Mrs.PatsFanInVa

I'm no accountant and I have trouble understanding some of this stuff - but it looks like employers in Australia pay those things, too....in addition to the 9% Retirement Account monies.

Taxation in Australia - Wikipedia, the free encyclopedia

wistahpatsfan

Costs per person could be lower because of many factors, one of them being that Aussies live healthier lives generally speaking. Even their football players get that wearing pads and helmets lead to more injuries. These numbers are so different because the US and Australia are so different. I hear their water drains clockwise and they drive on the other side of the road. Those two factors alone could influence the differences in expenditures. Christmas in the middle of the summer though? That's wierd.

Thanks for the exercise in koalas and grizzlies though, 13!

edit: And how's their economy handling the burden of 890 foreign bases and feeding the world?

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scout

[QUOTE=patsfan13;3037074]About Socail Security Reform;

Australia vs. the United States: Two Charts that Tell You Everything You Need to Know about Social Security Reform - Daniel J. Mitchell - Townhall Finance Conservative Columnists and Financial Commentary - Page 1






[/QUOTE

After looking at these two charts, I conclude that this thread needs to be merged with Harry's 'For Smoking Pot' thread.

Patters

The article really doesn't seem to make any sense. Besides, Social Security is not a retirement system. It was introduced in the 1930s because the reality that a large number of people who counted on the market lost everything and we faced a huge social system. If Australia's economy should collapse, do they have a safety net? Social Security is a safety net, and probably provided a measure of comfort to those who retired in 2007-2009.

PatsFanInVa

Also Colonel Hogan

Real World

If I'm not mistaken, people have been warning of a pending real estate collapse in Australia. So buyer beware.


Meanwhile he whines to others about making it "personal". Pot, kettle....

Bingo. Not to mention they don't have tens of millions of red ink invaders flooding the country from their southern border. So, when you add it all up; 890 bases across the globe, 55% subsidizing the other 45%, 47% not paying any taxes, free trade agreements that do more favors for others than they do us here at home, tens of millions of red ink invaders from the 3rd world to pay for, corporate welfare with taxpayer money, bailouts as far as the eyes can see, and the fattest population on the planet, you can see why we don't look at good as we maybe should. But hey, everyone gets a trophy, so we're winners even when we lose.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

PatsFanInVa

Cousins,

(I stole that from DW Toys in the football forum... I don't know whether it's got some special meaning I don't get, but it seems so calm and familiar...)

Let's leave aside for the moment the obvious fact that some things will be different across countries, regardless of political choices, and think about retirement security in its own right, and the Australian solution, so far as we understand it.

It appears that you have social security. You also have a nationally mandated 9% savings contribution, and a nationally mandated 9% company match.

Here are a few thoughts:

1) In our parlance this would be an auto-enrolled 401(k) on steroids, with higher employer matches and a minimum floor that would have turned Americans green at first glance just a few years ago. Now, I think the need to save is more ingrained, so 13's suggestion that we emulate the somewhat more statist Australian solution may get more traction.

2) There is a coming retirement security crisis which we are all aware of. What we are seeing is the Australian realization that in the future, retirement will cost more, not less.

3) We have at this moment a number of remedies we could discuss. One comment here is that the Ozzies expect to "take the pressure off" their social security program over time by having the state mandate contributions to workplace savings.

4) It's the 21st century. We have a 20th century retirement system for some called pensions. It works very well if you have one. Employers complain that they cause balance sheet volatility, and rightists complain every time a corporation can't compete that it's because of their pensions (it's impossible that they're just not good at their jobs.)

5) We had a 20th century accidental reaction to pensions when 401(k) became available and widely adopted in the 80s. These were meant to make it easier to do personal savings through the workplace, and to incentivize savings, not to replace pensions. However, in large part, they have done so. People aren't starting large new defined benefit plans.

6) Unfortunately, to fund the same benefit for an individual through a 401(k), all-in, you end up paying nearly twice as much -- despite a regulatory environment that is much less onerous. Why?

6a) Pension funds get pros to invest for them and track their performance. It is important to the fund to get good performance out of their fund managers, because the better the growth, the less you have to pay in contributions to be fully funded (or close to it.) Pros are better at this than you.

6b) Pension funds can look at thousands of people, and have professional actuaries project their life-spans, in order to determine just how many payments of how many dollars per payment will be necessary on average. You, on the other hand, are an actuary with a population of one to project for, viz., you. An actuary with a population of one is also known as a clairvoyant.

6c) When pension funds invest money for a few thousand people, they get better deals on the fee if you divide it by the number of people in the plan. You may not blanch at a 1/2% fee, for example, but if your total year's growth from investments is, say, 7%, there goes 1/14th of the money you would have made -- i.e., your gains are 7% less than they otherwise would be. Depending on how frequently you pay one or another fee, and the size of the fee, you can eat up everything you make in your stellar transactions. Shmessy is better acquainted with this piece than I am. I'd be interested in hearing his take on it.

7) However, our pension system and 401(k) system are both completely voluntary, unlike the Australian example.

My conclusion is that we should make it easier to propose hybrid retirement plans in the U.S. They could put a little more skin in the game from the employee, and be more portable, from an employee's point of view. The traditional defined benefit plan comes from an era when you often stayed at the same company your whole career, and when everybody wanted you too. We want the security at the end, but we want companies to be nimble. There are ways to get there.

This approach would make it more possible to adopt a plan that's best for a given environment -- some may want better retention, and would want a more traditional plan (though right now that does not look likely.) Some may want a cash balance plan, in which employees have a contribution, and which could be easily ported to another employer, since there is a hypothetical account balance based on present-day assumptions (all the math is pre-done to do the handoff.) Some may want some other form of plan, like a pension equity plan or a floor offset plan, or something nobody's talking about yet.

What's clear is that a 401(k), for the average person, isn't going to significantly fund an average retirement.

Between the mid 90s and 2007, average retirement ages have grown by two years for both men and women. We already are working longer. These numbers will take a hit once they've crunched the data from the Recession. When you look at behavior of people 55+, their employment declined precipitously, and their unemployment only ticked up slightly. They just gave up and exited the workforce.

So there will be a notch in our "working longer" numbers, which also is not good.

What Australia seems to realize is that longevity gains are outpacing career length gains, and that you don't want an impoverished post-work cohort. That becomes the state's problem, and that becomes the taxpayer's problem. So they've enforced workplace savings, even while offering a robust safety net for those with least access to the "middle class" solution.

It's a good model, which deserves our attention.

Remember, we're talking averages. The average 401(k) balance is $75,000. The average balance for someone 55+ is $234,000. Try to retire at 65 and spend that down over 20 years, even in an era of high returns, and you will have a great deal of trouble replacing your pre-retirement income, even if you take a figure of 75% of pre-retirement income as your target, and even if you include your Social Security.

By the way, my e-trade baby friends, I really don't care about how much you claim to have saved. I'm interested in average cases. So please resist the urge to explain how smart you are and how dumb people have nobody to blame but themselves. That's great for the ego, but is not a policy position.

PFnV

DarrylS

Another factoid is that Australia spends 24 billion on military, while the US spends over 1 trillion dollars for defense..

The US has more private contractors than the whole Australian military..

So start from this POV..

Australia does have an illegal immigration problem, but that is due to brits and americans moving there and forgetting to leave..

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PatriotsReign

Why is it (my Andy Rooney) when people post stuff about how great the Aussie system is, all the lefties hit the "Like" button as if they actually do things "BETTER" even though the fact is, they don't?

Do they seriously over look the fact that America has millions more free-loaders in our system while the Aussies have so much pride, they all have jobs?

Then we have a joker trying to compare our defense budget to Australia's in a "1 to 1" comparison when it should be compared as a percent of GDP.

But when someone like you actually explains why Australia can do the things they do, no "Likes"!! Even though you're the only one who actually explained it truthfully....

Pretty sad RW.....

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PatsFanInVa

Hey look hey look I got a... CRAP! IRONIC LIKE!