Retirement becoming a 'pipe dream'
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What issues will get your vote?
Gen-Y is waiting with baited breath; will any party finally broach the issue of superannuation in these elections?
The longer politicians play chicken with this issue the bigger it becomes. Retirement is fast becoming a pipe dream for anyone under 40.
I would love to have a government-funded pension from the age of 65, but I know it is unsustainable in the current form and I expect I will be funding it myself.
Whenever this is discussed you hear cries from the baby boomers: "I have paid taxes toward my retirement my whole life", "The retirement age used to be 60, I have had to work five extra years", and of course "We had our retirement fund until Muldoon stole it". Perhaps if some of these boomers took on board some figures they would be more inclined to support a raise in the retirement age.
The current Super rates range between $274 and $357 per person. Given the average life expectancy of 87.4 years for baby boomers an average contribution of between $320,000 and $416,000 in taxes above other government costs would be needed to make this system sustainable.
This is the equivalent to between $123 and $160 per week, every week, between the ages of 15 and 65.
Unfortunately the current average income tax paid by those of working age is just $119.30 per week.
It may be too late to tell the boomers to fund their own retirement, but without an immediate action plan, we will soon be looking at empty coffers
I, like many of Generation Y (and X) expect that our Kiwisaver funds will be our main source of retirement income.
Others in these generations however need to be told now what to expect so that they can plan accordingly.
My advice to Gen Y is to join Kiwisaver and contribute as much as you are able to. Superannuation as we know it will not be there for those under 40, so start planning now.
Total contribution amounts, $320,000 and $416,000:
Average income tax: