SUPER THE SLEEPERS WITHIN
The Australian bureau of statistics calculates the average life expectancy following a national census. This is then used to establish the minimum account based pension once a super account is converted to the pension phase. But as time marches on and we age, as we all do, the pension must increase and is eventually higher than the actual income received and earned.
A gradual reduction in the account balance is the result. Strategies to compensate for this can and should be put in place to provide a safety net along with diversification. There is a false sense of security if the account based pension is the only private source of investment funds.
Tax benefits due to the low rate and then NO tax rate from age 60 is a benefit and a main incentive for additional contributions BUT there is tax later! Much later, when we move to the higher place off the face of the earth tax creeps in. Estate planning and tax planning strategies for the long term, which many do not wish to consider, need to be implemented.
Professional and strategic guidance is of high importance for inclusion of these features in our service program. Superannuation as the preparation for retirement is of national importance and its use serves to provide a base cash flow but it should not and can not stand on its own.