We are definitely the ‘lucky country’ yet we shouldn’t let it allow complacency to creep in.
I was recently in South Africa and in discussions around the Australian property market a common question was “Why don’t more Australian’s invest in property?” (according to the ATO only approximately 7.7% of the population are property investors with only 25% of those holding 2 or more properties). My response was, ‘we have it too good’.
False sense of security
Its been my experience that many people in Australia believe that the Government pension and their superannuation won’t be sufficient to support their lifestyle in retirement, yet few ever take real action to do something about it. We’re not taught wealth creation strategies in school and the government ‘safety nets’ have created a false sense of security reducing our motivation to focus on creating wealth from a young age. We don’t live behind razor wire and electric fences or have to ensure our movements in our daily lives are based around minimizing our exposure to high levels of crime and violence so there is little to cause us to take real stock of our lives.
As the lucky country we have seen 16 years of strong economic growth leading to the GFC and were the only advanced economy not to have a recession so there is an entire generation under 40 who don’t really know what tough economic times look like. It’s no wonder complacency has crept in.
The time is now
During my trip, the vast majority of South African’s I spoke with all understand their position in life and their strategies for creating wealth. They are also keenly aware of their political environment, and understand the context of their currency in the global market. Their environment has caused them to be a forward looking and entrepreneurial people. Interestingly they look at the stability of Australia and its long term growth prospects as a low risk place to invest, particularly now given the challenges in Europe and the US. Yet, despite our prosperity few Australians are retiring today with the capacity to maintain their standard of living. Generally we don’t give more than a cursory thought about security in our retirement until far too late in life. Thankfully we’re not forced to by the environment in which we live, however maybe we should take a leaf out of the book of those who are.
With Australia entering another phase of growth and sound fundamentals underpinning our property market, today is as good a day as any to start working towards real wealth and security in retirement.