The truth about the stockmarket meltdown and your retirement
The far-reaching impacts of US President Donald Trump's tariffs will continue to be felt for a long time.
In terms of superannuation, market experts believe that it will have a profound negative impact on super balance.
Because of Trump's tariff's, the ASX is down about 1000 points (13%) compared to its recent highs, which will inevitably flow through into a similar reduction in many super balances.
Now of course, that is only a notional loss (which will only be crystalised if people sell their shares, which won't necessarily happen in a super context) but it is profoundly worrying, especially for those nearing or at retirement age who might have to dip into their super in the fairly short term.
Unless there is a rapid uptick in the stockmarket, this could mean that many people will have to work longer to afford the kind of retirement they thought they were looking at just a few weeks ago.
In tax terms, the effects of the tariffs and the associated stockmarket crash will take longer to feed into the system.
Reduced economic activity and possibly higher unemployment will lead to a reduced income tax take and a reduction in sales of goods and services will lead to a reduction in the amount of GST collected.
Exports will be hit and sales of vital minerals and ores will inevitably occur with the shrinking of the world economy, leading to less demand and less tax being paid into the system.
This could lead to increased government borrowing to support the domestic economy.
For individuals, fear of unemployment (and possibly actual unemployment) could have a chilling effect on consumer sentiment, leading to a fall in demand for goods and services as households put off making purchases until the economy stabilises.
Falling interest rates (which may be cut quicker and more dramatically than expected to beef up local demand) could prove to be a silver lining to this particular cloud but it is important to be aware that there could be large job losses as a result of the tariffs which could negatively impact a large number of affected consumers.
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