Social Security is sometime called the "social safety net" for people who need them the most but even wealthy people get social security check and medicare too. In other words, everyone in the US will get them.
We are given the impression the USA "Safety Nets" are very poor in comparison to the Australian ones. Perhaps that is Australian Government propaganda?
Does company in Australia match what you put into superannuation? If so, how much?
OK. So this is a bit complicated. Superannuation has changed over the years here.
Prior to the early 1990s, Companies were free to implement any form of Employee Retirement schemes they desired or none at all. Some companies had Defined Benefit Schemes. (For many decades, the Public Service offered these schemes.). Some companies had private Superannuation schemes where Employers made contributions on sliding scales according to the contributions made by the employees. In the mid 1980s, I was in a such a scheme with 0-3, 2-4, 3-5 (Employee - Employee) options. In these cases, the company choose and controlled the Superannuation Fund. (Company appointed Trustees and Fund Managers)
In the early 1990s, the Australian Federal Government of the time passed legislation to introduce a Superannuation Guarantee (SG). This was a defined percentage that was applied to the employee's total Gross Salary. The calculated amount was paid by the Employer into a Superannuation Fund chosen by the Employer. The initial SG was 3%.
So if an employee earned $100,000 p.a., the Employer would contribute $3,000 p.a. into the employees Superannuation Account in the Superannuation Fund selected by the employer.
So at that point, every Employee started to receive Superannuation paid by the Employer. Employees were free to make either Pre Tax or Post Tax Contributions. Over time the Superannuation Industry was deregulated which led to the opportunity for Portable Superannuation. Employees were able to choose their own Superannuation Funds and direct their Employers to pay the SG into the Portable Fund. (Prior to date, an Employee who changed jobs would often end up with multiple Superannuation Fund Accounts paying multiple sets of Fees.)
Overtime the SG has grown from 3% to the current day 9.5%. It is scheduled to continue to grow to 12% by 2025. But the Coronavirus might throw a spanner in the works there.
Since the inception of the SG, it had been legislated that employees could proceed to access their Superannuation monies from 55yo. But over the years the laws changed. Access to Superannuation now works according to a sliding scale based on one's year of Birth. However, anyone can access their Superannuation once they turn 60yo.
The Superannuation scheme is a pretty good one. It's certainly added a lot of wealth to the country and reduced the pressure on the Aged Pension system which was its original goal.
Access the 401K or Superannuation is the worst thing you can do to your retirement future from a financial standpoint.
It really depends what age you are. And it depends how your money is invested. Many many people that were approaching Retirement just prior to the GFC crisis had a lot of their Superannuation in Balanced or Growth Funds. They got badly burned as a result of the GFC. Many lost hundreds of thousands of dollars in a very short period of time and never recovered that money prior to retiring. Some continued to work longer than they otherwise would have.
I am just grateful that I have enough emergency fund that will last me for two years even if I lose my job so I am very grateful for that.
Unfortunately, the average Australian holds an incredible amount of personal debt. For many Australians, "Lifestyle" is a priority over everything else. Many, many Australians, regardless of their income, live from week to week. Average Household Debt is in the order of two times Household income. Too many people here live well beyond their means because they are driven by "image" rather than "substance". Huge houses with huge mortgages, new cars every couple of years, eating out several nights a week, overseas holidays every year, seems to have become the norm for many over the past decade.
Financial institutions are happy to lend large amounts of money. House mortgages operate differently here. If the value of the secured asset drops well below the value of the loan, Banks can sell the house to recover their capital costs, and then continue to collect the outstanding debt from the borrower. The only way a Borrower can avoid repaying the debt is to declare "Bankruptcy". But doing so introduces serious problems for the Bankrupt person.
The one huge thing this virus situation has exposed is how little funds the average Australian puts aside for a rainy day. Australia will be repaying hundreds of billions of dollars of recently acquired debt for decades to come.
And sadly, those who lived frugal lives and saved their money are probably going to have to bail out those who spent like no tomorrow.
. Even the filed next to it look kinda dangerous.
