Smart Investing
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The Chinese calendar says this is the year of the dragon. Less auspicious perhaps but for Australian investors this is shaping up as the year of fixed income.
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By taking a few simple steps, super fund members can both boost their retirement savings and legally minimise tax on their super – for themselves and their beneficiaries.
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Self-managed super funds seem set to remain by far the preferred superannuation choice among higher-balance members – particularly those in retirement.
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This is a question that many investors are, not surprisingly, asking themselves. But what might surprise some investors is that the answer is not as elusive as it may at first seem.
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Changes to the ASX operating rules to allow fixed income Exchange Traded Funds (ETFs) to trade on the Australian market will open a new means for investors to efficiently, conveniently and inexpensively diversify their investment portfolios.
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News & Commentary
World champion retirees 01 Mar 10
Australia is high in world rankings when it comes to the length of time that we typically spend as retirees.
Particularly given the extreme inadequacy of our retirement savings, it is not a title to hold with pride.
Australian males will spend much longer in retirement than the OECD average –with some exceptions including France.
This is due to a combination of factors: our propensity to retire long before pension age and one of the world''s longest life expectancies.
It is a challenging combination for most Australians in terms of providing for retirement.
Latest-available OECD statistics show that the average number of years spent in retirement for member countries is almost 23 years for women and 17.5 years for men.
Australia''s average retirement age is 60 – up from 58 in 2007. And the Mercer consultancy group calculates that the life expectancy of a 65-year-old is 20.9 years in Australia is men and 24.3 years for women.
The latest saga in the world-wide phenomena of a shrinking working population and a rapidly expanding retirement population with longer life spans occurred in Spain late in February. Protests took place in Madrid Barcelona and Valencia as the Spanish Government passed draft legislation to increase the retirement age from 65 to 67.
A recent article in The Economist – headed Golden Years – commented: 'Spaniards should spare a thought for the previous generation; those who became pensioners [at 65] in 1970 could expect to survive for less than a decade.'
But according to OECD/The Economist statistics, Spanish pensioners who retire today at 65 can expect to live for more than 20 years – twice as long as just a few years ago.
The postponing of retirement, if possible, can provide Australians with a valuable means to stretch much-needed retirement savings. Perhaps the dream of an early retirement, once held by many people, will lose its lustre.
On February 15, Smart Investing looked at what has been termed the ''silver tsunami'' of retiring baby boomers.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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