The Callaghan report – what does this mean for me?
If you’re thinking about retiring now or later, this report may mean something to your life and lifestyle requirements.
Mike Callaghan, AM PSM, an Economic consultant, provided his report “The Retirement Income Review; The Callaghan Report’ https://treasury.gov.au/publication/p2020-100554 on the retirement system to Josh Frydenberg MP in July 2020; released to the public in November.
Previous governments had avoided taking on a review of the super system, due to the fact that it might make a lot of negative publicity!
Mike Callaghan, and his committee, took ten months to look into the current retirement system; worth $3trillion! to find out whether Australia could enjoy a ‘comfortable’ retirement.
He found that –
Without employers paying the super percentage they are to employees, we would not be able to at least have a ‘comfortable’ retirement. The government is looking at raising the percentage employers pay to their employees in the next few years. It currently stands at 9.5% of gross earnings.
Owning your own home when you retire is key to your future support. It also allows you to earn extra income and draw down on the home equity.
Too many retirees are said to spend less in their retirement, as they are worried about how long they will live and what their needs will be and the cost of those needs. Some want to leave funds for their children.
Dipping into super savings is appropriate if people then can avoid a lower income leading to a lower standard of living.
Mike Callaghan did not make any formal recommendations, but some of his controversial findings may lead to many discussions on some big anticipated changes to the way we invest and save for our retirement.
Interesting facts from the Retirement Income Review –
The median age of 1st home buyers was 24 yrs in 1981 and now is 33 yrs in 2020.
76% of people over 65 years of age own their own home.
11,000 people have more than $5 million in their super account.
$30 billion, OMG! of fees are paid by members to the super industry A YEAR!
Whilst you may not feel old enough to worry about your future now, this may be a reason for one the super systems biggest problems; the mentality of people living in the now!
So, do your bit for you and your super savings account and make sure that your fees are low (say 1% or lower would be great!) and that you are not contributing too much to that $30 billion of fees charged to super fund holders – that is YOU!
I just have to add this quote I heard from Paul Keating, “nothing beats self-provision” and a quote from me, “nothing beats self-preservation!”
Start providing for and preserving your future today! Best wishes! Info sourced from: www.afr.com.au April 2021.