Entering the Final Pitstop : How to structure your social pension claim, and frolick doing it.

There are really two parts to structuring your claims to your social pension portfolio.  Since you have multiple pensions you have the option of claiming one relatively early if you need the cash.  In general, health prevailing, you should defer them until 70 and take the deferral cash coupon.  Multiple longitudinal and cross sectional studies across countries confirm this is generally optimal exercise.  The huge implicit advantage of having multiple social pensions is that the typical reason for claiming early, an income gap in your 60s, can be met by claiming one and leaving the others.  Once again, I will make an exemplar of my particular pension portfolio and one contingent strategy that i had planned as early as age 45.

The weakest and most constraining of my social pensions is the australian one.  It erodes quickly in the presence of other income, has strict moderate asset tests or it erodes again, and binds me to living in australia to receive it effectively.  A wife cannot work or you lose it again.  It is pretty constraining.

I do not mind australia.  I grew up there and it is a gorgeous country.  The blue collar human blight is quite unpleasant.  The lack of respect at an institutionalised social level for an educated professional male compared to a high school dropout baby boomer who drove buses and owns 20 properties, none of which he could have afforded, if a government of his age group had not rescued him by slaving his kids for decades, is quite simply repugnant - in every way.  It is a global feature of baby boomers running unchecked for 30 years, but it is particularly aggressive in australia.  That has deep roots in a social culture of loutishness and high skilled trade job generation.  It is not a place where i really enjoy listening to the posing social nonsense in the coffee shop at the table beside me.  It really does ruin the natural beauty quite badly.

This of course becomes a great example of a strategic option being exercised for its strategic value.  I actually hope to develop enough wealth to be able to say 'who cares, i do not need you' to the australian social pension, but i have a contingent strategic plan.  My contingency is to use it as an emergency reserve pension to cover the period from age 67 to 70.  I will defer my other pensions until 70 to get the deferral cash coupon.  I will of course lose a decent chunk of my australian pension for having them - they get deemed as income if deferred.  As a result i will only get about 20k instead of 28k.  However, 20k aud a year is a substantive gift for simply turning up, that i will not get elsewhere, not with any assets.  There are income/housing support programs of about that size in the uk and the usa - but not if you have any assets at all really.  I do have an asset base and i certainly plan on having one at 67. So, as is often the case, the strategy is about mixing and matching what suits your scenario, strategically.

I plan to live off my emergency cash reserve plus the reduced australian state pension from 67-70.  At 70, i will take the other pensions on their full deferred coupon.  One gateway benefit of the australian state pension is rental assistance which can be claimed on RV park fees.  I plan to have a lovely couple of years touring australia in my father's RV which will probably be mine by then.  You can get about 300 aud in rental assistance for paying about $650 a mont in rent.

Another restriction on the australian pension is you cannot claim it and become ex-resident within 2 years.  It really is a tight constraining set of rules - so i have 3 years to waste back  home, just like the local beach bums who go on to be builders and make millions while the educated minority keeps the country running actually.  It is a pretty skewed reality down in aus.  It is about economic opportunity frontier - and there is a lot of scope for a dextrous aggressive disasterous moron in the mining and construction industries.  Australia is very effective at producing more of them.

Basically, my cash reserve will be supplemented by about 20k a year and 300 a month towards my rent bill for a few years as i let my other pension coupons defer.  That is a strategic option - which implies a national circuit of the country to exercise.  Since i have not spent any time in australia since age 27, that seems fair enough.  My weakest throwaway coupon becomes a cash reserve from 67-70 and a longish touring holiday of a lovely country - half funded by the government.  if i need it.  A strategic contingency.

At 70. the world will be open again, and my claims will be rendered.  At this point my concerns have little to do with pension structuring since the claim of multiple pensions will remove me from most significant other benefits.  The primary exercise criteria will be tax management and cost of living.

Personally, i suspect that one of the great demographic themes of the 2020's and 2030s, now almost a full working generation deep in a housing and stocks ponzi scheme run for boomers, and a bit of a scheme in defined benefits pensions being eliminated etc ad nauseum, will be a grey-haired diaspora.  I think the post 50 crowd who went under the housing bubble are going to have had enough pretty seriously, and be pretty seriously booking one-way plane tickets soonish.  I know i have had enough of it for a long time now.  

I am in my 50s so my exercise decision is already fixed - you do not borrow for 30 years in your 50s, not at artificially low rates with 30 years of ponzi in the rear view mirror.  That ship has sailed and you do not want to jump on the last one as it catches fire.  However, i sit at the lead demographic edge of about 15 years of cohort that have been pretty seriously torn apart on economic incomes and capital formation by baby boomers scheming in housing.  Especially the risk rational ones who knew what a ponzi scheme looked like.  They are leaving - early - for cheaper pastures basically.  You only have to take a trip into an asian or latino capital and look at the difference compared to 15 years ago to see how that is actually transgressing.  It will accelerate quite stupendously, i am certain.  There is absolutely a wisdom of crowds when everybody faces the same predator.  Nature in action.

Revisiting my local pension broker's theme of how to retire you need a fully funded state pension, a paid off home and a cracking large private pension pot that he can help you with most ably of course...  One substitute to the paid off home leg, is to simply live somewhere with cheap rents.   In Brisbane where i grew up simple apartments go for about 1600 a month.  In the Philippines, in rural beach towns an apartment twice that size goes for 250 a month - with direct sea views.  Financial frolicking involves knowing where to frolick, and when.  Replacing first world rentals with second world rentals that are significantly less than your proprety tax is a very viable substitute to home ownership.  Somebody should warn generation baby boomer than the tyranny is about to blow up on them - badly.  A lot of those cochroach mansion renters are now in their 50s or getting there.  It has been a revolting predatory game in ponzi risk seeking for 30 years - and it is over, because you cannot rent to a demographic that booked plane tickets in a pretty hard sharp dynamic of 5-7 years in the tail of it.

There are a range of countries in the second world where rents of 350-500usd a month are very achievable high standard of living accommodation offers.  Why would anybody who went under that housing bubble fund it for the greedy idiots a moment longer than they had to under the labor capture principle that got run on them in their 20s and 30s and 40s?  At the higher end of that range or just above you have european countries like spain and portugal and germany too... exactly.  I will not be retiring in Brisbane will I? - and funding some champion baby boomer risk seeker who could not add up.  No thank you.  Find another sucker dad basically...  

I have a slight informed message for the australian government too.  You might want to value your engineers a little more highly - or live in slums sometime real soon.  We have all had enough of doing the hard courses at college and getting the worst outcomes.  Food for thought for useless sociopaths who end up in politics and as 'captains of industry'.  We have all seen exactly what gets to the decision making well-heeled top.  Laugh.  I am a chartered civil and structural engineer who booked a plane ticket at 27 and never went back.  That is a productive waste of talent.  But when you pay them like secretaries ... you will get some serious leavers.

Many countries in the second world offer retireee progreams and do not tax your pensions.  You can imagine many americans get rid of their american citizenship pretty soon after they figure that out.  Who can blame them?  The global taxation system is reminiscent of the Death Star from Star Wars in its extreme imperialist attitude to global and personal reality really.

So frolickers, the moral of this episode is that as well as having your portfolio of social pensions established you need to take a view of strategic options on it, and you need to have some pretty clear plans about where you are going to frolick that does not impose taxes on foreign pensions and has a low cost of living and sites worth seeing.