Originally posted by rocket973
Well your "done a fair amount of work on my own figures" is either completely wrong or you don't realise what other retirees do or have paid in taxes.
The current pension for a retired couple in Australia is a total of
$1381.40/ fortnight or $35,916.40 annually.
This welfare payment is paid directly to a pensioner couple.
For a single person it costs the welfare system even more at
$916.30/fortnight or $23,826.40 annually.
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For a self funded retiree to obtain this amount from a SMSF they would need to have a total of $800,000 minimum in the fund. IF, Self funded retirees were required to pay tax on the earnings of $35,916.40 held outside superannuation then using normal tax rates they would pay zero tax anyway.
There is a tax free threshold of $18,200 for everybody.
For a self funded retiree couple to get a $35,916.40 handout via paying no tax these self funded retirees would need to earn $8,400/fortnight to pay the amount of tax equivalent to the pensioner welfare payment.
ie the pensioner gets a $1,381.40 in fortnightly welfare payments V a self funded retiree tax saving if no tax is paid.
For a self funded retiree with a SMSF to get the equivalent tax free benefit as a pensioner handout the self funded retiree would need $4.5 million invested.
But you need to remember the self funded retiree needs the money to be in superannuation otherwise if the money is earned outside super then it is still taxed.
For a SMSF member couple to have $4.5 million in their fund you can be sure that most of the funds have been deposited as non concessional contributions. Therefore its possible that most of the funds have already been taxed at the 40c in the $1 ie non concessional contributions . The Superannuation rules don't allow huge sums like this to be deposited via concessional contributions even via max amounts every year.
Therefore, I say that its almost impossible for a self funded retiree to cost the Government through lost taxes as much as it costs to keep pensioners sucking on the public tit. I know a lot of people will say that its their entitlement, but there lies the problem.
Its definitely NOT cheaper to have retired people sucking on the public tit.
People need to be more self reliant and should only need welfare in the most dire of circumstances.
I don't mean to be rude, but obviously my children have had a different upbringing and the thought of not being self reliant goes against the grain. My youngest is 25 yrs and has just purchased her first home, now a qualified architect and saves every $$$ she can to repay more than her loan repayment.
My kids are definitely NOT " little spendthrifts would rather have folding stuff for smashed avos now."
I was being a little facetious about my poor children, humour and irony not your cup of tea obviously.
In truth I would like them to have as much fun as possible while they are young, they are too serious in my view.
You seem to be assuming that I was talking about the tax I would be paying on the income I am earning from my investments now. Although it isn't that far off. No, I am talking about the sum total of concessions on contributions, and compounded earnings on those concessions[which otherwise would have been in taxed at my marginal rate] over 40 years. So a 20k contribution left me with 17k to invest, rather than 10k, and the earnings on that 17k investment were taxed at 15%, instead of 50%. This is money foregone by the government.
What would my net worth be, if I had not had available to me the tax concessions that super provided?
Keep in mind, for virtually all of my working life until I semi retired , admittedly at an early age, I was in the highest marginal tax bracket.
So, lets say my wife and I live 20 years on an aged pension, so the government pays us 700k pension over that time.
I promise you, the concessions I have had , have increased my net wealth by a larger amount than that.
And that doesn't take into account the concessions on taxation that I continue to look forward to.
Just as an example to illustrate the point lets assume 3.2mill in a couples pension account, 5% drawdown , 80 k each , no tax.
Tax on 80k normally 17.5k by 2 = 35k. Oops, pretty close to the pension already.
But it gets better, the 3.2mill fund is actually earning 7.5%, so the net worth is going up by another 80k per year, again tax free.
If that wasn't receiving concessional treatment, then about another 29k tax.
Now this is an example at the top end, but work your way down the numbers.
The government is foregoing tax now with its concessions, much greater than a pension would cost.
And would have foregone even greater amounts during the contribution and accumulation phase for this couple.
As far as being rude, your talent for it, far exceeds your ability to work with numbers.
So goodbye.
