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E-book How to Build a Modern Tontine : Algorithms, Scripts and Tips

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Penilaian

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Australians retire with millions of dollars. It’s not that Australia is necessarilywealthier than any other country, although they certainly rank high on a per capitabasis. Rather, they happen to reach the traditional retirement age with millions ofdollars in their retirement savings accounts. The source of (and credit for) theirwealth is the Australian government who forces workers to save close to 10% oftheir salary in an investment account, and its employers mostly who are contributingto that pot. To put it in very simple terms, if your quoted salary is 100,000 AUD peryear, your employer will guarantee and pay another 10,000 AUD which flows intoyoursuper(short for superannuation)potas it’s called. So, after a few decades ofbeing forced to save that much money every year, and if the money is invested ata reasonable rate of return, it’s not surprising it accumulates to millions of dollarsat retirement. No other country has such a widespread system of forced retirementsavings, also known as mandatory Defined Contribution (DC) Individual Account(IA) plans.The problem with all these millions of AUD is that retiring Australians face ahuge dilemma of what to do with all this money. Now sure that sounds like a superproblem to have, but it’s a scary one when you are looking at large sums that mustfinance your golden years of unknown length and duration. Australians can continueto invest the funds in the many different investment products they used during the accumulationphase, or withdraw their money and spend it slowly, or they can yankit out and buy a sailboat, which some do. Australians have lot of choices to make,with complex income-tax and old-age pension implications, which can be ratherparalyzing and often leads to some very peculiar outcomes.The Australian scheme has been in place for almost three decades now and hasoffered plenty of time to gauge how typical retirees behave—and what they actuallydo with their accounts—as they age and progress thru the lifecycle. One very largeemployer who managed a very largesuperin Brisbane, a lovely city in Queenslandon the east coast of Australia, has carefully tracked the financial behaviour of tens ofthousands of retirees during the last thirty years. Needless to say, many of the peoplewho retired in their late 60s and early 70s are no longer alive three decades later, inwhich case the money in those accounts are transferred and bequeathed to survivingspouses, children and beneficiaries. But, after digging into all that spending andinvesting data over three decades of retirement, researchers in Brisbane noticedsomething very peculiar—and is an insight at the core of this book.The Brisbane “discovery”—which is what I’ll call this, with a shout out to BrnicVan Wyk was that onaveragethe amount of money left in people’s retirementaccount when they died wasequalto the original sum they had started withwhen they retired decades before. Members ended their retirement journey withan average balance equivalent to when they started the journey. If they began with amillion dollars at age 65, they ended with a million dollars. If they only had half amillion in their pot when they exited the labour force, they left this world with halfa million dollars, etc.Now, to be very careful, the Brisbane “discovery” was a loosely defined averageand there were many exceptions to this result, but the behavioural implicationswere even more interesting. Remember that the pension super pot wasn’t sittingunder their mattress or deposited in a bank account earning little interest income.The money was allocated to stocks (shares), bonds and many other investmentasset classes over the 10, 20 or even 30 years of retirement. They had properinvestment portfolios much like their brethren who were still accumulating. So,these account values fluctuated over time, bobbing up and down with markets andinterest rates. They might have been tilted a bit more conservatively, but these potsearned dividends, interest and realized capital gains over time, which means thatthey increased and decreased from day to day and year to year. But again on averageretirees adjusted and fine-tuned withdrawals and spending, so that the balance ofthe pension pot followed a rather flat trajectory over the long-run. How exactly?Well, if the pot grew in one year, the owner spent a bit more. If the pot shrunk, theowner would cut back and perhaps have one less “shrimp on the barbie”, to overusethe Australian phrase. In economic terms, this might help smooth wealth but not consumption.

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Ketersediaan

Informasi Detail

Judul Seri

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No. Panggil

650.0285 MIL h

Penerbit

Switzerland : Springer Nature., 2022

Deskripsi Fisik

168 hlm

Bahasa

English

ISBN/ISSN

9783031009280

Klasifikasi

650.0285

Tipe Isi

text

Tipe Media

computer

Tipe Pembawa

online resource

Edisi

-

Subjek

Data Processing and Analysis of Business

Info Detail Spesifik

-

Pernyataan Tanggungjawab

-

Versi lain/terkait

Lampiran Berkas

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