Retirement Age to Change in Australia | 1965 Cutoff Date

[Ego]

The Australian government just announced they will introducing legislation to raise the retirement age to 70 for those born after 1965.

Note the cutoff date.

http://www.smh.com.au/federal-politics/ ... zr318.html

[jennypenny]

Damn, GenX screwed over again ...

[workathome]

I wont be surprised if everyone else follows soon.

[Chad]

I'm fine with them adjusting programs like social security (I assume Australia's program is at least related), but I wish they would spread the pain a little. Especially, since the ones being punished didn't cause this. Maybe make those over 60 wait an extra 6 months, over 55 wait an extra 12 months, over 50 wait an extra 18 months, etc.

[Riggerjack]

I'm all for it! Let's do it here too!
If you are depending on politicians for your retirement, perhaps working til 70 is the best option for you. While we are at it, cut benefits to safety net levels, and tie payroll taxes to payouts.

No more using payroll taxes as a regressive income tax.

Of course, politics being what they are, raising retirement age and tax rates are the only options they will choose.

[jacob]

It's not just Australia. Lots of governments, cities, and even companies are realizing that those promises that were cheap to make a few decades ago are too expensive now. The problem is in guessing the growth (or discount) rate wrong. This is doubly complicated if it depends on demographics if the children are made to keep the promises the parents made. In this case, the boomers promised that they kids would pay the parents retirement except the parents didn't have enough kids so now the kids must work longer. Obviously something that all parents can agree on.

I wonder why reducing SS is never on the table though. If I do the math then 13% times 40 years, I get 5.2 years. How on earth is that supposed to last for a full retirement? People either need to spend less, save more, retire later, or change the payout so that it's used on homeless shelters for the 70+ something who didn't save on their own.

This goes for the government plans as well as people's private plans.

[DutchGirl]

In The Netherlands this is happening as well. The pain is spread out a bit more, here. People currently retiring have to wait two more months to receive their pension (so currently it's at 65 years and 2 months), next year it'll be 65 years and 3 months, and the I believe it'll accelerate by two more months every year until it's at least 67 years of age. Some people currently complain of having to work for two more months. Well, boohoo. If you don't have enough savings to cover your own expenses for two months, then yeah, I guess you'll have to work two more months... Of course personally I don't plan to need to work until the official retirement age anyway!!

[7Wannabe5]

I was born in 1965 and I am planning (irrational optimist) to live to 98- boo-hoo.

Two possible solutions. Greatly expand immigration opportunities for youth from other countries or eventually merge age-based SS with disability-based SS. For most people, the thought of still having to work at 79 would be depressing but the thought of still being able to work at 79 would be cheering. It could become a sort of status symbol among the elderly to NOT qualify to collect because you are still in great shape.

[workathome]

The US "solution" is immigration, though when a large (majority?) part of this is low-income labor that qualifies for poverty-level assistance programs, I'm not sure how it's going to magically bail out social security... though it should help some business' profit margins at the expensive of higher wages for the locals. Again, we are left with the conclusion that, anyway you cut it, you can only depend on yourself and your ability to invest/save for the future.

Maybe though it could revamp the US industrial base? It seems like we're just trying to make it more like "the rest of the world" where labor is much cheaper, and class divisions are far more distinct and disparate. Maybe it will work for the economy as a whole, but those dependent on government-managed programs won't be living the middle-class lifestyle in the longrun.

[7Wannabe5]

Well, I live in a neighborhood loaded with techie degree grad students from China/Middle-East/Southeast-Asia so my perspective on immigrant earning potential might be more optimistic. Most I know would like to stay here after graduation even though they face a good deal of discrimination/racism in the workplace/society.

[workathome]

I don't think Asians face a lot of discrimination/racism, though it does fit the general bias or assumption in media. However, on median they have a higher incomes in the US than whites, hispanics, or blacks.

A focus on H-1B Visa type immigrants might still have some negative impact on middle-class wages a bit, or tech wages, but it could also help create a lot of new industry and make for more net taxpayers. Unemployment is really high right now - we need the industries to be created before there's lots of new jobs versus simply causing wage competition.

Also, you're also assuming that when a big chunk of high-income immigrant voters will be happy cleaning up the mess left by current nationals! They might decide to vote for huge cuts to Social Security vs. paying for big tax increases.

[Chad]

Immigration would be definitely helpful for the US. The most basic premise of the current economic models is a growing population. Yes, the H-1B type immigrants are better, but even the low skilled low income immigrants are very helpful with our economic model.

[workathome]

I agree, but not entirely sure the middle class it's be the prime beneficiaries. I don't think they will.

[steveo73]

I'm all for it! Let's do it here too!
If you are depending on politicians for your retirement, perhaps working til 70 is the best option for you. While we are at it, cut benefits to safety net levels, and tie payroll taxes to payouts.

No more using payroll taxes as a regressive income tax.

Of course, politics being what they are, raising retirement age and tax rates are the only options they will choose.

I don't think from an ethical point of view you should ever retire if you are dependent on social security or put better a hand out from someone who is working.

This change is not really an issue for me and I'm Australian. I need a certain amount of money in my retirement accounts and a certain amount of money not in retirement accounts.

I'd add that the government in Australia is also not asset testing any social security benefits. My parents have some friends who live in a $3 million house and are receiving the pension. They could sell the house and downgrade to a $1 million unit or house and live a luxurious life with no problems and they would be self funded. They would rather take the pension though.