There is a common refrain we hear from our clients when planning for retirement. Many of our recommended strategies are designed to take advantage of tax breaks available to people leading up to and into retirement, and many of these involve our superannuation system. The question we get asked is; but what if the government changes the rules again?
The first point to make here is that we know that this is definitely going to happen. In an ideal world, superannuation legislation wouldn’t be played around with during every election term. If we knew what the rules were going to be we could all have a lot more confidence about saving for retirement. It would also be a lot easier for the average person to keep a track of what the rules are! However, we live in the real world, and I think it’s safe to say that it’s not a matter of wondering if there will be further changes; in my mind this is basically a given. The rules around superannuation have had a huge amount of changes to date, and will probably continue to change in the future.
So it’s not a matter of if, but when and what the new changes during the next couple of years will be. Given that we don’t even know who will be in government in a few years, and even our political parties don’t know what changes they would likely make, we have no idea what these changes will be. As I’ve said previously, worrying about these things we can’t change is like a rocking chair. It gives us something to do but doesn’t get us anywhere. If we’re going to be using our time and energy thinking about saving for retirement, we want to make sure we’re focusing on the things we can control.
Given rising life expectancies, and the sheer number of people reaching retirement age and living for a significant amount of time, I don’t think even the most optimistic person would argue that our current Centrelink Age Pension system is going to continue to be sustainable forever. Regardless of what government is in power, and what rules they set, they will always still want us to be self-funded retirees.
Any changes to the rules aren’t going to change this underlying fact. As such, there is always going to be some incentive available to people saving for retirement, we just don’t necessarily know the specifics. What we can do though, is to come up with the best plan with what we know now, and be ready to change this plan as soon as things change, and there is a more efficient way to grow our retirement savings.
One thing is for sure; the outcomes we get from making changes now, and having an adaptable plan, are definitely going to be better than not having a plan at all.
Written by Dallas Davison.
Dallas Davison, Michael Hogue and Ali Hogue.