expect anything less from the Herald. Socialism rules. In typical socialist style, they hate the idea of people being well off. They want everyone to be at the same level — poor. Treat super as an investment
The fact is that what you probably always thought was your retirement money isn’t really your retirement money.
The State views your super fund as a national asset. It’s for the country to decide how to spend it, rather than you.
This is why I’m about to say something that’s very important. It’s financial advice that you won’t get anywhere else.
Your super is under threat from government expropriation. There is an extremely high chance that you will never see even one cent of the money you’ve contributed to super.
It’s for that reason that it’s important that you don’t contribute anything extra to super above the minimum required by law.
I know. Your accountant will tell you that it’s tax effective to salary sacrifice into super. They’ll tell you about the tax benefits.
But let me tell you something. One of the most important rules of investing is that you should never invest in something purely because of tax reasons.
Your accountant probably tells you that super isn’t an investment. They’ll tell you that it’s just a tax structure. That may have been true in the ‘old days’. But it’s no longer true.
Superannuation is an investment, and you need to understand that.
And just like with any other tax effective investment, you need to weigh up the odds of the tax benefits against the chances that you’ll ever get your money back.
In my view, while the tax benefits of super may be great, you’ll never get your money back. That makes it a bad investment.
The patriotism of nationalising savings
The truth is that none of this surprises me.
I’ve written on the subject for years.
I even predicted that the government would effectively nationalise superannuation funds in return for the government providing a guaranteed income stream.
This was one of the Murray Report’s big ideas. Of course, they didn’t put it that way. Instead, the suggestion is for compulsory annuities.
Again, the mainstream has lapped up the idea. Take this from the Sydney Morning Herald:
‘One of what Murray describes as the “braver” options canvassed in the report was compulsory annuities — which are products designed to ensure retirees are forced to budget throughout retirement rather than getting access to a lump sum as soon as they hit the eligible pension drawdown period.’
When I first wrote about this idea I called it the Aged Pension MkII. I said the government would call it something like an ANSAC account — Australian National Savings Account.
I still wouldn’t put it past them to do this...anything to draw on the patriotism line as the government dips its hands into your retirement savings — ‘do it for your country’.
And if you still have doubts about the future of super, take this quote from the same SMH article quoted above:
‘Thus the risks contained in super are that this pool of money (which is forecast to grow to $5 trillion in 30 years) is not being put to effective use to drive economic growth...’
I don’t know about you, but when I look at the money in my self-managed super fund I don’t see it as a pool of money.
I also don’t consciously think about putting it to ‘effective use to drive economic growth’.
As far as I’m concerned, my super money is mine. It’s not the nation’s money. It’s money that I’ve earned during my working life based on the labour I’ve expended to earn it.
Do these two things
And as for helping to grow the economy, only a dunderhead would fail to understand that the direct result of making investments is economic growth.
You don’t have to single out a portion of your savings and give it a good talking to, telling it that it must achieve economic growth. When you buy a share of a company, you become a part owner in that company. You’re supporting its growth and hopefully the growth of the economy as a whole.
Even if you’ve got money in the bank, you’re supporting growth to some degree. The banks can use that as collateral to issue loans to businesses that want to invest and grow (or, sadly, to just build more houses).
But this is the real reason behind the Murray Report. It’s not about you investing in stocks that you think deserve investment.
This is about the government getting its hands on trillions of dollars-worth of private savings so it can pour this money into pet projects that will help it win re-election.
Get this straight: governments don’t give a proverbial about your retirement. It’s about grabbing your savings. That’s why the conversation quickly turns from ‘saving for retirement’ to ‘building the nation’.
Your retirement is an afterthought.
That’s why it’s important you do two things to reduce the impact of the government taking your retirement savings.
The first I’ve already mentioned. Under no circumstances should you contribute extra to your super fund. I don’t care how good the tax breaks are.
If you want to have savings for retirement, you have to build up these savings outside of the super system.
Second, you need to take advantage of the super contributions system. Each year you can split a certain amount of your super contributions with your spouse’s super account.
You should take advantage of this. How? The younger person in your relationship (ie. the person further from retirement) should nominate the maximum amount that you can contribute to the other person’s fund.
This isn’t without risk. But if there is a significant age difference between you and your partner, it makes sense to have as much as possible in the name of the person who is set to retire first.
That way, as soon as they reach retirement they can put in motion the steps needed to get that money legally out of the super system.
The only way to save for retirement
Yes, there will be tax consequences to doing this.
You may end up with a smaller super balance and a lower income.
But the way I look at it, it’s better this way than having no balance or income at all when the government takes your super fund to fund its crazy ‘nation building’ plans.
Rest assured, you will come under attack for following this advice.
Your accountant will object.
Your financial planner will object.
Your spouse or partner may even object.
But that’s the consequence of being an independent investor. Sometimes you have to do things that others don’t like or even approve of.
If you think I’m talking out of my backside, then ignore everything you’ve just read. I wish you luck.
But even if you think there’s a small chance of this happening (remember that I’ve warned about this for years and gotten everything right so far), then you owe it to yourself to take this advice.
Even if I’m right and you follow this advice, you may not be able to save your entire super. You have to stay within the boundaries of the law.
But if you can take the action now to make sure that you have a significant portion of your retirement savings outside of the super system, I have no doubt you will be better off in retirement than if you do nothing at all.
Cheers,
Kris+