Hello from australia

[weny]

this is my first post. i found this interesting forum via a link from reuters money. it looks relevant to my situation albeit there maybe some issues that may only be applicable to the us eg taxation rules etc. but some concerns will be universal.
i am in semi retirement with a view to having the best of both worlds.
there is an acute shortage of skilled/experienced staff here and so the idea of flexible type work situations are becoming the norm. rather than people purely evaluating if they have enough money to retire, they are also wondering if the retired lifestlye is what they truly want. i wonder if that is also common in the us?
of course having enough funds is important and how to structure. if we knew how long we had to live definitively it would make much easier.
regards weny

[Martha]

Welcome to the board! I wonder if flexible work situations will become more normal here, as baby boomers age. Right now it is the exception.

[Rich_by_the_Bay]

Weny, how does it work in Oz - do you have anything similar to social security, government pension, etc. or is it save-for-yourself? What is considered typical retirement age?

Welcome aboard. I'm glad you signed on.

[Coach]

Weny, welcome to the board! Although predominately US, we have a good number of non-US posters so I hope you'll feel at home.

Quote:

Originally Posted by weny ... rather than people purely evaluating if they have enough money to retire, they are also wondering if the retired lifestlye is what they truly want. i wonder if that is also common in the us?

I think this is a pretty common viewpoint in the US as well. Due to the nature of this board, a lot of those folks might not find us too interesting, so I suspect they are seriously under-represented here.

I'm glad you've joined us!

Coach

[Twinkle Toes]

Welcome Weny! I look forward to reading your posts.

[layla17]

Welcome to the forums Weny... it's great to meet you!

[mountaintosea]

Hello,
From what I've observed, people I have known, they retire and then return to the same work force but part time. I'm not sure if the reason is money or boredom or a little of both. It also seems after they work part time for a while longer they fade away (retire for good.)

[Sweetlip]

Quote:

Originally Posted by Rich_in_Tampa Weny, how does it work in Oz - do you have anything similar to social security, government pension, etc. or is it save-for-yourself? What is considered typical retirement age?

A federal government pension is available for men after age 65 and for women from 63 to 65 depending on when they were born. (This is a grandfathering provision - or should that be grandmothering? - because the pension used to be available to women from age 60.)

The pension is means tested though such that it tapers off reaching zero when a couple has assets not including their home of AUD$839 000. (That currently equates to USD$730 000.) There are other factors in the means testing but that figure exhibits the major hurdle to lots of people. The benefit of getting a part pension - even $1 per year - is in the health benefits that accompany the pension. (Trust me though - Australia's health funding arrangements are infinitely better than those in the USA)

Australia has long recognised the baby boom and longevity issues in relation to funding future retirement incomes and several years ago, a compulsory regime was introduced such that employers must lodge 7% of an employee's salary into a retirement fund for them. This came into being at the time in lieu of wage rises in a national wages negotiation with unions. We call such retirement funds "Superannuation" and now every working Aussie has at least some superannuation being put aside for them every pay day. The superannuation funds exist in a low tax environment and are very attractive for people to shovel money voluntarily into them as they get closer to retirement - so the government has set limits as to how much a person can contribute voluntarily each year.

That superannuation money is locked up until they reach a "preservation age" which varies according to their birth year but the earliest that it can be accessed is at age 55. At ages 55 - 60, tax s paid on withdrawals but with a tax rebate, it is possible to live very comfortably without paying any tax. At age 60, all withdrawals are tax free.

Drawing down on one's superannuation fund is typically done via an allocated pension in which the fund manager remits a monthly direct payment to the person's bank account. An allocated pension fund pays no tax. The minimum annual draw-down is set by legislation to be a minimum of 4% at age 55 and rises at later ages. There is no maximum drawdown limit in any year. Theoretically, someone could spend every cent of their retirement funding in their first year of retirement ate age 65 and then draw the govern pension. The government pension is liveable but only just.

There are a few variations to the theme. Australia has a skills shortage at the moment and the government is encouraging oldies to stay in the workforce, even if only part-time, by introducing a work-to-retirement transition scheme where at age 55, a person can start drawing down their accumulated superannuation to live on but have their salary paid directly into their superannuation fund ("salary sacrificed") thus incurring much lower tax rates.

Complicated, isn't it?

Australia's superannuation scheme is very good, though. You do need a financial planner to help you through the complexities though. BTW, since last July, the taxation arrangements are much simpler than they used to be.

[DangerMouse]

Welcome Weny and Sweetlip, glad to have another couple of fellow Aussies on board.

This skills shortage that the Australian goverment keeps bleating about, I would like to know where it is? I think the simple truth is so many of us head overseas as skilled workers are so poorly paid in Australia. The skills shortage seems to be in the areas of nurses and tradies rather than at higher levels. Until recently, personal taxes were ridiculously high in Oz.

Our pension scheme is a tad more transparent, however the allocated pension they are trying to steer everyone towards is along the annuities line. I'm not sure about the need to have a financial planner on your team to steer you through the complexities of superannuation, I think this is a bit of a con perpetuated by the financial planners to make people believe it is all too hard for them to understand thereby giving them an never ending stream of commission. I remember last time I was home I was reading in the Australian verison of Money magazine about one chap who required income of $120k a year to live on and the article was telling him he would need to have $5million saved to accomplish his goal. I think Australian tend to be less financially aware than our American counterparts, because saving for your future is a relatively new thing for Australians.

[Sweetlip]

Quote:

Originally Posted by DangerMouse Welcome Weny and Sweetlip, glad to have another couple of fellow Aussies on board.

Thanks Mate.

Quote:

Originally Posted by DangerMouse This skills shortage that the Australian goverment keeps bleating about, I would like to know where it is? I think the simple truth is so many of us head overseas as skilled workers are so poorly paid in Australia. The skills shortage seems to be in the areas of nurses and tradies rather than at higher levels.

That is exactly the case. My perspective is that Aussie governments of both persuasions have, for years, encouraged people to stay at school longer and to fund more university places for the sole purpose of short term reductions in unemployment statistics, and the benefit of this towards re-election.

I left school at 15 and did trade training and for the life of me, I don't understand why a kid has to stay at school until 17 or 18 to enter a trade. Worst still, trade training was made less popular in lieu of university courses
producing graduates in topics like movie making and other glamour soft options that attract gullible teenagers brought up on "Neighbours" or "Home and Away" but for whom negligible jobs exist for those qualifications.

I recall that universities liked cramming their halls with those low cost useless courses so that they would receive lots of government funding which could be used to fund more capital intensive courses like engineering or medicine.

The net result is that we have a glut of people with useless degrees who end up working in call centres, the battery hen factories of the millenium, and a shortage of people who know how to repack a wheel bearing on a low loader or change a tap washer.

BTW, although leaving school at 15, I subsequently studied for matriculation at night school and went on to get an engineering degree and an MBA but my sentiments remain about delaying youngsters earning a living by keeping them at school too long and educating them with useless degrees. This country needs some macro capacity planning of its skills base.

Quote:

Originally Posted by DangerMouse however the allocated pension they are trying to steer everyone towards is along the annuities line. I'm not sure about the need to have a financial planner on your team to steer you through the complexities of superannuation, I think this is a bit of a con perpetuated by the financial planners to make people believe it is all too hard for them to understand thereby giving them an never ending stream of commission.

I use a financial Planner who is tied to my industry (the best kind) superannuation fund thus I incur no incremental fees nor trailing commissions. However, when I retired at 56, and thinking that I was so very well read on superannuation matters, I was surprised at what he could do for me in relation to structuring my affairs so that even though I am below the tax free age of sixty, I am not paying any tax at all. My allocated pension gives me the minimum legislated 4% drawdown and I have to say that I could not spend that amount of money each year in a fit so I am recontributing most of it. His plan also awoke me to how I might structure things to improve the situation of my estate and that of my wife when we pass on and leave our bundle to the kids.

Having said that, I still make the decisions on my investments and indeed, I chose to ignore his advice on allocation mix at the time (June, 2007) because ( and you may not believe this!) I was concerned at how the easy credit flowing around the planet might cause the share market to tank. This is especially because the Aussie share market has ramped up unnaturally over the past four years and looks remarkably like what it did pre-1987. My concerns about world-wide easy credit had nothing to do with US sub-prime loans though. I had never heard of these at the time. My concern was about credit management in China. At this stage, my own gut feel on asset allocation has proved itself but nonetheless, my financial planner (not to be confused with "financial guru by any stretch of the imagination - after all, he is working for a salary, isn't he?!) has served me well, especially in understanding the nuances of taxation as applied to superannuation.

My real hope now is that the USA drops into recession quickly so that the world share markets can all tank and we can get it over and done with quickly and those of us holding lots of money in cash funds can reallocate that into a bottomed out share market. What I fear though is that the decline in the markets will be gradual over the next couple of years as the shakier companies, affected by the sub-prime mess, fall over one at a time when loans are due for refinancing etc. eg Centro in Australia which lost 70%+ of its value overnight last week.

[weny]

thank you for all your greetings and informative comments. it is comforting to think that others have similar concerns and interests.
the global economy is troubling at present. i have read of a fund called friends provident that has prevented people from withdrawing their finds for 6 months. it does not seem right that you can be stopped from getting your money, in a way losing control over it.
i wonder how common that is does anyone know?
there does seem to be lack of transparency re the level of debt that some companies are effected by and the contamination from the subprime situation is also hard to see. not many banks etc are giving much detail re their potential exposure.
we live in interesting times.

[Texas Proud]

Quote:

Originally Posted by weny thank you for all your greetings and informative comments. it is comforting to think that others have similar concerns and interests. the global economy is troubling at present. i have read of a fund called friends provident that has prevented people from withdrawing their finds for 6 months. it does not seem right that you can be stopped from getting your money, in a way losing control over it. i wonder how common that is does anyone know? there does seem to be lack of transparency re the level of debt that some companies are effected by and the contamination from the subprime situation is also hard to see. not many banks etc are giving much detail re their potential exposure. we live in interesting times.

The economy is 'alway' in some kind of crisis even though it keeps chugging along and growing year after year...

And everybody has lived in interesting times... it just seems more so than at others since it is 'now'.... but, my mom was a teenager in the Great Depression... she survived the slow market crash of the late 60s early 70s (as they had no money in it anyhow)... took a big hit during the 87 crash, but is still going strong at 88 YO..

So, don't sweat the current market as it will be the same for a very long time... some down, some up...

[Ed_The_Gypsy]

Quote:

there is an acute shortage of skilled/experienced staff here

In some areas, it seems so. I just found a nice posting for a job in Perth for an engineer in my line of work. The terms reminded me of ARAMCO in the old days. I wonder what the tax trap is.

[Sweetlip]

Quote:

Originally Posted by Ed_The_Gypsy In some areas, it seems so. I just found a nice posting for a job in Perth for an engineer in my line of work. The terms reminded me of ARAMCO in the old days. I wonder what the tax trap is.

Australia is having a massive mining boom at the moment fed by Chinese and Indian demand. Most demand is in the states of Western Australia and Queensland. Great fishing in both states. Western Australia is a big place - it has cattle ranches the size of England.

Tax rates are at .... Individual income tax rates I have no idea if special arrangements apply to foreign workers.

[Zipper]

Weny, I'm Canadian and spent 1978 in Inverloch on a teacher exchange.

At that time the $A was around $C1.38 but is around C$.90, thanks to all the oil we have in Alberta.

I have very fond memories of Australia and hope to visit again and see all "me mates" from long ago.

You will enjoy this site but the Americans don't see that Canada and Australia still have a very strong middle class. I think you are even more egaliterian than we are.

There are a lot of rich Americans but a great many more poor ones.

[Ed_The_Gypsy]

Thanks for the link, Sweetlip.

"Special arrangements" for foreign workers usually are "bleed them white."

At the tax rates in your link, I will net [a little] more here in Canada--and I pay at a higher rate than anyone in the province. ("Special arrangements", remember?)

I will speak to the frau about this assignment anyway. She might like the adventure.

Cheers!

[Zipper]

Ed, Perth has the best climate in the world.

[Sweetlip]

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Originally Posted by Ed_The_Gypsy I will speak to the frau about this assignment anyway. She might like the adventure.

Crikey! You can reassure her that we have indoor plumbing and electricity in our homes now.

[DangerMouse]

Quote:

Originally Posted by Ed_The_Gypsy Thanks for the link, Sweetlip. "Special arrangements" for foreign workers usually are "bleed them white." At the tax rates in your link, I will net [a little] more here in Canada--and I pay at a higher rate than anyone in the province. ("Special arrangements", remember?) I will speak to the frau about this assignment anyway. She might like the adventure. Cheers!

Ed, I think you can assure your wife that she could expect to live in civilisation. Most of these assignments involve the worker doing a FIFO rotation whilst the spouse suffers in civilisation. If you are serious I would look at something in Qld rather than WA as even thought WA is a lovely area it can be a bit isolating.