Totally agree. Point is not as much will be left for an inheritance as 'expected'...
Most people enter aged care facilities when they are in their 80s. It's likely that their children have or are near retirement. If the children haven't bought a place by then it's their own look out anyway.
The whole, I'll own a house when my parent's die method of acquiring a house is hopeless to begin with. Median age at death is near 80 so you can expect 1 of your parents to beat that. Statistically, most of your own life will be over before both your parent's are dead - and that's a good thing.
The truth is that people do care about their children's future and there as as many boomers risking impoverishment helping their kids as there are spending lavishly.
It is just MSM propaganda spreading the hate and setting Peter against Paul or worse getting silly people to give up their own rights and benefits that they would later enjoy out of spite on a previous generation.
If anyone told it like it was and said that we are gonna increase all your taxes in 20 years time,they might think twice about it. However,it is sold in terms of a tax on a greedy generation by pointing out how much more wealth that people have as they spend longer and longer in the workforce and in investments. The boomers were sold the same lines and Gen Y will be taught to hate GenX and on and on it goes.
The other point is that the government is after their ie young peoples inheritance. Grandma and Grandad often miss out on luxuries and lavish spending by holding onto a home they can leave their kids and grandkids.
Some people are so gullible,the MSN has them out in the streets protesting for higher taxes on their future selves. Sigh
ThePauk
25 Sep 2014, 09:38 PM
Lonjevity has been increasing since 1800, correct, however it has increased significantly since 1940 and it just may level off at some stage, obesity etc.
“Population ageing is unprecedented, without parallel in human history...Population ageing is enduring: we will not return to the young populations that our ancestors knew...Population ageing has profound implications for many facets of human life.” “Social Security remains in a period of permanent cash deficits, with slower economic growth moving the looming bankruptcy date up to 2033. When its trust fund is exhausted, seniors can expect a 25 percent cut in their benefits.” 9 A 2002 united Nations report 8 states that: underfunding of retirement is a global issue. We have seen the problems in europe and the need for severe austerity measures including the lifting of the retirement age and the reductions in age pensions in some countries. In the united States it has been noted that: “More attention to longevity risk is warranted now, given the potential size of these effects on already weakened public and private balance sheets, and because the effective mitigation measures take years to bear fruit. Governments need to acknowledge their exposure to longevity risk; put in place methods for better risk sharing between governments, private sector pension sponsors, and individuals; and promote the growth of markets for the transfer of longevity risk.” 11 In Australia, this problem is well understood and policymakers have been focused on the issue for a number of years. treasury’s Intergenerational report 201012 identifies the future increases in Commonwealth Government spending (expressed as a % of Australia’s GDP) from our ageing population, especially in the areas of health costs (from 4% to 7% of GDP) and Age Pensions (from 2.7% to 3.9% of GDP).
Health costs rose only a small amount due to ageing they rose mostly due to advances and increased testing etc
You were shown this yet decided yet again to perpetrate an untruth.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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?
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.
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.
Actually, I don't accept that it is any harder for a couple to buy their first home now than it was 30 years ago. It's just a myth. I will say though that it has become much harder for a single man to do so. Couples have it about the same, single women have gone from impossible to very hard, but single men have gone from having it relatively easy to pretty damn hard.
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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.
I'm well aware of that. However, Germany repeatedly gets put up as a poster child for housing prices. I don't buy that either, but I have to admit they make it work.
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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.
So now flogging off the houses is raising house prices is it? In actual fact it has no impact because final demand for housing is not impacted. Until you die you need some form of accommodation and so do your kids. If you flog your house, they are going to have to buy or rent one. I guess you could reduce final demand by forcing people to live in studio apartments with their cat once they retire. That might reduce house prices.
In the end, if I am a boomer (or anyone else for taht matter) and I spend a dollar, I can only do it in three ways:
1. I can spend it on consumption - and I can only spend it on current production of goods and labour. I cannot consume tomorrow's production.
2. I can invest it in infrastructure that produces goods and/or services over time - that could be infrastructure like roads, housing, etc. or it could be a factory. In this case I create wealth that will eventually *enrich* following generations.
3. I can invest by buying an asset whether that be a financial asset or a productive asset. In this case, it is a zero-sum game. nett-nett, the impact is zero.
If I *don't* spend a dollar, then it will just be passed down as a dollar.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Most people enter aged care facilities when they are in their 80s. It's likely that their children have or are near retirement. If the children haven't bought a place by then it's their own look out anyway.
The whole, I'll own a house when my parent's die method of acquiring a house is hopeless to begin with. Median age at death is near 80 so you can expect 1 of your parents to beat that. Statistically, most of your own life will be over before both your parent's are dead - and that's a good thing.
Good post. Pauk deceives by constantly referring to these ~60 year old children of the last to die parent as "kids".
There may have been more justification for inheritance, and its benefits to kids, when life expectancy was about 45.
Good post. Pauk deceives by constantly referring to these ~60 year old children of the last to die parent as "kids".
There may have been more justification for inheritance, and its benefits to kids, when life expectancy was about 45.
The passing down of some of my 'familial loot' will skip a 'familial generation'.
The current 40 something yos will get a good whack. But so will the younger types.
No particular 'needs based analysis' as such - The current 40 yos types haven't been especially disadvantaged in any ways that I can see. So if they couldn't make a go of things, that's their look out. ('N no particular value throwing any more loot at them unless on the off chance they should happen to lift their game.)
That said, in my mob's case, the current 40 yos types have shaped up OK. (I'm VERY happy to report ... ) So they'll get a decent whack - As stated.
Pushing a bit down a bit further is just a bit more of 'hedging ya bets' maybe - Which I am actually quite big on. Including within family.
Actually, I don't accept that it is any harder for a couple to buy their first home now than it was 30 years ago. It's just a myth. I will say though that it has become much harder for a single man to do so. Couples have it about the same, single women have gone from impossible to very hard, but single men have gone from having it relatively easy to pretty damn hard.
I'm well aware of that. However, Germany repeatedly gets put up as a poster child for housing prices. I don't buy that either, but I have to admit they make it work.
So now flogging off the houses is raising house prices is it? In actual fact it has no impact because final demand for housing is not impacted. Until you die you need some form of accommodation and so do your kids. If you flog your house, they are going to have to buy or rent one. I guess you could reduce final demand by forcing people to live in studio apartments with their cat once they retire. That might reduce house prices.
In the end, if I am a boomer (or anyone else for taht matter) and I spend a dollar, I can only do it in three ways:
1. I can spend it on consumption - and I can only spend it on current production of goods and labour. I cannot consume tomorrow's production.
2. I can invest it in infrastructure that produces goods and/or services over time - that could be infrastructure like roads, housing, etc. or it could be a factory. In this case I create wealth that will eventually *enrich* following generations.
3. I can invest by buying an asset whether that be a financial asset or a productive asset. In this case, it is a zero-sum game. nett-nett, the impact is zero.
If I *don't* spend a dollar, then it will just be passed down as a dollar.
Sorry miw - normally you're a sensible poster but you just seem to be talking shit here. Fuck me dead mate, we would struggle to afford the same little shoebox again if we were starting from scratch, despite the fact that our real household income is significantly higher and interest rates are a lot lower. And no, Gladstone did not boom ahead of the rest of the country due to LNG, it merely caught up with everywhere else.
Put it this way - it would be do-able but christ, there wouldn't be nearly as much left after paying the mortgage, despite that we are better off income-wise and interest rate-wise. The burden would be much greater for the exact same thing, despite an increased ability for repayment on two fronts. Definately what you would call official mortgage stress. Which is what I've been saying all along.
I really think that you and I must be arguing past each other here, arguing about two different things it seems. I am arguing the very, very obvious fact that one group is benefitting at the expense of another and that the more they benefit today, the greater the burden on the other group in the future. You are making an argument based on economic theory - which is completely seperate from what I am talking about. We need to be clear about one thing - VERY LITTLE EXTRA IS BEING PRODUCED OVERALL. Vast sums of borrowed money are being used to inflate the cost of existing shelter in the here and now - you're saying this has no bearing whatsoever on shelter yet to exist? Well that's great - I'll just rush out, buy a block and put a small house on it for $150 000 for my young bloke, easy peasy. What's that - you just can't buy a house for that anymore unless it's somewhere beyond the black stump where jobs are almost non-existent?
No miw - prices being bid up today for speculative reasons inflate the cost tomorrow, at the gain of investors and at the increased burden of those who merely want a roof overhead but have not yet bought. It called hysteresis if you want to argue about economic theory - the fact that what happens in the economy in the future is strongly influenced by where it has been in the past.
If you're saying these things as some kind of justification for investing in residential property here in Australia then you can do that if you wish. There's nothing wrong with investing in property of itself - it's just that the collective effects have now reached a point where every gain for investors is matched by an increasing burden on newcomers. I could not have thought this any more obvious.
Couples have it about the same, single women have gone from impossible to very hard, but single men have gone from having it relatively easy to pretty damn hard.
Quote:
Actually, I don't accept that it is any harder for a couple to buy their first home now than it was 30 years ago. It's just a myth.
Our collective non housing needs/wants are far greater now than 30 years ago. Also our housing needs/wants are greater.
- It's quite normal for an office worker to buy a coffee a day. 30 years ago there wouldn't be many office workers spending $1000 + pa on coffee when they could just have an instant cup provided by the work place. - It's normal for a stay at home mum to 'need' a second car. 30 years ago the stay at home mum would walk/get PT and use the family car on the weekend to do the big shop. That's at least $4000 pa that we have to spend now that we didn't 30 years ago. If a second car was genuinely needed 30 years ago it would have been an old bomb - now it must be no more than 5 years old and have 15 air bags! - We're so busy/tired/whatever that we need to get takeaway at least once a week. 30 years ago takeaway was at best a monthly event that was fish'n'chips. There's another couple of grand a year - We now need to visit a restaurant at least once a week. 30 years ago you might have gone to a restaurant twice a year for special occasions. There's another couple of grand a year. - 30 years ago almost no one had AC. Now it would almost be child abuse not to have AC. There's another couple of grand -etc etc etc.
Then there's the house. 30 years ago a 3 bed, 1 bath, 1 living area house would have been normal for a family of 4. Now it needs to be a 5 bed, 2 living area, 2 bath house.
Like for like it's no harder for a couple/family to buy a house than it was 30 years ago. They just need to return to ways of 30 years ago - no coffee, no second car, no takeaway, no restaurants and no AC etc.
Quote:
I will say though that it has become much harder for a single man to do so.
Mostly due to the tax transfer policies of govts from Howard onwards.
It's normal for a stay at home mum to 'need' a second car.
Permanent, full-time stay at home mums are getting thinner on the ground these days. Unless you live where good public transport is available, a second car is a requirement for the second person having a job - which is itself a requirement of having any hope of owning a home unless one partner earns big $$$.
Our collective non housing needs/wants are far greater now than 30 years ago. Also our housing needs/wants are greater.
- It's quite normal for an office worker to buy a coffee a day. 30 years ago there wouldn't be many office workers spending $1000 + pa on coffee when they could just have an instant cup provided by the work place. - It's normal for a stay at home mum to 'need' a second car. 30 years ago the stay at home mum would walk/get PT and use the family car on the weekend to do the big shop. That's at least $4000 pa that we have to spend now that we didn't 30 years ago. If a second car was genuinely needed 30 years ago it would have been an old bomb - now it must be no more than 5 years old and have 15 air bags! - We're so busy/tired/whatever that we need to get takeaway at least once a week. 30 years ago takeaway was at best a monthly event that was fish'n'chips. There's another couple of grand a year - We now need to visit a restaurant at least once a week. 30 years ago you might have gone to a restaurant twice a year for special occasions. There's another couple of grand a year. - 30 years ago almost no one had AC. Now it would almost be child abuse not to have AC. There's another couple of grand -etc etc etc.
Then there's the house. 30 years ago a 3 bed, 1 bath, 1 living area house would have been normal for a family of 4. Now it needs to be a 5 bed, 2 living area, 2 bath house.
Like for like it's no harder for a couple/family to buy a house than it was 30 years ago. They just need to return to ways of 30 years ago - no coffee, no second car, no takeaway, no restaurants and no AC etc.
Mostly due to the tax transfer policies of govts from Howard onwards.
Mobile phone, internet, foxtel, etc etc.
More than offsetting that is the greatly reduced cost of everything - cars, tv, clothes, food, electrical goods etc.
People keep trying to look at the percentages of income apportioned to a particular cost, but the number that really matters is the disposable income left in the family 'pocket' after meeting all expenses.
I doubt that the buying power of that number has materially changed much, if anything it's probably increased over the last 40 years. Increases in the female wage to match (or almost match) the male wage have made a significant difference to family incomes, as has the reduction in interest rates and borrowing costs. Women once worked full time for a part wage.
Any expressed market opinion is my own and is not to be taken as financial advice
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