YOYO stands for “You’re On Your Own”, and it has never been truer for Australian retirees.
In the 1980’s when Paul Keating changed government policy to encourage us all to save enough money for our eventual retirement, we did so with an expectation of mastering our own destiny to enjoy a wonderful and carefree retirement. The idea was to reduce the dependence upon government funds for the old-age pension.
There has been a tremendous change in the social culture of Australia in the 25 years or so since superannuation commenced. Consumerism and household debt have risen to enormous levels. Almost every householder draws upon the equity in their homes to afford luxury “lifestyle” items such as the latest big-screen home theatre systems. Credit cards and high levels of debt are common. The levels of average household savings (apart from superannuation) are non-existent, and most super funds are invested in Australian equities (shares) and therefore vulnerable to share-market contractions, such as at present.
These and related factors have left us Baby Boomers with a substantial shortfall (on average) in our projected savings for retirement.
This is why You’re On Your Own. The government absolutely won’t have enough funds to provide full pensions and ever-more-expensive health-care for the enormous numbers of Baby Boomers about to leave the workforce and head into the twilight years. There simply are not enough replacement workers coming into the workforce behind us to pay for everything through current taxes. It is no coincidence that in the same era as superannuation began in Australia the GST (Goods & Services Tax) was introduced (also by Paul Keating) to reduce reliance upon workers’ incomes as the main source of government revenue.