Credit Cards and personal loans are a large factor in predicting whether or not you will be pensioner. If you have a credit card with a balance and you can’t pay it off in full at the end of the month this is a strong indicator you will become a pensioner. Iif you can’t afford to make ends meet now how are you going to make ends meet on $671.90/fortnight for a single and $506.50/fortnight per person in a couple?
There is Hope
Credit Cards and personal loans are big predictors because it means a) you’re not actively working on your retirement and b) you’re living beyond your means. Once you’ve realized there’s a problem you can start doing something about it. The first thing you need to do is NOT start saving. The first thing you need to do is get debt free as quickly as possible. Debt consolidation, mortgage refinancing and debt agreements are all strategies to accelerate debt repayment (more information on these is in the debt solution section). You need to do something quickly though. Wait 5 years and over 30 years it may cost you more than $100,000.00.
How much do you need to avoid being on the pension?
To have an purchasing power equal to the average Australian and you were retiring this year you need $1,100,000,00 invested. Not including your house.
Below is a table of what you need invested to retire on $50,000.00/year.
| Years From Retirement |
Amount needed to be Invested at Retirement |
| 0 |
$1,100,000.00 |
| 10 |
$1,493,240.42 |
| 20 |
$2,006,790.26 |
| 30 |
$2,696,958.30 |
Obviously if you want to retire on less you need less. If you want to live on $25,000.00 you only need $500,000.00 invested.
How am I going to get that Much Money?
To start with you’re not going to get that much money by putting it in a bank. There is generally considered to be two asset classes Stocks and Property which you’ll need to invest in. Everything else is a combination of these. Your Super Annuation Fund invests in stocks and property on your behalf. You will need to make regular weekly investments in order to accumulate wealth. If you’re interested in learning about wealth accumulation a good start is Noel Whittaker’s book, “Making Money made Simple”, is essential reading and has been for the last 20 years.
Why you REALLY don’t want to be on a pension?
Currently there are 17 pensioners per 100 workers. By 2050 there will be 33 pensioners per 100 workers. Health care currently 9.1% of GDP, by 2050 it will be 21%. To maintain the current pension rate income tax will have to increase by 31% which can’t happen. If real wages go down my 30% people won’t be able to afford housing or consumables which will ruin the economy. The only options is that provision of health care and the pension will decrease substantially, by more than 50% if current tax rates are to be maintained, which is likely considering Australia is THE highest taxed nation on earth or taxes will have to increase by more than 31%. So if you’re struggling to make ends meet now how are you going to make ends meet on $335.95/fortnight for a single and $253.25/fortnight per person in a couple?
Zombie Debt
Occasionally we come across zombie debts, or debts that have come back from the dead. These zombie debts frequently incurred during early life come back to haunt you in latter life, generally when you’re in a much different position (wanting to settle down, get married, buy a house, have kids)
Sometimes our clients have got a debt consolidation loan and have paid out their debts but haven’t closed the accounts. These accounts start to accrue fees and charges, mainly through having direct debits dishonouring repeatedly on these accounts. With no payments penalty interest rates kick in and the balance of the zombie debts grows.
The second way zombie debts occur is when a creditor might sell, or “charge off” its overdue debts to a debt collector who starts fresh collection activity. This might happen years after you thought it was dead and gone. Suddenly 10 years latter you’re getting calls, letters and legal action.
There is a statute of limitations on debt is 6 years. So if you haven’t heard from your creditors for 6 CONTINUOUS years the debts is gone. However if you didn’t update your contact details with that creditor the statute of limitations doesn’t apply. The statute of limitations is 12 years if the creditors have successfully obtained a judgement for the debt.
Zombie debts don’t go away unless you pay them. Just like zombies keep coming back to life in horror films to make sure their dead CLOSE THE ACCOUNTS!