According to Australian statistics, the average male aged 65 can expect to live until age 83. For females, it is age 86. (These statistics are extracted from the Australian Life Tables 2005-07). That might seem like a useful base upon which to plan for retirement. How much savings are needed before someone is able to retire depends on how much they need to meet living expenses and how long they are going to live. Predicting living expenses is a lot easier than predicting your remaining lifespan, but you have to start somewhere.
Author: AustralianActuary
Twisting the language of tax for political gain
George Orwell wrote of the importance of language as a political tool. Language could be used to manipulate the way people think.
Today’s example of manipulative language comes from the world of superannuation tax. Apparently, using the language of the politically motivated, high income earners in Australia receive greater superannuation tax concessions than do low to middle income earners. Consequently, reform is needed to make the system fairer and levy a higher rate of tax on the superannuation contributions of the high income earners.
Right risking an investment portfolio
Generally, reduced exposure to equities, in favour of bonds, will reduce the expected long-term return of an investment portfolio. However, the variation of short-term returns will also be reduced. This is a means of risk control, but an overall reduction in investment return, will result in higher cash contributions from the employer sponsor of a defined benefit (DB) pension plan. Is the trade-off worthwhile? How is the trade-off quantified?
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The difference between DB and DC superannuation plans
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In the world of private sector pensions, how often have you heard that defined benefit (DB) plans are different from defined contribution (DC) plans? How often is the difference explained by risk acceptance: in a DB scheme the employer bears the risk (of investment losses, mortality improvements etc) and in a DC scheme the employee bears the risk? |
Sleepwalking to retirement
Every day, Australians get up, go to work, cope with the stresses and strains, get home, deal with family affairs, pay bills, relax just a bit and then sink into bed as the winds of sleep arrive from the field of dreams. Then they repeat the cycle the next day. How many of those people have any reasonable idea of how they will fund their retirement, where the money will come from, where it will go, how much will they need and how much should they save now towards that funding? Not many.
Stockmarkets, currencies, bond yields
Strengthening US dollar, rising stock markets and falling bond yields. Two out of those three don’t make any sense at all. It won’t last.
Tax Forum
Last week’s tax forum in Canberra did not actually achieve much, other than general agreement that the tax system could be improved. However, one snippet: the assistant treasurer was reported as saying that the tax applied to superannuation income streams and annuities in particular needs review. This would be a welcome review.
What does watching TV do to your expectation of life?
Research published in the British Journal of Sports Medicine in August 2011 has linked watching TV with reduced life expectancy.
The future of publishing
It may be considered by some to be impertinent posting my first blog about the future of publishing. For some time the traditional means of publishing, the newspapers and to a lesser extent free to air television, have been worrying about the viability of what has been a well-established business model. Social media, an internet connection and blogging have led some to think that the future of publishing as we knew it, is bleak indeed.
Australian Actuary 