Why Your Super Will Never Be Enough
There is a little known secret about your superannuation that the Government, the Banks and the Unions don’t want you to know! Your Super will never be enough.
Why do they want to keep it a secret?
Because between them, the Government, the banks and the unions have to be pulling over $15 billion dollars a year out of your superannuation.
And if you knew the truth, you might put your money somewhere else. Or you might want some accountability and we all know how much the government, the banks and the unions hate being held accountable for what they do.
And the secret is that your super will never be enough.
Simply watch the video below and read the examples under that to learn why you super will never be enough.
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Let’s look at some real life examples
Let’s have a look at Denise and David.
Denise is 65 and was earning $45,000 before tax (about $39,000 after tax). David is 67 and was earning $75,000 before tax (about $59,000 after tax).
Their current combined income after tax is about $98,000.
Denise has a superannuation balance of $112,000 and David has a balance of $198,000. This is a combined balance of $310,000. Denise’s superannuation was lower because of her lower wage and the fact that she took time off work to raise their children.
If they retired today they were facing a drop of over $64,000 per year in their income. They were one of the lucky ones and have managed to pay off their home loan. So they can use their superannuation to supplement their pension.
Now if they want to live to the same standard as they were living before they stopped worked, they would need to draw out of their superannuation about $64,000 per year. With a superannuation balance of $310,000, this would last about five years.
So in five years ………..
Denise would be 70 and David 72. They would have no superannuation left. They have no choice then but to live on the pension (or they could go back to work!). And this could be for long time. With today’s medical improvements, Denise has a life expectancy of around 85 and David nearly 80. So Denise could be living on the pension for 15 years and David nearly eight years.
So when Denise and David stop working they face several choices. Either continue spending the amount of money they were spending whilst working for the next 5 years. Then in five years they start to survive on the pension below the poverty line. Or reduce their standard of living now and spend less so their superannuation could last longer. Or continue to work part time to supplement the pension and their superannuation.
Either way Denise and David are forced to make a sacrifice in their living standards. Now or in five years. But either way, their super will never be enough!
What about Francis, a divorced IT specialist who is thinking of stopping work.
She earns $110,000 per year before tax. This is about $81,000 after tax.
With a higher wage and no children her superannuation was just under $250,000. However she had not managed to pay off the mortgage on her expensive inner city apartment by the time she turned 65. Francis still owed $150,000. Now Francis faces different choices to David and Denise.
Francis could chose to sell her expensive inner city apartment, pay off her mortgage and buy a cheaper property somewhere else. This would leave her with the $250,000 in superannuation to top up the pension each year.
Or Francis could choose the stay near her friends and use $150,000 of her superannuation to pay off her mortgage. This leaves her with about $100,000 in superannuation to top up her pension. How long do you think this will last?
Just like Denise and David, whatever choice Francis makes will result in her having a reduced standard of living either now or sometime in the future.
I hope you now realise why your super will never be enough.
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The Wealth Navigator
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