[ExI] Psychology of "Entitlements"

Stathis Papaioannou stathisp at gmail.com
Fri May 15 15:01:13 UTC 2009

2009/5/15 Alejandro Dubrovsky <alito at organicrobot.com>:
> On Fri, 2009-05-15 at 17:13 +1000, Stathis Papaioannou wrote:
>> I'm still not sure I understand: are you saying that if you had modest
>> savings you would not have found another job? Where I live it takes
>> about 5 to 7 years savings for someone on the average wage in order to
>> sustain themselves at the level of the dole for the rest of their
>> life. So most people could retire before they're 30, if they would be
>> satisfied with the dole. Is this a problem?
> I don't think you've done your calculations correctly:
> Average full time salary in Aus is very close to 50k, which leaves 40k
> after tax if you don't owe HECS (37 otherwise).  Dole is 15k with rent
> assistance, but before all the other benefits (concession card,
> telephone assistance, etc).  If you assume you are happy to live on the
> same amount of money while working full time as you are on the dole
> (very hard, much more expensive to have to get out of the house every
> day and also to keep work-stress manageable without money), you can save
> 25k per year.  7 years gives you 175k, good for under 12 more years of
> dole equivalent.   7 on/12 off is not a terrible split, and I hope I can
> do that, but it's not 7 on/infinity off.

The dole is $453.30 a fortnight, or $11,785.80 a year for a single
person (the aged pension is somewhat higher than the dole):


The average wage in Australia is $63,154 per year:


After tax, that leaves $49,218 per year:


Subtract from this $11,785.80 and you are left with $37,432.20 per
year in savings. Now, it depends on what investment return you can get
on this money. If you invest it at 5% per annum then after 5 years you
will have $206,839.10 and after 7 years $304,777.4. If you retire at 7
years and continue to get a 5% income return that's $15238.70 per
annum, preserving your capital.

I did not include rent assistant and non-cash benefits, nor the extra
costs associated with work; on the other hand, I also did not include
any tax deductions or the 9% superannuation contribution, which you
can't access until you're  60 but which will allow you to draw down on
some of your capital every year without running out of money by then.

In any case, even in a worst case scenario everyone happy to subsist
on the dole could retire in their 30's.

> (Disclaimer:  I only got out of the dole because they started hassling
> me with the dole diary.  That was work.)

The idea of the dole in Australia is that if you can work you
shouldn't receive it. But even if this weren't the case, I've never
heard of a situation in a country where there is a labour shortage
because the dole is too high or too easy to get.

Stathis Papaioannou

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