A lifetime of spending is catching up with those who never planned their future, writes Ross Gittins.
I would never expect anyone to feel sorry for the baby boomers - they always feel sorry enough for themselves. But there may be something to learn from their plight. After a lifetime of yielding to the capitalist system's blandishments to borrow and spend, they now have capitalists berating them for their failure to save for retirement.
Compared with previous generations, the baby boomers have lived lives of indulgence. But they've been products of their affluent times. Everything around them has encouraged them to live it up.
For one thing, they've lived through a progressively more effective and pervasive effort by advertisers and marketers to persuade them that everything their heart desires - beauty, success, good friends, a happy family, even escape from boredom or unhappiness - can be attained by buying something.
There's nothing new about buying stuff, of course, but in the olden days we often had to save up for it. What changed for the baby boomers was a revolution in easy access to consumer credit.
It began after World War II with the advent of hire purchase, then grew to freely available personal loans and credit cards. The latest is the home-equity loan, where people with equity in their home can borrow for any purpose simply by adding to their mortgage.
Apart from the convenience, the great attraction is the much lower mortgage interest rate you pay (the great trap is that you keep paying the interest for the rest of the life of your mortgage, which may be 20 or 25 years).
Borrowing is about impatience. If you want to buy something but can't wait to save for it, it allows you to have it now and save later as you repay the loan. But the price of impatience is the interest you pay.
In the baby boomers' impatience to consume they've done a lot of borrowing - and ended up paying a lot of interest (running a permanent credit-card debt is a particularly expensive trap).
Saving involves spending less than all your income on consumption. That's why economists think of saving as "deferred consumption". (And the reward for your lack of impatience to consume is the interest you earn on your savings.)
Why would anyone want to defer their consumption? So as to smooth it out. They may consume less during their working years to enable them to consume more during their retirement years.
And it's here the capitalist system has suddenly changed its message to the baby boomers. What? You mean to say you've earned all that income for all those years and saved so little of it? How on earth will you get by in retirement?
AMP recently sponsored a study by the University of Canberra's NATSEM centre which found that, on average, people aged 50 to 69 who are still in the workforce (which means they'd mainly be the early boomers) have savings through superannuation of just $170,000, plus other savings of about as much.
Now, I have to tell you I believe the banks, life insurance offices and others that make up the super industry are knowingly exaggerating this problem, pumping up the baby boomers' expectations about how grandly they should live in retirement.
The industry's urgers are trying to con the Howard Government into increasing compulsory employer contributions or tax concessions because the more of our money they have in their care, the bigger the clip they can take from it each year.
Even so, there's no doubting the marked decline in our saving performance. Since the mid-1980s, the proportion of their disposable income saved by all Australian households has declined steadily from 12 per cent to minus 2 per cent. (The current rate of "dissaving" means households are now consuming in excess of their income and borrowing to make up the difference.)
Nor is there much doubt that our behaviour during the latest long-running residential property boom does much to explain the recent deterioration in our saving performance - with the baby boomers leading the charge.
Historically, one of the main ways Australians have saved is by paying off their mortgages. So much so that, during the '80s and early '90s, Australian households' repayments of principal exceeded their investment in new homes and renovations by 4 per cent of their disposable income each year.
Since 2000, however, it's swung around, with our investment in new housing exceeding our repayments of principal by 4.5 per cent of disposable income a year.
Although he did agree, much to pauks disgust, that boomers SHOULD spend the kids "so called" ineritance
I agree. what is the world coming to when the young can't make it on their own anymore... needing to live at home forever, or inherit all of their parent's hard work. whether its their lazyness, or the impractical price of everything... it ain't right...
my friend tells me he's just going to float around not doing much, he has a million dollar inheritance waiting for him. he even tells me of all the really hard work his parents put into building their wealth from nothing... but he doesn't seem to care.
I'm not jealous, I look forward to hopefully one day being financially well off, and looking back and saying "I did that". and you know what? if I did it, and then spent time and money raising my kids. I would do as I DAMN PLEASE with my money in retirement! to hell with the kids that (good) parents have already sacrificed so much for! earn your own fucking money!
I may sometimes wish beyond my means... but I would never sit around just waiting for someone to give me handouts... offer me a handout and I'd take it without hesitation! but I don't like it how people live in expectation of them... or worse, that people can only live with them...
but in short, I'd never save all my inheritance for my kids... so I can't expect my parents to do that either.
I agree. what is the world coming to when the young can't make it on their own anymore... needing to live at home forever, or inherit all of their parent's hard work. whether its their lazyness, or the impractical price of everything... it ain't right...
my friend tells me he's just going to float around not doing much, he has a million dollar inheritance waiting for him. he even tells me of all the really hard work his parents put into building their wealth from nothing... but he doesn't seem to care.
I'm not jealous, I look forward to hopefully one day being financially well off, and looking back and saying "I did that". and you know what? if I did it, and then spent time and money raising my kids. I would do as I DAMN PLEASE with my money in retirement! to hell with the kids that (good) parents have already sacrificed so much for! earn your own fucking money!
I may sometimes wish beyond my means... but I would never sit around just waiting for someone to give me handouts... offer me a handout and I'd take it without hesitation! but I don't like it how people live in expectation of them... or worse, that people can only live with them...
but in short, I'd never save all my inheritance for my kids... so I can't expect my parents to do that either.
You miss the main point. 1. Many boomers will foolishly spend all their money too early, without planning for their full life expenses and therefore go onto the pensions. This means they will need your tax to support them. 2. If a boomer has planned and will not become a burden to the taxpayer, then fine, they have the right, obvivouslyu to spend all the inheritance. The SKIN issue is not really about that right at all. 3. SKIN is a generational slap in the face.
So, what you are really saying is sure, blow you money as I am happy to pay more tax to support you when you blow it all?
Pauk, as I said before, dont call it skin, call it something else as you clearly can not handle the concept of skin and really, who else apart from you calls it this?
The more I hear pauk whine incessantly about this the more I become convince that pauk is upset that he missed out on opportunities throughout his life through his failure to act
I think he is coming to the realization that he is a renter* with an Ipad, nothing more, and he finds that upsetting
add: I have no issues with renters, they pay for my early retirement
Ignore posts by The Whole Truth · View Post · End Ignoring The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
The first strata titles legislation in the world was written right here in NSW exactly 50 years ago. But how much do you know about it? Considering half the population will be living under a strata title in the next 20 years, it would be nice to think most of us had some idea of how they work. Maybe we should have a test - like the one for your driving licence or citizenship - before you are allowed to rent or buy in strata. And certainly before you're allowed to stand for the executive committee. I joke, of course. But here's a taste of the kind of questions you might ask yourself, your committee members or, even better, your local MP. Answers at the end of the column - no peeking!
1. Can tenants be members of executive committees?
2. In a ''poll'' vote at an AGM, how is the voting based: a) per owner; b) per adult reswident; c) a figure based roughly on the value of your apartment?
3. Are owners' corporations obliged to enforce their by-laws?
4. Can the owners' corporation prevent owners from entering common areas within the property?
5. Can you clamp or tow visitors' cars that are parked illegally on common property?
6. Is there a limit on the number of proxy votes that one person can use at a general meeting?
ANSWERS
1. Provided they are legally nominated by an owner, anyone can be on the executive committee. Tenants, however, don't need to be nominated by their landlord.
2. Option c: Your votes are your unit entitlements - the figure used to calculate your levies - and is roughly based on your home's relative value.
3. Not in NSW but they are in Victoria and Queensland.
4. Yes. Common property isn't shared property and sometimes it's in everyone's interests to restrict access, for instance, for safety reasons.
5. No. It's against the law.
6. No. There is a limit of two per voter in Queensland but ''proxy farming'' is still rife in this state, especially in properties in which there's a high percentage of investor owners.
You miss the main point. 1. Many boomers will foolishly spend all their money too early, without planning for their full life expenses and therefore go onto the pensions. This means they will need your tax to support them. 2. If a boomer has planned and will not become a burden to the taxpayer, then fine, they have the right, obvivouslyu to spend all the inheritance. The SKIN issue is not really about that right at all. 3. SKIN is a generational slap in the face.
So, what you are really saying is sure, blow you money as I am happy to pay more tax to support you when you blow it all?
no! where did I say that?
you are right, just as quickly as I would say "yep, its your money, do with it what you like, I don't deserve any of it just because."
would I say "hey, its not my problem you spent all your money, I didn't expect handouts for no reason, why should you? enjoy winter on the street!"
ok, ok, compassion and stuff, if they fell on hard times due to circumstances out of their control, then of course I happily help,
why? because I'm awesome? no! because I would hope the same from my loved ones if the shoe was on the other foot.
honestly, if they did run out of money, I wouldn't kick them to the street either... but I WOULD be thinking it...
I have no issues with renters, they pay for my early retirement
ohhh!! I get it!!! you say you have no issue with renters, like theys are equals, but then suggest that they aren't because they have to give money to you!!! ahhhahaha!! funny joke!!
now that I have finally got it after the FIFTY THOUSANDTH FUCKING TIME, do you think you could, perhaps... stop with it?
UNIT rents are creeping higher and in most capital cities prices are almost as expensive as houses.
The rental market for units has outperformed that of houses during the year to September, according to Australian Property Monitors (APM).
Nationally median rents for houses fell by 0.2 per cent while unit rents rose 1.1 per cent, according to AMP's Rental Price Series Quarterly Report.
Median rents for apartments is approaching parity with houses in most capital cities. In, Melbourne the median rent for units is $350 (houses $360), in Sydney $460 (houses $495), in Brisbane $360 (houses $370), in Perth $370 (houses $380) and in Canberra $430 (houses $465).
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