Posts Tagged‘retirement’

I Find Your Lack of Financial Knowledge…Disturbing.

I wasn’t always interested in the world of finance and making money work for you. No for a very long time I was the product of my not-so-well off parent’s financial education: save everything you can so you can buy a house one day and then use every spare dollar you have to pay it off. If I’m honest that advice is probably the best advice most people can take as it appears that anything more exotic than that gets thrown in the too hard basket along with any notion of fiscal responsibility. However it seems that there’s a distinct lack of financial knowledge prevalent in Australia (although if I’m honest it’s not unique to us) and the number of articles that keep popping up showing this have really got me worried.

Most of the ones that have been crossing my path recently (from news.com.au and yes I know, I should stop. I have a problem) are regarding Australians, both young and old, voicing their concerns over their superannuation. It appears that some Australians believe that their inheritance, you know that supposed financial payment you get when your loved ones  die, will be their saviour come retirement time. Other’s are worried that their super won’t be enough for them when they retire, which is a valid concern for many, but such worries are usually born of poor planning without a thought given to what retirement and superannuation are really for.

I’ll forgive my generation for not knowing this but there was a time, and it wasn’t that long ago, when superannuation wasn’t a guaranteed thing. Indeed it wasn’t until 1992 when the Keating government legislated for compulsory superannuation that it became required for employers to contribute a percentage, then 3%, of their employee’s income into superannuation funds. It was a long game manoeuvre as the next 2 decades were going to see many of the baby boomer generation move into retirement. The pension system would be unable to cope with so many retirees and thus the government hoped to head this off at the curve by making everyone save for their own retirement (and created the oft-quote “self funded retirees” sound bite).

For all of my generation they will have spent their entire working life contributing to a super fund and whilst it probably isn’t anything to write home about at the moment it will be quite something when it comes time for them to retire. I ran some quick numbers using the median Australian wage as a base ($66,820 if you’re wondering), the current 9% super contribution and a modest super return rate of 5% per year (the average is closer to 6.5%). If we say that the average Australian has a working life of 45 years, from the age of 20 to 65, then they end up with a rather healthy sum of $960,000 in super when they finally reach retirement age. At 5% return rate per year this means a retiree can draw down almost $50,000 per year without eating into their super at all. This is about 71% of their working life income which wouldn’t be too bad considering you’d expect their expenses would be a hell of a lot lower.

The situation for people not in my generation is completely different however as many of the assumptions I made can’t be said for everyone else. I haven’t even touched on things that can increase that final figure dramatically (like super co-contributions) which would make retirement even easier. Still the point stands that anyone in my generation in Australia who thinks they won’t have enough to retire on obviously has little idea about real financial planning.

As for those nearing retirement and wondering if they have enough super I can’t really say much without knowing their situation (there’s a whole mess of variables that can change things dramatically when you’re within 10 years of retiring) but the fact that there are people worrying about it should serve as a warning to the rest of us. It’s not something you should be thinking about when retirement is looming over you, although that seems to be the norm around here.

I really could go on for quite a while longer about this but I think I’ve already driven my point home. Us Gen Y’s are going to be pretty well set up for retirement when the time comes and anyone who’s relying on some kind of influx of cash in order to retire has more than one kangaroo loose in their top paddock. I’m not saying you need to fret about it every day but if you keep an eye on your super, keep those home loan repayments up and keep your bad debt low then you’ll really have nothing to worry about. Not doing this will leave you in the same situation as many baby boomers are now finding themselves in and you’ll find no sympathy from me should you ignore the lessons to be learned from their plight.

SpaceX’s Vision for Mars.

There are only a few private space companies that I have any semblance of faith in these days, most notably Armadillo Aerospace (founded by programming genius John Carmack, creator of DOOM) and my current space idol SpaceX. The former’s achievements have been quite impressive with their technology progressing steadily over the past decade. SpaceX has shown everyone that the realm of space is not just for the super-governments of the world, successfully launching multiple rockets and landing numerous contracts for their services. If there’s anyone that can commoditize access to space it will be SpaceX.

Whilst their current plans of reducing the cost of access to space is clear their direction past that has always been something of a mystery. Last year they announced some plans for a number of rockets that had some mightily impressive specifications, rivalling that of rockets of decades past. SpaceX’s CEO Elon Musk has gone on record saying that he wants to retire on Mars (and his wife is on board too) but those dreams had always been met with scepticism as we haven’t been past low earth orbit for the better part of 4 decades. Reports are starting to come in though that shows Musk is quite serious about his future retirement plans:

“We’ll probably put a first man in  in about three years,” Elon Musk told the Wall Street Journal Saturday. “We’re going all the way to Mars, I think… best case 10 years, worst case 15 to 20 years.”

“Our goal is to facilitate the transfer of people and cargo to other planets, and then it will be up to people if they want to go,” said Musk, who also runs the Tesla company which develops electric cars.

Putting that in perspective that could mean we’d have people on Mars by 2021 or at latest 2031. Comparing that to George Bush’s Vision for Space Exploration which had us returning to the moon in 2020 you’d be forgiven for being sceptical of it since if a government couldn’t do it with a lead time of 15+ years and a comparatively large budget what chance would SpaceX have? However SpaceX has shown that they are quite capable of creating aggressive schedules, meeting them and doing it all on a fraction of the budget that has traditionally been used to accomplish such feats. Indeed the recent announcement of the Falcon Heavy saw many people speculating about missions like a Mars sample return mission that has not been feasible due to the launch weight required but was well within the capabilities of SpaceX’s new rocket.

SpaceX has also been making strides with its Dragon capsule, putting the finish touches on it to make it 100% compatible with NASA’s human rating standards. The planned additions to the craft would see the launch abort system, traditionally a large spike on top of the craft that’s discarded once the launch is successful, put on the side of the craft. This would give the Dragon capsule an unprecedented amount of accuracy when it came to landing the craft, enabling it to soft land at a precise location rather than requiring a splash down in the ocean. Consequently a Dragon capsule could very well be used to land on the surface of other planets, including SpaceX’s goal of Mars.

You’d think by now nothing that SpaceX could do would surprise me, but it seems at every turn they manage to pull off another feat that puts their wild claims firmly in reality. Whilst we may still be a decade away from seeing any real progress on this front it still feels a million times closer than it ever did when the same goal was held by a government agency. Even if they don’t meet their aggressive 2021 target there will be a whole host of progress made between now and then, enough so we’ll have a clear picture of when we’ll be exploring our diminutive red cousin.

 

Just Let Them Go NASA.

There’s really nothing quite like the Space Shuttle. Every part of it has been subjected to countless hours of engineering with the culmination being one of the most complex and powerful objects that man has ever created. All that being said however it’s getting on a bit at 29 years old and the revolutions in technology since its inception have set the stage for it to be succeeded by the next big thing. It will still remain firmly in our heads for a long time to come as the icon that heralded in the new space industry but the time has come for the Shuttle to retire to greener pastures.

Obama seems to support this vision with a new plan that focuses on what NASA does best: pioneering technologies and that are risk heavy and lack the current commercialization opportunity that would make them attractive to private industry. Following on from this idea it would then be preferable for NASA to delegate the routine tasks to private industry where possible, saving them an appreciable amount in research and operational costs. This is why I supported the closing down of the Shuttle program as whilst it is something that I and the wider world will miss the time has come for private industry to take over some of the mundane aspects of space travel so that NASA can return to the innovators they’re meant to be.

It seems however that some just can’t let the status quo go:

NASA currently plans to retire the space shuttle fleet in the fall after flying the last of four final shuttle missions remaining for this year. The next shuttle to fly is Discovery, which is poised to blast off on April 5 to deliver vital supplies and spare parts to the International Space Station.

The fleet’s retirement would end more than 29 years of U.S. space shuttle flights and leave NASA without a dedicated American spacecraft for launching astronauts into orbit.

Some U.S. senators and members of Congress have expressed support for extending the shuttle program, with Senator Kay Bailey Hutchison (R-Texas) filing a bill last week formally seeking a reprieve for NASA’s space shuttle fleet.

Whilst I can appreciate Hutchison’s concern for keeping the Shuttle going I can’t help but feel that it’s done only to win some political points with her constituents. Texas is home to the Johnson Space Center which employs around 3,200 public servants and well over 15,000 contracting staff. All of these are dedicated to the manned space flight programs which will suffer under Obama’s proposed plan for NASA. Other supporters of the bill are from the state of Florida, home to the Kennedy Space Center which is the current host to the shuttles and the majority of America’s launch facilities. It would then be advantageous to them to continue the Shuttle program as long as they could to keep the loyalty of their constituents, but it comes at the cost of revolutionizing NASA. Something which I believe it is desperately in need of.

The bill also calls for some form of heavy lift launcher to be ready to transport crew and cargo to the International Space Station by 2013. The earliest scheduled date for a Ares-I launch was sometime in 2014 with more recent estimates pegging it around 2017. The only way that NASA will get such a capability will be to buy it off private companies such as SpaceX, who’s Falcon 9 is much more likely to reach that deadline date than anything NASA comes up with. I can’t seem to track down if there’s any additional funding included in the bill to support this more aggressive timeline but needless to say it would be needed if they wanted to meet it.

As much as I’d love the Shuttle to continue on I know that it’s not the right path if we want to go further into the solar system and beyond. Obama’s plan for NASA showed a great deal of strategic focus with creating a real and sustainable space infrastructure that could support future astronauts in their endeavours outside our atmosphere. Introducing a bill like this one just to score a few cheap political points is what has been keeping NASA back for decades and it’s only now that we have an opportunity to let NASA shine again.