Another week and there’s another shot across the bow for anyone planning their retirement.
I should clarify that before I scare anyone close to retirement – it’s your kids who’ll really need to worry!
There have been a few media rumblings in the past week regarding a tough budget on the horizon and what potential implications there will be for the pension.
New figures from the International Monetary Fund estimate Australia’s pension and healthcare spending are going to bulge so much that they’ll require an extra $93 billion a year by 2030.
Joe Hockey was quoting these same figures last week when giving a speech in Washington.
Hockey also added the following warning, “this will inevitably have an impact on the affordability of healthcare, aged care, pensions and discounted services for older communities”.
These warnings are probably part of the process of softening us up for a dark budget.
When the previous government was in power they legislated to increase the pension age from 65 to 67 by 2023.
There’s been ongoing speculation the current government could increase the pension age to 70, though no mention on the timeframe.
As I mentioned last year, The Productivity Commission already recommended this change to the government in a report, so it would seem the pressure is building.
Other topics doing the rounds are greater means testing of the pension, including the family home in the assets test and increasing superannuation preservation age.
These might not happen immediately, but their mere mention should have anyone in their 30’s or 40’s reconsidering their retirement plans.
If the pension age increases along with superannuation preservation age, those wanting to retire early will need to build a bridge between their intended retirement age and when the government would like you to retire.
This may mean a reassessment of your budget and saving options to ensure you’re prepared for whatever governments will throw at you.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, www.mfg.com.au This information is general in nature and readers should seek professional advice specific to their circumstances. Looking to reach your goals with one of Australia’s highly rated financial advisors?
