800 Australians are due to retire every day for the next decade, giving them access to a whopping $1.5 trillion in superannuation.
The Financial Services Council (FSC) believes the Baby Boomers will not spend all their super and save some for their kids. Such action only adds to the growing fire for superannuation to be taxed one way or another.
Research by NMG Consulting on behalf of the FSC shows retirees in Australia are currently drawing down 17% less income in retirement from their super “than what is optimal”.
FSC chief executive Blake Briggs wrote in The Australian that policy reforms focused on improving how Australians spend their superannuation savings would boost retirement incomes by 10% each year or by $397 billion by 2050.
He said changes to regulations and legislation needed to be made to simplify how the superannuation system interacted with other parts of the retirement system, including the aged pension, aged care and health care.
The research points out this could include redesigning pension means test rules to “encourage higher consumption of capital”.
It also recommends addressing the “interaction of major policy levers on retirement spending behaviour including tax policies, especially around inheritance and gifting, home equity release options and aged and disability care”.