Will I ever retire? This is the question on the minds of young Australia’s workforce, particularly those that are fluorescent-clad (previously known as blue-collar). One would not be hard pressed to find a 25-year-old fitter machinist daunted by the reality of working hard labour well into their 70s in order to maintain the delicate balance between contributors and recipients, which is set to be shaken to the limits as Australia ages.
SMSF (self-managed superannuation fund) is modern Australia’s favourite acronym. Even people that don’t know what SMSF means are presenting to their accountants and financial planners to have their own set up, and for a reasonable incentive. Between 2007 and 2012, six million Australians would have been better off keeping their super in cash than investing it as their fund manager had.
People were angry. Their dream of joining the grey nomads in trekking around the country in their own ‘Windy-bago’ had been delayed indefinitely. The fund managers were taken to the gallows as many Australians came to realise that they are likely one of the 84 per cent of us that will retire on less than $21,000 per annum. The demand for SMSFs subsequently increased.
Unfortunately, hindsight is always 20/20, whereas foresight is often blind. Even those that predicted the global financial crisis hadn’t predicted everything correctly beforehand or since the event. Predicting the future to one’s best ability is essentially the job description of every analyst, fund manager, planner, trader and salesperson in the investment world.
Hindsight is not something that young Australians have in abundance, which is one reason why eight out of ten SMSF holders are over the age of 45. With time in market and timing in market the sweet spot that Blue Wealth aims to achieve for every client, young Australia has a real opportunity to escape their future prospect of relying on social welfare upon retirement by taking control of the money that is to protect them when they are to be most vulnerable.
Current government policy should be a stern warning to us that we cannot continue to look to the future taxpayers to fund our complacency or poor decision making. The ‘lifters not leaners’ adage will demand that we take positive control of our financial futures in order to reduce our burden of ‘transfer payments’ on the generations to come.