Comment by hackits | Hacker News Reader

Comment by hackits | Hacker News Reader

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I'm from Australia and here is my pet hate.

Over here we have compulsory Superannuation Funds where 9-10% of your salary is deposited into your superannuation fund of your choice. Although you cannot access the superannuation fund until you turn 80, and this figure keeps getting pushed back. The business tax rate is 30%, and also employee tax rate for me is 25-27% of my income goes into income tax.

We get shoved down our throat's that we shouldn't be a burden on the tax payer, and will have to provide for our own retirement using our own superannuation funds. Well at the same time being faced with the following situation.

27% of the wages go into tax. 9% of the wages go into superannuation fund for retirement. 2% is the medicare levy that you have to pay per year. 5% or $70 per week for Private Health insurance or you get health insurance loading after 30 years old that accumulates 2% per year.

Then we're faced with a situation where housing is 8-9 times medium income in this country.

So in summary, you're faced with indirect costs to about 43% of your gross income. So take my situation for example 85000+(85000*0.09) gross income the take home at the end of the year is 52,810.5.

Considering a house is now 8-9 medium income, this comes to $680,000 for a average 3 bedroom house. Using a full time income to pay that mortgage @ 4.5% PA ($96 going to fees and associated council rates) weekly repayment of $919 this will take ~ 23 years to pay the mortgage off with the total cost of the loan being $1,086,386, and total interest payable. $406,386.

So fast forward, forward 23 years I'm 58 with $175,950 in the super fund. Assuming a 3% growth of the value of the house, it would be now worth $1,382,299.

The only realistic option for the remainder is to save for the next 20 years until I can access the superannuation (if its around)

$344,250 in super payments $1,284,081 in savings, $2,496,588 house value at the time of retirement and medium wage would be ($277,398)

So what does this say about the Australian economy? Well everyone is banking their house will pay for their retirement that they would draw down on in later years. If by any chance house prices go through a major correction here the whole system will be thrown into a massive shit storm.

>Although you cannot access the superannuation fund until you turn 80

This is incorrect. You can access your super from 65 no matter what. You can also access it earlier under some specific circumstances.

https://www.ato.gov.au/individuals/super/accessing-your-supe...

That will probably be pushed back when the baby boomers start retiring and the super funds come under pressure with more people withdrawing than members contributing.

This is kind of a pet hate I have. Super funds only make sense when you have more people paying into them than withdrawing. Super funds being a business still need to make a profit to pay investors, wages, brokers, and building associated costs and lawyers. That is kind of the reason why I have my own self managed super fund under my wife and my name that that we purchase government bonds.

It's not perfect by any measure, but its a small price to pay to know that we don't need to pulled over the coals when the whole thing falls in on itself.

>Super funds only make sense when you have more people paying into them than withdrawing.

It feels a bit like you might be confusing the difference between a pension fund and a super fund. A super fund only pays out to you what you put in (plus hopefully profits from having your money invested). Provided the fees they charge cover the fund's running costs it doesn't matter if there are more people withdrawing than paying in. You only get your own money back, they aren't a ponzi scheme where old investors are paid out with money from new investors.

>Super funds being a business still need to make a profit to pay investors, wages, brokers, and building associated costs and lawyers

You might want to research some low cost funds. There are lots but as a starting point https://www.ingdirect.com.au/rates-and-fees/superannuation-f... This sort of thing will likely cost you much less than whatever you accountant is charging you to oversee your self managed fund.

You also use to be able to access it all when your renounced your citizenship. But not anymore, which means I have paid all that out over 12 years and can't do anything with it until I'm 65. It won't grow for me, as I don't pay taxes or superannuation in Australia anymore.

When the company I was working for transitioned to the Czech Republic, they wanted to convert our pay over to the Czech koruna 1-1 conversion (laughter). At the time all the CEO/CIO where all getting paid in Euro's. They made it out so easy that we could easily get our super/retirement money from the Czech government when we retired. Granted nothing against the Czech people (love ya) but trying to keep track of a super fund in another country when you don't speak the native language (HA) would be more time than its worth.

Bumped into the CEO/CIO after I departed a couple of years and they offered the position again but agreed that they would never see their retirement fund from the Czech system.

>It won't grow for me

It will depend on your specific fund but the funds already in there should be invested in some way. If they aren't doing a terrible job the money will grow even without you putting more in.

This is so on point.

The entire economy seems to be driven by housing in Australia.

Its a massive ponzi scheme with developers making the big bucks and the tax system geared to assist investors at the expense of first home buyers.

If housing crashes there will be a lot of very angry people in this country. Developers and governments need to wake up.

Wait until the May 2017 budget. The government may announce co-payment or tax incentive to keep the system going. For my situation I will jump and purchase a new house if I can deduct interest repayment from my taxable income. It would level the playing field where as a investor you can deduct interest repayments from their taxable income but as a owner occupier you cant.

I get a bit emotional about this because I went got a CS degree in 2000 and my colleagues quit high school at year 10, and purchase a house in 1998 for $80,000 and in 10 years time that same house was now worth $450,000. In that time they've leverage themselves with 2-3 investment properties. They pay less tax than I do and simply because they got in before the massive housing boom.

Yes I'm pissed about the whole situation.

Turns out the May 2017 budget has been announced and the headlines are:

`The federal government has given the go-ahead for a scheme in which the private sector would be given access to cheap capital in return for building more community housing.`

So no alteration to stamp duty, negative gearing, or capital gains tax discount.

Oh well....

Is there a good list of names being kept?

"If" housing crashes? There is no "if". It is always a matter of "when".

You don't know Australian psyche that housing double's in price every 7 years and the safest investment you can ever make and you will never lose money.

Idiotic, illogical, but that's the country I live in.

I'm living in a bubble too where people's memory of the mid 1990s when things went to shit, and the mid 1980s when things when to shit, and the 1970s when things went to shit are gone.

The US had a wake-up call in 2008 that a lot of countries missed. Canada snoozed right through that and went on trucking like we'll never have to deal with a downturn.

That's why creaky, practically condemned houses are selling for over $1M: http://www.theglobeandmail.com/real-estate/toronto/a-million... It's "detached" so it's obviously worth a million bucks since that's the average price of these things now.

What if that house goes for $2M? $5M? $20M? The bubble must give out at some point. Those prices will not keep going up forever.

What do you mean it had a wake-up call in 2008? Looking at the data its surpassed 2008 prior levels!

https://mhanson.com/2-1-hanson-house-prices-main-street-bubb...

It's like the world collectively said `Yeah this is bad, lets do exactly the same thing but BIGGER!`

Tech securities and real-estate prices have been pretty bonkers lately. If those two things implode something else will bubble up instead.

It's like there's too much money in the world or something. This is like trying to get rid of a big bubble in a waterbed. Once you think you've jiggled it out of existence it just comes up somewhere else.

btw the prior comment was a bit of sarcasm. I sometimes wonder about the bubble prices and just conclude there is something else going on in the macro level that I'm un-aware off. A lot of the fundermental concepts such as supply and demand for housing has been de-coupled so you have low demand but still prices remain high in some parts of the country.

I do think that at a fundermental level it just shows a complete lack of governance of politicians why is it is this bubble so super focused on a critical part of our life style and that is housing. Why isn't it focused at other area's of the market place such as health, medical, entertainment?

We have growing families in single bedroom apartments unable to afford a house for their growing families, well at the same time retires who live in a empty house or investors who have a empty unit's sitting vacant all year round.

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