Money Talks

Team Name

Dirty Cash

Team Members

Project Description

The Australian Government is allowing people financially affected by COVID-19 to apply for early access to their superannuation.

But is dipping into your superannuation early a good idea?

"If it was always their own money to use as they please, there would never be any superannuation. Because the whole point of superannuation was a great public bargin for the Super Guarantee that I struck with the community .... The deal was: you defer consumption, we give you a low rate of tax." - Paul Keating

If your Super balance is lower than people in your demographic this will impact your quality of life in retirement. Compound interest is powerful, to show this we have build:

• a calculator to show the difference in your super over time.
  
• a sand graph with the relative tax rates per tax bracket
• income adjusted for inflation over time
• a calculator to show how your super balance compares to other people like you.

Data Story

How has your tax changed over time?

In 1950 the tax rate in the highest tax bracket was 75% on income above 10,000 pounds

In 2018 the tax rate in the highest tax bracket was 45% on income above $180,000

Thanks to inflation this makes it difficult to directly compare. So we have created a sand graph of the tax brackets over time with an overlay of your salary today adjusted for inflation.

The effective tax rates for individuals has decreased over time. This has been made possible by shifting the burden of care in retirement from the government to the individual through Superannuation. The grow of Australia's population has made this a necessity.

13,123,478 people paid tax in 2007–2008
13,508,101 people paid tax in 2015–2016

so an extra 384,623 people paid tax

But

The population increased by 2,783,435 over the same time period
put another way our tax paying population increased by 2.93% but our overall population increased by 13.24%

Surprisingly a large number of people in all age brackets have no super before the governments scheme. This is due to
Australia's population increasing through immigration by roughly 250,000 a year net. The average age of migrants to Australia is 40, however when people migrate to Australia they have no superannuation, this potentially means more people will require access to government pensions.

The increased number of people supported by the pension makes it difficult to increase the dollar value to each recipient. However the effect of inflation decreases the spending power of the recipients.

The aged pension may not exist when you retire.

Running different profiles through our tool shows that those with low super balances will have adverse long term effects. Where as those who can afford to withdraw super early will have less of an impact. This is further amplified by the effect of fixed fees on the return of an account with a small balance.