Inequity of Superannuation savings for those who have saved well

Originally posted by Infose: ↑

I retired at 55 but for people with a birthday date after 1960 I think that the preservation age it is now 60. I doubt if during next 25 years the preservation age will change to 70, at least in a universal way. Most likely future changes, if any, will be introduced on the basis of one's professional or activity sector.

Each person has his own priorities, which not only vary according to personal circumstances but also along one's life.

So, first you set your financial goals then your strategy in order to achieve them. The setting up of one's strategy does involve options and trade offs which may or may not offer the best way to achieve one's goals at the minimum cost (the optimal solution).

Super is designed to provide income during old age, a period that thanks to advances in medicine and better living conditions one can now expect to last longer than before. So, if you are looking for the optimal solution to provide income during old age then the point in consideration should be no other one than that. In other words, you have to compare super with only any other strategy to provide income for old age. For instance, reverse mortgage schemes, partial or total reliance on Centrelink, income from a discretionary trust or any other source or combination of several different sources. This may imply that you have to put a value to things such as, for instance, flexibility of access, applicable tax regimes, etc.

"Oh, this bitter earth
Yes, can it be so cold?
Today you're young
Too soon you're old…"

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Hi Infose,

I'd agree with most of what you posted there.

I guess my point is that, after reading some other super related posts on this forum, maybe having $300k sitting in super at age 30 due to voluntary contributions etc isn't the best strategy. That money is going to be locked up for 30 years (per current legislation), or maybe longer if legislation is changed in the future. That $300k is going to grow well beyond the $1.6m transfer balance cap by retirement due to growth/contributions, so the excess above the cap is going to continue being taxed @ 15% in pension phase anyway, plus you are giving away access to your capital until an unknown point in time.

I'm not inclined to tie up more than the $1.6m (at retirement age) in super, given I believe super is where politicians will look to first to try and pay down deficits / balance budgets. It's a $3Trn pool of funds waiting to be taxed further. I don't think the rules in 25-30 years will be anywhere near as favorable as today, both from taxation and access/withdrawal perspectives.

Cheers!