I was reading in an article a week or so ago that the number of Australians between 55-64 years old who own their own home has halved over the last 20 years [based on census data]. That's alarming in itself but further, three quarters of retirees owe more on their mortgage than they hold in superannuation.
It doesn't sound all that bad to those who are nowhere near retirement age I suppose however together with the fact the age of first home buyers is increasing [in Australia] it means more people are using their superannuation to pay down mortgages later in life meaning they'll be less self-funded and more reliant on the government aged pension putting massive pressure on the government pension scheme.
The term mortgage is taken from an old French word [morgage] which literally means "dead pledge" with the concept being that on death it dissolves.
Mortgages work differently these days of course...and so do people mainly due to society's continual drive towards consumerism which is fueled by many factors. With the need for more and more and credit-spending being so acceptable, little financial understanding and the trend towards not planning into the future for financial independence...well, it seems to me that so many people are on a fairly destructive trajectory.
Not only does that financial burden mean working well past retirement age, it means their progeny is less likely to benefit from an Estate on the death of their parents - they don't own their houses outright so the banks sell them off for whatever they can get to recoup their losses and the children get nothing.
That's just the obvious effects and, as there often is, there's other repercussions; as always though, people tend to stick their heads in the sand saying things like "it won't happen to me, or, "I would rather live for now", and other such nutbaggery. Ok, fair enough but it's actually likely to happen to them (considering they failed to plan) and the repercussions of financial chaos is higher crime for one, civil unrest, lesser-quality in service and products (that's already happening), less jobs and other such things...and that touches everyone.
As a responsible person I've always worked toward financial security and independence knowing that there's no handouts, nothing comes for free [even the government aged pension] which is almost certainly going to disappear. I've worked hard for what I have, look after those things to make them last and have had a need over want ethos; it's worked well for me, I'm very comfortable, but I don't stop there and keep pushing on...at the same time as having a life now, a pretty fucken good one too.
If one delves into this issue it's broader than just financial; think of the mental health issues a person may have through the stress and worry of financial matters, problems that can spiral out of control. Sure, we pay taxes so people think it's the government's responsibility to look after us but if you fully believe they will do so you need to go see a psychiatrist and if you think a government can't have their own financial issues then go talk to someone from so many countries around the world, some of you reading this are from those countries.
I don't know what the answer is other than, for me, working hard and being smart which is what I do. How about you? Do you want to take your financial debts to the grave, suffer under the yoke of financial burden until death?
Design and create your ideal life, tomorrow isn't promised - galenkp
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I am in the camp of living quite plainly and simply in the now, in order to be more comfortable in the future. Debts are in the last stages of repayment, aside from my living property, and after those debts are paid, I will double down on the home, which is a private mortgage, thankfully. Not doing too bad, I think, and at least I still have a bit of savings stashed away for emergencies.
It seems to be the way to go I reckon; a lot of people tend to want to live extravagantly but I wonder what the true cilost if that is and if those people are genuinely happy because of it.
As long as those people remain oblivious to the numbers they will continue to live extravagantly. On the other hand, if they were to run the numbers, it would most likely make them sick. I live simply, but lack for nothing, and I am quite happy. It eases my mind to think of having a nest egg to fall back on in the years to come.
You sound a lot like me (without the swearing.) I have nice things, no doubt, but I find enjoyment and relevance in other ways, not through buying things. Experiences and all, small things like time to read and reflect, nature, better relationships and so on. As for that feeling of sickness you mention for others, yep indeed. If they saw their position laid out in numbers (and their future) they'd not like the look of it.
I still work for my government and my retirement will depend on it until this moment.... I know that the world economies are in a bad way and my country is much worse, BUT I am in the strangest point of my life: I want to improve my present to ensure the future, at least while I live here because the security of emigrating is still a distant dream.
I have no mortgages, no debts...at least I think so, but the price of life is too high, and I have already passed to the second stage of life.... now I will give the last profitable effort that my mind and body allows...translated it means that I will work much more than what I have done so far.
This is what we have to do.
I mentioned that some reading this post are living proof that governments fail and I had your country in mind.
Being debt free is awesome, so many keep building debt, credit debt, and think they're living their best life but...nope.
One of my biggest fears in countries like yours is precisely living in mortgaged houses...from here I don't understand how retirees in your country can cope with it.....
Although here either most people can't own their own house, unless they inherit them, allowances, lots of money, outside help, or jobs that are not with the government and are very well paid, all like that in a general sense.
But I really shouldn't compare one system to the other, it's decidedly not fair, because retirees here can barely make enough to eat.. 🥺, from an excellent doctor to an average professional technician.
I think they didn't allow us to plan for the future by making us believe that everything would be fine.
They promised so much.
It's very difficult (impossible really) to draw parallels between your country and mine, they are worlds apart economically.
As for retirees unable to eat properly, the same happens here despite there being a government aged pension; the cost of living is extreme and only going upwards.
Very unfortunate to know that.
I must tell you that I have learned some interesting things about your lifestyle.
Thank you
I resemble that remark...
Indeed.
I've never been one to run up debts and I own my house without mortgage. Of course there's always that pesky property tax, increased 15% this year, so you can never really own your property.
There's always something to keep the money going outwards right? Taxes...is there a better system? Maybe, but I don't think the system will change anytime soon. I think it's best to work around it and keep moving forward rather than get angry about it...although I always have my pitchfork ready in case the masses want to march on government house and burn it down.
Hi mate, as an ex-pat I have found the Australian system of superannuation to be very generous, and easy to get ahead with not much effort. Makes sense that the government pensions will be a thing of the past, all the incentives to become self funded are there.
It's always been pretty fair I think and when compared with other countries quite generous as well especially when the benefits and subsidies retirees enjoy are considered; still, in a country where the cost of living is skyrocketing it's not enough; many pensioners live a very base existence. Being self-funded will be a thing of the past (for most) if people don't start to think about it (and act). It's a big problem that every one has within their power to mitigate.
Yup, a bit like hive, keep powering up and watch your stake and earning compound.
Exactly! It makes sense to me but (seemingly) not to very many others.
The fact that someone with 30-35 years of life contracts a loan that he will repay for the next 25 years is a fucking frustrating situation.
I have a friend in the neighborhood, who bought an apartment with a very high monthly payment, which takes more than 60% of his and his wife's salary, but he had an attitude, he takes a loan for 10 years, in which he will pay the maximum amount, but after 10 years, he will not do it anymore to be afraid of loans, interest and mortgages.
Another example is my brother, who has been renting a house in Scotland for years, but after recalculating how much the monthly rent would cost him, and how much the monthly installment for a house twice as big would cost him, he decided to go for a loan. now he has a good business and does not worry about repayment. he also took life insurance that would provide for the family, so that their house would not be worthless...
And me? I have no debts, loans or mortgages. I work hard, I get paid for it and I don't need loans for now.
In addition, I pay small amounts into a private pension fund, I pay life insurance, and I also have some investment in crypto.
It seems like you have the right idea, keep doing what you're doing, it will pay off.
I really don't want anyone to need to worry about my debt when I am gone. Especially my wife. It's pretty crazy that people use to be able to not save at all and just rely on their pensions for retirement. My mom and dad are that way and while it works well for them, I don't think it's possible these days. I've always been under the impression that Social Security won't be around when I need it, so I need to take care of myself. That's why I started investing early.
Yep, that's the responsible way to think and be I reckon. The problem is most probably don't think this way at the moment.
No, I don't believe they do.
If you can live without any Debs it is the best way, if you can, but how did you get it, easily practice the foraging and harvest your own food.
The problem is if you live in a city you do not have space to grow your own food.
Well the forest give options like roots, flowers, mushrooms, leaves and all kind of edible plants.
I agree, being self-sufficient is a good way to go, even being partially so is good.
I don't have much money I could invest but I do invest a little bit into Hive/HBD hoping to have enough crypto for an emergency situations/ my old age. My mother won't live for ever and is likely to die before me so I am trying to prepare for that. Few days ago I bought more HBD again. I am getting closer to 400HBD. That is nowhere near enough but it is a start.
Are you looking to invest in other areas or just crypto?
For now just crypto.
I remember when my friend here in Spain, telling her about the situation in Argentina, said to me: Only a Spaniard who lived through the war and hunger can understand you. I was left wondering about that... I didn't understand what I was telling her, how people live, the conditions and so on. Maybe he is right.
I have no debts or mortgages and that is good and at the moment I am working hard, my family and I to progress but above all this last time to have all the papers in order, this year has been one of order and programming and everything is going very well.
I think the solution as you mention, is to work hard, and be proactive. But many people live for the moment and don't care about anything else, I see it every day.
Having no debt or mortgage is a good thing indeed, but having to pay rent isn't and so many do that, paying off someone else's mortgage in the process. Home ownership is a dream rather than a reality for most and people tend to live day to day, week to week, even those without mortgages. Saving and investing isn't usually high on the list of priorities for many; iPhones and instant gratification is more attractive for many.
This is absolutely true. I'm still paying rent but I'm planning on owning my own home, I hope it happens soon, it's my main goal. I always set small goals for myself and I'm always climbing up the ladder.
Small goals are better than no goals. ✅
I reach one, and then I set my sights on another, and so on to the biggest goal.
I believe in Australia only few people are relying on government and increasing financial problems for future generations... do you know here in Pakistan every single child who borns here is debtor of around 2 lakh or 3 lakhs, which is increasing with every single minute.
But in my country people don't like to take small incentives and rarely talks about the financial instability and future problems it will case... Unlike you who is discussing this to aware people about their responsibilities, People here in Pakistan thinks it's not our duty.
Wrong.
I'm not surprised. It'll end in a predictable manner.
they don't own their houses outright so the banks sell them off for whatever they can get to recoup their losses and the children get nothing. That's not actually how it works, Banks in Australia VERY VERY rarely foreclose on a loan, In this instance you would inherit the house with the mortgage attached. The Bank would absolutely pause the repayments on it (although the interest would increase) it would be up to you either keep paying the mortgage or sell the house, pay out the loan and take what's left. Given the rise in home value it only about 0.1% of home loans in Australia have negative equity (loan higher than the value of the house) so the chances you would get in trouble are very low
In reality most Australia die with higher wealth than they had a retirement age. Essentially people are in fact too conservative in retirement and keep too much money. Now of course that is an average and there will be some people who are struggling particularly in the current generation, particularly women and those who have had insecure employment but we do have one of the best Superannuation systems in the world. And it's worth remembering that the generation X (which you and I are) at the first generation who have had compulsory super their entire working careers, we will be far more comfortable than the current generation (although house ownership will be less)
And Finally when you look into generational wealth transfer it doesn't do much to even anything out, You have rich parents leave more money and they leave it to people who generally speaking are rich anyway. And the most common time to inherit money is between the age of 55-65.
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Try powering up regularly rather than taking all your funds and failing to support the community.