Transcript of AE 1325 - How to Retire With $1,000,000 in Australia

G'day you mob. Pete here. And this is another episode of Aussie English, the number one place for anyone and everyone wanting to learn Australian English. So today I have a Goss episode for you where I sit down with my old man, my father, Ian Smissen, and we talk about the week's news. Whether locally Down Under here in Australia or non locally overseas in other parts of the world, okay. And we sometimes also talk about whatever comes to mind, right. If we can think of something interesting to share with you guys related to us or Australia, we also talk about that in The Goss.

So these episodes are specifically designed to try and give you content about many different topics where we're obviously speaking in English and there are multiple people having a natural and spontaneous conversation in English. So it is particularly good to improve your listening skills. In order to complement that though, I really recommend that you join the podcast membership or the Academy membership at AussieEnglish.com.au where you will get access to the full transcripts of these episodes, the PDFs, the downloads, and you can also use the online PDF reader to read and listen at the same time. Okay, so if you really, really want to improve your listening skills fast, get the transcript, listen and read at the same time. Keep practising and that is the quickest way to level up your English. Anyway, I've been rabbiting on a bit. I've been talking a bit. Let's just get into this episode, guys. Smack the bird and let's get into it.

Dad.

Pete.

What's going on?

Not much.

What's going on?

What's going on?

Yeah, let me open my Pepsi here.

Oh, yeah. Hang on. I better do the same while we. Yeah, we're on to the hard stuff now.

Which means we're already soused.

Well, speak for yourself.

Yeah, I am. Two beers in.

If he starts snoring, I'll kick him.

Oh, yeah, that's when the content gets really good.

Yeah. And you're..

When I, shut up. Yeah.

So, Pete, what do you think? (snoring sound)

I haven't even got a topic. What are we talking about, Dad? Come on, it's your turn. I've done the last two.

I don't know. I've started swimming!

Yeah. How does that go?

Yeah. Slowly. Well, because I don't like pools anymore. I used to be a swimmer. 100 years ago. And so, lots of laps in chlorinated pools. And frequent eye infections and ear aches. So.

You did get those as well. Because I know mum's susceptible to eye infections.

Well your mum's still are completely susceptible to them. But yeah, she sort of looks at somebody and goes, Oh yeah..

She doesn't like getting her head under the ball.

Yeah. Um, so swimming in the sea, which is a bit of a challenge because, you know, obviously we live down in the surf.

It's not too much of a challenge. You walk to the beach.

Yeah, you walk to the beach, but the actual swimming part is swimming between waves. So.

Yeah, that would be less. Less..

So you swim out behind the waves and then swim along for a while, and then.

You're worried about sharks?

No. Not particularly.

No? Land sharks?

Land sharks. There's always a few of those where..

You get out of the water, and then something just jumps out of the sand dunes and takes your leg off. Ah!

But it's more the real estate agents. Enough land sharks around.

What was the golfer called?

He's a shark, wasn't he? The Australian golfer, Greg Norman.

Greg Norman, the great white shark.

Yeah. That's right.

Because he was tall and blonde.

Yeah. So, yeah. You've been enjoying the swimming, huh?

Yes! Yeah. It's good to get out in the surf. Yeah.

Yeah. Well, I guess we could talk about retirement.

Yeah. Oh, yeah.

What's it like in Australia with retirement? How do you prepare for it?

How do you prepare for it?

Do you think it's changing? Like, do we need to do more to prepare for a good retirement? Um, you know, like, am I going to need to have twice as much money saved up as you?

Probably. You know, or you just hope we die before you retire. Inherit. Inherit whatever we've left..

Before I retire, more like die quickly so that you don't burn..

Well, yes. Yeah, exactly. Yeah.

Please do not die of a disease..

It's not when you die, it's how long it takes to get there!

What do you reckon would be the worst? Probably Alzheimer's or something.

Ah, yeah, I'd think so.

Well, you would be like, this is going to cost a lot in care.

Yes.

And. And the old people..

Will you care for me yourself?

Yeah. Up to a point.

Yeah.

But the, I am..

Wheelbarrow, off the pier.

The old..

He fell in twice.

They must They must be so happy when they get people that are like, please just sell your house and just pull out all of your superannuation. Come into our home and we'll take care of you.

Yeah, buy a room in our place and spend squillions of dollars a month.

Yeah. So how did you prepare for retirement? What were the expectations, too, growing up? Like, did your parents expect to have a retirement the same way that you and my, my mum, your wife are currently having?

Me and your mum?

Yeah. Are currently having a retirement? It's something that's relatively new and..

.. so funny because. Yeah. Well within, well, a generation effectively, between my parents and me.

Yeah.

Um. And your mum's the same that. Yeah. After my parents got married, my mother never had paid employment.

That was the life.

Uh..

Well. Yeah, it was. She was still employed..

She didn't say. I didn't say she didn't work, so I deliberately used the term paid employment.

Just had her feet up for the last 30 years of her life.

Yeah, exactly. Um, so for her retirement really didn't sort of, you know, mean anything until all of us children had left home. And that was her retirement, was suddenly she had her life to herself. Um, and by then, my father had died. And my grandfather, her father, who had lived with us for the last ten or more years of his life, um, he had died. So.

So what was the order that that happened in? And how old were you?

Um..

Because your grandfather was living with you. Your mum's dad was living with you?

He was, yeah. He died in 19th September 1982.

Yeah.

And my father died in September 1983.

Oh, wow. Okay.

Yeah.

So just the next year.

Yeah.

Far out. And you were 25, 26?

I was 25 when my father died.

Yeah. Okay. So you had, had you moved?

I had just turned 26.

You'd moved out..

A few days after my..

Out of home at that time? Or you were still..

I was married.

Yeah. Okay. Oh, yeah. Ooh, yes. Okay. So. Yeah. So that's sombre.

Yeah. No, but it was. But but that for so retirement in the case of my mother, and most of the women in her age group. Um, it was the same thing. Your, you know, retirement wasn't a retirement from work. Retirement was you no longer have the same level of domestic duties to take care of.

Yeah.

Because, you know, well, in the case of my mother, she didn't have a husband or children living at home. She was that something, though herself.

That she grew up anticipating as retirement?

Well, I don't know that you, I don't know that you anticipate that your husband would be dead before you, your children leave home.

Yeah.

Um. But She had. Um, I think most people would have assumed that a couple would retire when the husband retired from work.

Okay. Yeah.

Um, which would be the case for your other grandparents.

Yeah.

Who were still alive.

They're. They're probably getting to the point where they probably spent more time in retirement than working.

Yeah. Pretty much. Yeah. We're getting close. Um, yeah. And so, uh, for them, that was the sort of, you know, you one person works, the other person works at home. Um, and when the husband had retired, they did whatever they did. Um, but within a generation, double incomes became the norm.

Yeah.

Um, and so it was, you know, when two people retire. So in the case of your mum and I, um, you know, I retired five years ago, your mum retired three years ago. Um, and that was well, mine was sort of not quite forced, but it was a decision I made based on injury and illness, um, that I'd only been in the job I was in for 18 months, and I'd run out of sick leave and run out of, uh, normal leave. Um, and decided.

This is not a healthy lifestyle either.

Well, but, yeah, I was travelling five hours a day, you know, in and out of Melbourne to to work, which I didn't mind. I enjoy it, I love the job, but but I looked at I looked at it and thought and you know, the irony is that was late 2019. And the job I had was managing a group of people, which was going to be very difficult to do without being in the office and working with a, you know, academics around the university and developing online learning.

So you should have held on until you were made redundant during Covid.

Well, I wouldn't have been redundant if I if I'd held on another four months. February 2020. Everybody was working from home, so I made the decision that I couldn't work from home in October 2019. And then by February 2020, everybody was working from home. So, um, but at the same time it was, you know, I yes, I would have preferred to have worked for another few years because I was enjoying the job.

I think though you..

The money's always good, but.

But the money would have made barely any difference in the grand scheme of things, right? The extra additional income you would have earned to put into.

Yeah from, from what I was earning.

It would be an extra few hundred bucks a month type thing.

Uh, well, if I'd worked for another two years, I probably would have had another. Oh, let me very quickly do the calculation. I probably would have had another 30, $35,000.

In superannuation.

In superannuation.

Which would be, what, a few hundred bucks extra a year in, in um, or a month in, um, uh, interest that you would earn, right? Assuming it keeps going up.

Less than that.

Yeah. So.

That was what you had to work.

That was. Yeah.

And my sacrifices.

At the time it. And look the the well, irony that's the thing was that for the first year um, and a bit of my retirement, I didn't take superannuation. I just sort of, I just let the superannuation continue to build. I didn't take a pension out of it until your mum retired. Uh, because I looked at it and..

I didn't thought that you could do that.

Well, we had enough savings sitting there and I thought, we're better off because at the time, uh, five years ago, interest rates were so low that our savings were earning less than 2%, um, as superannuation was still earning about 7 or 8%. And so I thought, just leave the money in superannuation, drain the savings.

Yeah.

We could live off with me not working less expenses in terms of travelling to work and so on. So we could live off one income. Close to. So we drained the savings a bit. But in the end we saved more money in super, so.

Do you mind talking specific numbers and not- it doesn't have to be your specific numbers, but like..

The sort of numbers that people need.

Yeah. For what? Like if someone is listening to this podcast they migrated to Australia. They've, you know, perhaps they're older, perhaps they're younger, but they're trying to set themselves up for retirement at the average age..

What you need to retire.

Yeah. What you..

Well for me, and now it's different for me. And I don't know the numbers exactly, because there's a sliding scale of, um, 15, 20 years ago, the government changed the retirement, the official, whatever that means, retirement age in the country. It basically eligibility for the old age pension changed.

Which is when you don't have superannuation or don't have very much and you..

Don't have very much, and you get a..

Payment from the government..

Payment from the government.

Which is peanuts.

At the time. It was 65 for decades.

Yeah.

Um, and then it got bumped up to 70.

Mhm.

Um, but anybody who was born in this period in the late 50s, which was you were going to be, by the time they introduced this thing, you were going to be older than 65 but not 70 yet. They had this sliding scale. So for us it was 67 for your, for your mother and I. So we were eligible for the pension by age at 67. Um, now I retired at 64 or 63. Um, and so I wasn't eligible for any of that sort of stuff, but financially, I wasn't eligible anyway because we had enough superannuation. So typically, just backgrounding, there are three ways that people will work for a retirement. One is the old age pension. That is, once you reach retirement age and are no longer working, the government will pay you a pension.

And it's related to how much, um..

There's an asset test for it as well.

And how much superannuation you have.

Yeah. So the asset test is basically around how much income you are generating out of whatever other things.

'Cause obviously, if you're generating a certain amount..

You can live in a $10 million house and own the house, but that's not worth anything to you. So the house you live in is not considered an asset.

Oh, so it's almost like there should be something around that that says if you own a house that's worth that kind of money, you probably need to make some concessions and sell it and maybe downgrade to an $8 million house.

We could argue about that, but we don't. Yeah, that's probably an exaggeration, because anybody who's living in a $10 million house probably has their own.

That's it! They're not living that close to the wire.

Exactly. But but, you know, people inherit houses from their parents and parents and so on. And they but so there's there's that if you don't have enough income to survive on, you are eligible for a government pension.

Which I imagine is between, what, 25, $30,000 a year?

I have no idea what it is, but it's roughly that I would think. Um, the second thing is that since the 90s, um, when the Keating-Hawke government, um, Bob Hawke was the prime minister, Paul Keating was the treasurer. They brought in compulsory superannuation.

From employers.

For employers. So employers have to pay a proportion of your salary into a superannuation fund.

Which means though it's not, they're not, well, they're not taking money from your salary. They say if you get $100,000, this is your, this is your salary that you will be paid. We will give you a percentage on top of that. That goes directly to your superannuation. I guess you could say the salary depends..

It depends on some people. Some employers will advertise a salary package.

Ah okay. That includes the superannuation.

So you're getting 120,000 a year, but 20,000 of this is actually superannuation. The other 100,000 is what you get is the wage.

So the minimum, when it was first introduced, was 9%.

Yeah.

Now this is..

Now it's up to like it's, isn't..

It's ten and a bit I think now,

But it's not uncommon to hear about 18%.

But yeah. But universities and universities where I worked in the university sector for a long time paid 17%.

Wow. Yeah.

But again, that was universities don't pay well as a base salary. But as part of that compensation package, they paid a much higher superannuation.

What's the incentive for them to do that as opposed to just paying you a better wage and reducing the amount of..

Well its pre-tax. So they basically, if for instance, if I, when I left the university, um, my salary last last university when I left Deakin University in 2007, my salary was, I think, about 140,000 a year.

Yeah.

But I was earning 17% above that in superannuation.

So it was on top of..

On top of that. So that's another 20,000 a year.

Yeah.

If they had said your salary is 160,000, they have to pay income, salary tax, pay payroll tax on the 160. So what they're doing is offering you less as your take home pay..

.. which saves them money.

Which saves them payroll tax. But..

Then they pay you money..

Because me money because they put more in, which is, you know, not quite tax free, but it's a much lower tax rate.

So it's one of those everyone wins..

Everybody wins sort of situation. So but a lot of employers don't do that. A lot of employers just say we'll pay the bare minimum and that's fine. That's what they're..

That's me! That's me with Kel.

Required to do. Yeah, exactly.

'Cause we're a business. We work together. And I actually pay my wife some..

You pay her nine and a half or 10% or whatever it is.

She gets about six grand, I think, a year from me in superannuation.

So that superannuation component, then the idea of that superannuation, when it was introduced, lots of people had already had it, particularly government type jobs, had always had a superannuation component. Um, but the idea was to force, uh, all employers to pay a superannuation component in their salary packages.

And the idea..

And the idea was that you would have over a lifetime of earnings, you would have enough money saved in your superannuation account that you could retire on it without having to take a pension.

So the government saves money.

The government saves money. Um, and the third option to that is you just save money yourself in addition to whatever superannuation or in the case of I mean, you for example, you have no requirement to pay yourself superannuation. If you have employees, you do, you've got to pay them superannuation.

That's how I pay my wife.

Kel but, but in the case of that, if you are a sole trader and you're a self-employed or whatever, you can just save your own money and invest that and do whatever you like and then live off that. So by the time you reach a retirement age, there are effectively three streams of income. There will be if you are not earning enough to survive on according to the government, you will get a either a full pension or a proportion of that pension. The second thing is your superannuation. And with superannuation, when you retire, depending on the superannuation company you work with, they will have various options. The base option is take your money out and do what you like with it.

Because they're effectively just investment companies.

They're just investment companies. Yeah. Um, take your money out, do what you like with it. The alternative to that is leave your money with us. We'll keep it invested. And you will take a proportion of that out as a equivalent of a pension, which is what we are doing your mum and I are doing. Um, and then obviously the third option is you're self-funded, you've got your own retirement fund..

You have, you're effectively a superannuation.

Speaker2:
You can have, you can have what's called a self. Yeah. Self-managed superannuation fund. The advantage of being a self-managed superannuation fund rather than just investing yourself, is that if you invest yourself, you buy shares, or you put money in a bank or you're buying property or whatever, you're eligible to pay income tax on everything that you earn out of that. Whereas if you put it into a declared self-managed fund, then you don't have to pay the tax on any income you earn from that, like you earn shares. You get paid dividends. But if you're just rolling those dividends back into your superannuation, you don't pay tax on it. If it is declared as a superannuation fund.

Speaker3:
Then that's so you and mum at the moment both being retired, both having superannuation funds from which you are drawing money are not paying tax..

Because it's tax free.

Yeah, they are superannuation funds, which is meant to be the equivalent of a pension. And if you were paying tax on it, you would be effectively paying tax on money you've already paid tax on, right.

Yes.

Like you pay money into there already. And so.

Speaker2:
Yeah. So in terms of numbers that the question that was all background to the question about the numbers. Most funds have in the case of ours, um, they have a rule that you have a, you have to take a if you go to that pension option, you have to take a minimum of 5% of the total at the at the end of every financial year or the beginning of every financial year, you have to take 5% out of that out for the next financial year.

Speaker3:
So if you had $1 million..

Speaker2:
So if you have $1 million, you've got to take 50,000.

Speaker3:
But that's not at the start of the year.

Speaker2:
No, it's set out in a two weekly payment that comes out.

Okay.

Um, so you've got to look at it and say, how much do I need in order to survive. In order to have an income from that. That's up to whatever people think they need.

Yeah.

Now, most people, if you're let's say you retire on $100,000 a year, which is just above the average income in Australia. So if you retire on $100,000 a year, um.

Speaker3:
As in the money, you're drawing the money?

Speaker2:
No. Your last income was $100,000 a year.

Speaker3:
Yeah. Okay. Gotcha.

Um, and so you say. All right, I don't need $100,000 a year when I'm retired, because my expenses are going to be less and I'm not paying tax and blah, blah, blah. I might only need 50,000.

Yeah.

Speaker3:
So.

Especially if you've got your house paid off.

Exactly. So in order to have $50,000 a year, I need $1 million in my superannuation fund, or I need roughly $1 million in some self-managed fund or other investments.

Speaker3:
I need some kind of..

In order to get $50,000 a year..

A year. Now, if it's if it's not a superannuation fund, you're going to need probably another 30 or 40% because you're going to be paying tax on it.

Yeah.

So if you've just got, if I've got $1 million worth of investments and I'm earning 5%, I'm earning $50,000 a year, I'm going to pay $10,000.

Speaker3:
So really it's only worth 30 to, yeah. 40,000.

Speaker2:
40,000. Yeah. So that's why it's some form of superannuation is a huge tax benefit to you.

Speaker3:
Yeah.

Speaker2:
Um, so that's the preparation for retirement. I had always worked on the basis when we were planning our finances as we were going along. Now, both of us were employed in the university sector for the majority of our working life. So we knew we we knew that any extra money that we had, which was very little, that if we put it into private investment, that was fine, because we're always going to be earning 17% of our income in super.

Cushy jobs, man, these cushy..

You don't get. The thing is, you don't get paid a lot in the first place. But, you know, I was earning $140,000 a year as a director, a senior manager in a university. It's not..

You would expect it to be a lot more.

Speaker2:
Yeah, that's 17 years ago. But yeah, if I was doing the same job in private industry, I would have been earning at least double that.

Yeah.

So.

Yeah. Um, so it's it's all a matter of just working out what you think you're going to need, and you're guessing because, you know, who knows what inflation is going to do in the next 20 years.

Speaker3:
Oh man. Tell me about it. Well, um, you know, freaking out about the economy..

You are 30 years behind me. In age. If you looked at it and said..

My finance is probably like 100.

Speaker2:
Well, no one your age, we didn't have much, but but we but you look at it and go, what's life going to look like in 30 years? Now, when we were planning go back 30 years when, you know, 37 years when you were born. Um, we were looking at it going, we think we're going to need about $2 million in assets.

Combined. Yeah.

Speaker2:
Combined in order to have an income that we could live on.

Yeah.

It's, you know, it's not a travelling overseas every year and buy a new car every second year, but it's what you can comfortably live on.

Speaker3:
Well that's part of it..

And we were basically right.

Speaker3:
You have to work out..

Speaker2:
We're roughly right.

What matters.

But who knows whether somebody is going to be able to say, you know, whether you can go, what's inflation going to do over the next 30 years? You know, what's the cost of living.

Speaker3:
It's not inflation I'm worried about. It's the government.

Speaker2:
But.

Speaker3:
It's what are they doing in order to impact all of these things? How much are they fucking us? How much are they changing?

Speaker2:
Well, yeah. And the other thing that has changed considerably is the cost of housing.

Yeah.

Yeah. Interest rates I mean, people now, I mean, I don't know what interest rate you're paying. Probably 5%, thereabouts.

Speaker3:
It'd be more than that. It'd be six point something.

Speaker2:
Yeah, 5 or 6. When we started paying our mortgage, we were paying 13%. Within a year, we were paying 18%. Yes, but but but the the principle that is what we owed on the house was about double my annual salary.

Speaker3:
Exactly that. It's one of those things where it's like, if you've got a $100,000 house, paying 18% on that is 18 grand.

Speaker2:
Yes.

Speaker3:
And that's nothing compared..

Speaker2:
But if you're only. But if you're only. Well, yeah. Our first house cost us just under $60,000.

Speaker3:
Exactly.

Speaker2:
But I was earning $28,000 a year.

Speaker3:
Yeah.

Speaker2:
Yeah, but.

Speaker3:
So.

I would kill to have a house that, or to be either on an income that was half the value of my house, or to have a house that was twice the value of my income.

Yeah. Yeah. And so and that at the time, housing was other than interest rates on mortgages, housing was relatively cheap in relation to the cost of everything else.

Yes.

That's the irony, is that the cost of living at the moment is almost entirely housing.

Yeah.

In terms of the proportion of the amount of money people are doing.

Speaker3:
But when..

To be transparent..

Speaker2:
Cost of food. When we first got married more than 40 years ago, the cost of food relative to today was much more expensive.

Speaker3:
Yeah. But probably less options.

Speaker2:
But way less options. The cost of fuel was as well.

Speaker3:
This too, with all of the stuff, like we were looking at a magazine the other day for Kmart in the 90s, and it was like a microwave was a few hundred bucks.

$400.

Speaker2:
Now you can buy one for 80 bucks.

Speaker3:
And I think when I did the, what is that amount in today's money, it was like the microwave you would get from Kmart, which is a cheap store, was the equivalent of 1500 dollars.

Speaker2:
But you can go into Kmart and buy a microwave now for 100 bucks.

Speaker3:
Yeah. Which would have been the equivalent of probably about what, 20, $30, $30 exactly.

So yeah. So it's that and that's why we, you know, people talk about the cost of living crisis and they complain about the cost of food. The reason people are complaining about the cost of food is because a vast majority of their money is going into housing, whether it be rent or mortgage or whatever.

Speaker3:
Well, and you can't really cut back on food. Really?

Speaker2:
Well, you can't cut back on housing.

Yeah.

That's the thing. Is that.

Yeah.

You, the first thing you need is a roof over your head.

Yeah.

Particularly if you've got a family. Um, and so that's, that's the baseline. And then you've got the gap. Whatever's left behind that. And yes, food is expensive, but, you know, not in comparison with what it was 40 years ago.

Speaker3:
For transparency, I think our house we bought for $640,000 with, I don't think we had a deposit, really. It was you guys as guarantors.

Yeah.

That was the only way we got in. So the loan is for about $640,000. At the time that we got that loan, the repayments were like 2500 dollars a month. And then since those 13 rate rises, it's gone up to nearly $4,000 a month, I think pretty much $4,000 a month. And so, yeah, it's just it's ridiculous to think that that's well and truly beyond my wife's wage, you know. And combined, we can sort of manage it. But yeah, we definitely had to cut back on a lot of other things that think about budgeting and, you know, what's what's wasting money. What are we, what are we..

Annoying. The annoying thing about that is that we are working in a economic system that is based on a flawed 19th century economics, that is around saying that the reserve bank that controls interest rates is managing interest rates to try and keep inflation where it is.

Yeah.

But it's not. They don't seem to account for the fact that the vast, the by far the biggest component of inflation is the interest rate you're getting, you're charging on housing.

Speaker3:
Yeah. Well and this is one of the funny things because you and mum have have coasted through this.

Yeah.

With respect, pretty easily. If anything, you've made money through all of the inflated stuff because of the way that the shares have just gone berserk because.

Speaker2:
Well, shares haven't gone berserk. Shares have basically been a linear increase forever.

Speaker3:
But it's been a bear market, recently, right? Like the value of anyone who's got assets is effectively making.

Speaker2:
A bull market.

Speaker3:
Yeah, yeah. Well, anyone's making a load of money if they've got loads of assets at the moment.

Speaker2:
Oh at the moment. Yes.

Speaker3:
Yeah.

Speaker2:
But everybody's done that..

But we have this disparity right between the, the boomer generation that are at their peak of asset ownership and, and income and everything. And also their personal cost of living is probably about as low as it can be, with most of them having paid off their houses, not having- so the interest rate rises don't directly affect them in terms of mortgage rates or anything like that.

Really, the only thing that interest rates hurt me. I would rather interest rates go up because that makes my cash savings are earning more for me.

Yeah, exactly. And that's the weird situation where we almost have two economies running side by side, right? Where anyone with a mortgage is feeling the pinch, and anyone who is retired or doesn't own a mortgage because they're inherently wealthy is sort of like, this is great, just keep it going because I'm making more money. And..

Yeah, but that's what the irritating thing for me is that we have a as I said, we have a system where the reserve Bank seems to think their entire job is to manage inflation. And, you know, and there's, there's I don't know of any research that is not done by Keynesian economics economists who will actually tell you that increasing interest rates actually reduces inflation.

Yeah.

Because the only way that it can increase inflation, that it can reduce inflation, is by reducing the demand for goods. And the demand for goods is purely based on based on people's ability to pay. So what you're saying is that we're going to hammer the poor people in order to manage inflation. So the government looks good. No, I'm sorry, that's not the Reserve Bank's job. The Reserve Bank's job should be to continue to drive the economy. And frankly, the economy does well with a slight increase in inflation. Yes.

Yeah.

So and I'm not an economist, but.

Well, one of the things I heard recently was that really a more, a fairer way of dealing with it would have been using GST as a, a lever for um.

Yes.

Increasing, you know, the cost of things where you do it temporarily. You say GST is the goods and services tax..

Yeah, we're going to whack it up 10..

Or 15%..

Put it at 15 or even 20% and then slowly drop it down as, as um, inflation drops down and get it back to ten. Or you would have it set where, you know, and again, it's sort of a socialist, I guess, type view on it where people who are inherently wealthy and have loads and loads of money are either taxed proportionally or forced to pay more for things that are proportionate to the amount of wealth that they have, or that you work out a way of taxing wealth more equitably.

The other. The other challenge too, is that we we also are living in a, um, a society where, uh, corporations, whether they be major corporations or small companies, are relying on reducing expenditure as a way of increasing profit.

Yeah.

And the biggest expenditure for most companies is salaries.

Yeah.

Is their payroll.

But it's..

When they reduce the expense by just saying we're not going to pay people more.

But this is the weird thing in Australia, right. Because I think we've actually had wage growth recently.

But it's still behind.

Yeah.

Inflation rate.

But we've still we've had wage growth. We've had a high employment rate where the unemployment rate is so low..

It's the lowest it's been ever!

Apparently it's really weird, right, that we have such high inflation. But because I think the government is pumping out so much money in NDIS jobs, like government created jobs, that it is artificially propping up. Um.

The thing is that our inflation isn't very high. It's a myth. It's a myth that we've been. Yeah. Our inflation is 4%. 4%!

It's relative.

Right? Yeah. The best that's ever been is in the 2% range.

But that's where they're aiming for, 2 to 3.

I know.

They just decide that that's..

Four! People go, Oh, 4 is a third more than it should be. No it's not. It's 1% more. Um. It's, uh. So anyway..

So what would your advice be to people wanting to prepare for retirement? And are there things you would have done differently? Do you feel like you've nailed it? Do you feel like, besides obviously. Oh well, make more money.

I would have earned more money. Yeah. No. Well, you know, ignoring that, um, well, I, I reckon the, uh, the best thing you can do is put as much money as you can into superannuation and the house that you're going to live in, assuming you're going to buy a house.

Yeah.

People make the choice not to buy because they think rent is going to be preferable to them. That's fine. You can argue that case both ways. There is no right answer. But if you're buying a house, pay it off as quickly as you can.

Um, in order to save on the interest..

In order to save on the interest, because that you're always going to be paying more interest to borrow money than you're going to earn by investing it.

Unless you've got tax breaks. Unless you've got negative gearing or yeah..

So then it's that balance of how much do I put into superannuation versus how much do I pay off my house?

Yeah.

And you know, while interest rates are the pressure, pay off your house.

Yeah.

So but if you don't have a house then you're just paying rent, then.

Shove it into superannuation.

Shove whatever you can into anticipate, because you can always make additional payments up to a certain amount into superannuation, and therefore you get the tax benefit of it later on.

Yeah.

And you get the tax benefit of it immediately because you can make those payments.

And it reduces your taxable..

It reduces your taxable income.

So yeah, if you were on $100,000 a year and you contribute 20% of that to your superannuation, you're only charged on..

10% comes from your employer and you throw another 10% in.

Yeah.

Then suddenly you're only going to get taxed on 80,000 a year.

Yeah. Yeah. So awesome. Well, hopefully this was interesting for people. Yeah. I don't know how many boring, how many people are thinking about retirement. It's something..

Ian's rant on.

Yeah, it's something I'm starting to think so much more about because I'm like, I don't have much in the..

Well it's too late. When you start, you get to your 50s and you start thinking about it.

Yeah.

Because in the end it's, it's always there. And I don't know, I think it was Einstein that said..

Compound interest.

The power of compound interest. And that is that the sooner you start saving in whatever form it is, the better, because that money is just going to keep working for you.

Well, that's what I keep thinking. I'm like, God, I wish I had been earning hundreds of thousands of dollars a year when I was 20.

Well, yeah, your mother and I were the same when we were when we got married. We were both students.

Yeah.

Didn't have any income. Our income was a scholarship each. Yeah. So.

Yeah. Oh, well.

For the $4,000 a year each.

Yeah. Boom.

Yeah.

Thanks for joining us, guys.

Thanks everyone!

See you next time!

Bye!

See ya!