On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML

Australia needs a better safety net in case of unforseen circumstances

By Phil Ruthven - posted Saturday, 15 December 2001

Graph showing that in the 1999-00 year, 90% of Australian households had assets valued at less than $350,000, while that accounted for only 50% of the nation's wealth.

This could expect to double by 2010, to around $750,000. The baby-boomer segment will average higher – being older – at around $1 million, still too low.

However, the sources of wealth by millionaire households reveal how different their mix of assets is compared with the average household.

Graph showing that millionnaires store more wealth in liquid assets, trusts and shares, and less in superannuation and housing than other Australians.

Clearly, assuming that owning a house is half-way to being able to retire with dignity and freedom is a dangerous assumption!

So what would a new Government do?

Firstly, educate society to the realities:

superannuation of 9 per cent of wages, is inadequate;
going into more debt each year, is reducing the net savings from 9 per cent down to around 3 per cent; so the current superannuation level is inadequate;
households need to save the equivalent of 15 per cent of gross income for their working life (of around 45-50 years).

Secondly, put in place a better superannuation scheme that:

encourages employees to match employer contribution, making the total around 18 per cent of wages by 2010;
does not represent a "milking cow" for consolidated revenue.

The coming Generation Xers and Net Generation might not like the thought of being taxed out of their mind to support their parents with pensions to the extent that society was prepared to support the retirement of the Depression/World War II generation.