Another example would be a couple with $1,000,000 vs a couple with $400,000.
Assuming a return of closer to 5% p.a., one lives on $50,000 per annum and the other on about $54,000 per annum inc pension. Granted that doesn't include franking credits however if Bill's policy comes to fruition the pensioner couple actually moves further ahead.
I agree with you from a capital standpoint however there is the opportunity cost as well... While one has $600,000 in less capital they have probably 'lived it up' a lot more throughout their life... Or perhaps they live in a much nicer asset test exempt primary residence than the self-funded couple and still have access to that capital via downsizing if required in future.
Our pension system needs an overhaul IMO. Its sad that the couple with $1,000,000 could upgrade their home and end up with greater annual income at the expense of the taxpayer... Not that I would blame them for doing so, everyone else does.
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