Do they have retirement done right in the land down under?

I keep reading that people are using 401k’s to cover the gap for everyday living expenses during this period of high inflation. Retirement in the United States is a complex subject. Tax time is an opportune time to review your retirement accounts, but have you seen the list of how many types of retirement accounts the IRS has now? Here is a list of some of the accounts I manage designated for retirement:

• 401K
• 401A
• 457B
• Traditional and SEP IRA’s
• Roth Accounts
• Cash Balance Defined Benefit Plans

It’s an IRS section soup with rules and thresholds for each, etc. Each one has specific advantages that when utilized effectively, can go a long way in providing sustainable retirement. Complexity typically leads to failure to act though. That’s not good. In addition to the complexity of the retirement accounts, we also have a Social Security funding problem on the horizon. I’d like to point you to the Australia’s Retirement Plan.

First the Superannuation Guarantee or “Super” for short: (I used Chat GPT for the below)

Australia has a mandatory retirement savings system called the Superannuation Guarantee (SG). Under this system, employers are required to contribute a minimum of 10% of an employee’s earnings into a superannuation fund. Employees can also make voluntary contributions to their fund.

The funds are managed by private sector companies and are regulated by the Australian Prudential Regulation Authority (APRA). There are a variety of superannuation funds available, including industry funds, retail funds, and self-managed super funds.

Industry funds are run by unions or employer associations and are typically low-cost. Retail funds are run by financial institutions and offer a range of investment options.

Self-managed super funds (SMSFs) are managed by individuals and have strict compliance requirements.

The funds invest in a range of assets, including shares, property, and fixed income securities. The aim is to provide retirement income for members, which can be received either as a lump sum or as regular payments.

Superannuation funds are an important part of Australia’s retirement income system and are designed to provide financial security for retirees.

In addition to the Superannuation Guarantee, the Australian government offers a range of retirement income support measures to help people save for retirement and provide financial security in their later years. These measures include:

1. Age Pension: This is a means-tested payment that provides a safety net for people who have not accumulated enough retirement savings. To be eligible, individuals must meet age and residency requirements, as well as income and assets tests.
2. Superannuation co-contributions: This is a government scheme that provides low and middle-income earners with a matching contribution of up to $500 per year when they make voluntary contributions to their superannuation fund.
3. Superannuation tax concessions: The government provides tax incentives to encourage people to save for retirement. These include concessional tax rates on contributions and investment earnings within superannuation funds.
4. Retirement income stream products: The government has introduced measures to encourage the development of innovative retirement income stream products, such as annuities and pooled lifetime retirement income streams, to help retirees manage their income in retirement.
5. Financial advice and education: The government provides support for financial advice and education to help people make informed decisions about their retirement savings.

Overall, the Australian retirement income system is designed to provide a range of options and support to help Australians save for retirement and enjoy financial security in their later years.

Financial planners in Australia have told me about this for years. It makes you think …