When did I say increased lonjevity was a bad thing? Making things up Peter?
Funny I thought that you said this -
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So a boomer lives longer than they expected, by perhaps 10 yaers, and spends all of their wealth on aged care. Nothing is left to pass on to Gen X. Miw, you totally igone the increase in lonjevity and the boomers who are in denial of it.
It certainly doesn't sound as though you are happy that boomers are going to live longer than previous generations, and by extension you will naturally be unhappy that Gen X and Y will live even longer.
Any expressed market opinion is my own and is not to be taken as financial advice
It certainly doesn't sound as though you are happy that boomers are going to live longer than previous generations, and by extension you will naturally be unhappy that Gen X and Y will live even longer.
If you conclude that what I said means that increased lonjevity is a bad thing, then so be it. Either your comprehension skills are lacking or perhaps you are projecting?
"The latest ABS data reports the life expectancy at birth for a male as 79 and a female as 8416. these figures are reported in the media and most Australian retirees base their views on how long they will live on this information. the more realistic predicted scenario is much more dramatic. After allowing for mortality improvements on a cohort basis (refer to Appendix A), it’s estimated that retirees aged 65 now (i.e. in 2010) will live until 86 for men and 89 for women. So rather than living 14 years after age 65, men are expected to live 21 years i.e. 50% longer! Similarly women will be living 26% longer! By 2050 the average life expectancy for people aged 65 is projected to have improved to 92 for men and 93 for women." Edited by ThePauk, 2 minutes ago.
So a boomer lives longer than they expected, by perhaps 10 yaers, and spends all of their wealth on aged care. Nothing is left to pass on to Gen X. Miw, you totally igone the increase in lonjevity and the boomers who are in denial of it.
Those aged care fees don't go up in a puff of smoke. They pay wages of the younger generations to care for the aged, doctors, rent and possibly a dividend to shareholders of the aged care facility (also, sparking innovation in medical products fields and bingo technology).
I'm not a person that subscribes to the view that a house is a non-productive asset but if I were, I'd be cheering houses being turned into aged care fees as being a reversal unlocking the non-productive asset for a bunch of productive uses.
Yes I would. Assets are only worth what people will pay for them. Nothing drives asset prices down like people not being able to afford to pay for them.
My point is that people can afford to pay for them but what benefits one group is making it ever harder for another - I can easily afford to pay for a $500 000 home on a fairly modest salary simply because I can flog my existing home bought close to 15 years ago (probably to an investor) and have lots of equity, notwithstanding this might be getting tougher here in Gladstone now. And because interest rates have been driven down close to effective zero to allow prices to continue to inflate. In doing so I would have improved my material circumstances or improved my financial circumstances if it was a second home rather than my PPOR but in doing so, inflated the price of an existing house by hundreds of percent. How did that benefit the new young couple looking merely for an affordable roof overhead? Now multiply that by the hundreds of thousands or millions and tell me how one particular group did not benefit today at the expense of the next lot coming along?
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If incomes don't rise, neither will house prices.
miw, I don't see the point you're trying to make - house prices have been rising ahead of typical incomes for years, made possible by the points mentioned above.
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For example, the Germans seem to prefer to rent. Does that mean the housing situation is dire in Germany?
For starters, there is a cultural divide between Australia and Germany and this is reflected in the very much stronger rights held by rental tenants - not really that far short of actually owning.
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When the boomers pass on, GenX will own the lion's share of the assets,
miw, the whole idea is to flog such assets for the maximum amount possible when you retire so as to allow the most comfortable retirement possible. Nothing inherintly wrong with that. But in doing so, the price of housing becomes inflated for those coming along. London to a brick says that when retirees say they expect to leave lots to their children, they mean they expect to sell houses for motza and therefore have plenty of financial assets to leave the kids - except that the collective effect of what they are doing means that by the time they are about ready to drop off the perch, whatever is left will probably be flat out being a deposit on a house because because they drove up the price in order to get those financial assets in the first place.
Note that I am not arguing maliciousness - merely pointing out that just because I benefit from doing something, it does not necessarily follow that everyone benefits when large numbers of people all seek to do likewise.
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It is just not possible for dead people to own assets.
I am not arguing that it is - but it is most certainly possible for their actions taken while they are still alive to have consequences for others in the future. I'm really struggling to understand why you don't seem to believe this plain light of day reality is factual and happening right now. They can't take a house with them when they die but they can certainly cause it to become dramatically more expensive for the next generation while they are still alive.
Investors know this is a fact otherwise they wouldn't bloodywell invest! An investment is a worthless investment if the price does not grow ahead of inflation while it is being held.
Everything is screaming out that these are facts - just look at the enormous ballooning of the houshold debt-to-income ratio, most of whiach is mortgage debt.
Just look at the growth in investors as a percentage of buyers - you tell me they arent benefitting over first timers?
I'm really struggling to understand your veiwpoint.
Those aged care fees don't go up in a puff of smoke. They pay wages of the younger generations to care for the aged, doctors, rent and possibly a dividend to shareholders of the aged care facility (also, sparking innovation in medical products fields and bingo technology).
I'm not a person that subscribes to the view that a house is a non-productive asset but if I were, I'd be cheering houses being turned into aged care fees as being a reversal unlocking the non-productive asset for a bunch of productive uses.
Potentially leading up to, but certainly on death, a person's 'wealth' (which to me is at least in part, just a measure of the diff between their proclivity to produce and their proclivity to consume throughout life) certainly gets distributed to others.
There are those who feel that by default at least, that 'wealth' most naturally and rightfully 'should' continue to belong to the family of the person who acquired it; And 'should' by and large be distributed amongst the surviving members of that family - If that should happen to be the wish/choice of the person who acquired the wealth. Then there are those who are convinced that they could distribute it more 'fairly', and/or in some 'better' fashion; And believe that as such, they 'should' just naturally and rightfully be entitled to do so.
Then there are those who are convinced that they could distribute it more 'fairly', and/or in some 'better' fashion; And believe that as such, they 'should' be entitled to do so.
There is a good argument for a better distribution of wealth in our society with a huge proportion of wealth being accumulated by just the highest 1% of our society, but grandma in her house collecting the aged pension is not a member of that 1%.
Lets keep some perspective here.
Some in their blind fury and naked ambition to own a house but not work for it get the percentiles quite mixed up.
Any expressed market opinion is my own and is not to be taken as financial advice
But your argument seems to boil down to "it is impossible for one group to benefit today at the expense of another in the future". This is nonsense miw - it's been happening right in front of us and is continuing to do so.
The only way it is possible is through the consumption of natural resources. That is something that it is possible to consume both now and in the future.
However, that's outside the scope of this discussion.
Other than that, current generations are actually accumulating wealth in the form of infrastructure and housing that future generations can enjoy. I guess boomers could dud the next generation by burning their houses down as they die.
ThePauk
29 Sep 2014, 09:35 AM
So a boomer lives longer than they expected, by perhaps 10 yaers, and spends all of their wealth on aged care. Nothing is left to pass on to Gen X. Miw, you totally igone the increase in lonjevity and the boomers who are in denial of it.
Boomers live an extra 10 years, but they pass their wealth on to a cohort of about the same size instead of a cohort twice the size so in fact GenX and GenY will inherit much more on a per-person from the boomers than boomers have/will from the previous generation.
It does not matter one iota whether their assets are sold off prior to death to pay for nursing care or they are passed on to the kids after death. It still gets passed to the next generation (or the one after that.) You obviously seem to think that a house somehow vaporizes when it is sold.
It does not matter one iota whether their assets are sold off prior to death to pay for nursing care or they are passed on to the kids after death. It still gets passed to the next generation (or the one after that.) You obviously seem to think that a house somehow vaporizes when it is sold.
Yes, it would seem pretty obvious that the loot goes to other parties.
With the only real questions being a) when, b) to whom and c) how?
A Professional Demographer to an amateur demographer:"negative natural increase will never outweigh the positive net migration"
Those aged care fees don't go up in a puff of smoke. They pay wages of the younger generations to care for the aged, doctors, rent and possibly a dividend to shareholders of the aged care facility (also, sparking innovation in medical products fields and bingo technology).
I'm not a person that subscribes to the view that a house is a non-productive asset but if I were, I'd be cheering houses being turned into aged care fees as being a reversal unlocking the non-productive asset for a bunch of productive uses.
Totally agree. Point is not as much will be left for an inheritance as 'expected'...
Totally agree. Point is not as much will be left for an inheritance as 'expected'...
Well if you are correct making them eat the family home will just mean they can't afford aged care in their final years and the state will have to pick up the tab. Your goal of saving the community money is thus thwarted.
Generally individuals spend their own money more efficiently than the state, your plans might add to the states burden as well as add to their administrative responsibilities.
It's still a dumb plan isn't it.
Any expressed market opinion is my own and is not to be taken as financial advice
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