use 16 to calculate how much is enough for retirement

Originally posted by occam ↑

Cafa , you touch on a couple of interesting points.
Firstly, some smarter countries , as you mention , do not tax contributions or in fact earnings during accumulation phase. That way individuals end up with a much larger balance, and again as you say , are then taxed at normal rates upon retirement. In Australia , depending upon what you earn, contributions are taxed at 15% and 30% ? , which means that the Govt gets its hands on our super 30 or 40 years before we get it. (Smart move by Paul Keating back in the day to get an instant access to tax revenue). Over my working life I paid 15% and 30% contribution tax, tax on earnings in the fund , and tax on pension upon retirement.
When you start taking this into account , it does not look like much of a gift from taxpayers as you put it.
If our system only taxed at normal rates at the final pension phase and we got the benefit of the tax free threshold , we might be a lot better off than the present system. Unfortunately, politicians and public servants , driven by greed , incompetence and the need to spend money , have totally messed the system up and made it the most complicated in the world, not to mention the most highly taxed.
The last change to super rules introduced by the current Govt was possibley one of the dumbest I have ever seen . Not so much because they introduced yet another tax, although that was bad enough and we just know that they will make new changes in a few years, but because of the complexity and cost of administering the new changes.
Don’t get me wrong , super is still a reasonable proposition , but if I had my time over, I would build up more assets outside of super,....maybe property, but even that bubble will burst with a change of Govt and changes to negative gearing and capital gains taxes.

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'Over my working life I paid 15% and 30% contribution tax, tax on earnings in the fund , and tax on pension upon retirement.'

Occam, appreciate your view. However we need to take the emotion out of any argument, and look at hard numbers.

If you paid 30% tax on money going into super them you would have been on very high levels of marginal tax, and probably still got best end of a 20% tax saving. If you invested this outside of super you would have had about 20% less each year in which to invest.

On an ongoing basis your super funds would be paying tax on income at 15% or eventual capital gains at 10%. Investments held outside of super would be taxed at about 50% and 25% respectively.

Over a number of years the above differentials are huge impact to the final outcome. Secondly any growth assets in super would never get taxed if held until pension phase.

I just don't see how super was not a gift for you. compared to investing outside of super.

Lastly if you are paying tax on your pension then either you have in excess of $1.6m in super, in which case these additional funds are being taxed at 15% or 10%, OR you have a government service pension where it was unfunded and thus is just another income stream. Even if the later, there are significant tax benefits that would avoid anywhere near marginal rates of tax. There are other reasons but would only impact a very small minority of folks.

Can there be better ways of funding pension, yes for sure, and I'm not suggesting that what we have is the best there can be. I only make the point that if one is happy to tie up funds until 60,then super if a gift from the taxpayers of Australia.

In relation to property, then one can do this within super or outside, and the same data points above are still relevant.

Best.