MySwag.org The Off-road Camper Trailer Forum
General => General Discussion => Topic started by: DannyG on December 10, 2013, 09:42:51 AM
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There are a few threads already on these subjects but nothing specific to what I want to know so here goes.....
Im a long way off retiring (unless I win a substantial amount of money) being 44 at my next birthday but I have been putting a lot of thought and effort into my super the last year or so and I am happy enough at this stage that it is going to put me into a position Ill need to be when I retire.
But maybe my logic is flawed and my plans may not work in the real world so I want to get advice from those that have retired or know a bit about this type of thing.
Lets just assume any assets are to be left to kids at death so as for using them for income while we are alive is a non event so assets are out of the equation.
Is it feasible to retire at age 60 and live on a super income of approx 45k per year for the next 15 years? Again lets assume there is no mortgage or very little living expenses. We would ideally like to be living on the road for a big part of the year.
That would get me to the age of 75 if I am lucky enough to live that long and then I imagine life would be a lot simpler and living from a pension may be feasible....especially if I am laying in a retirement home dribbling all day??
How much income from super can you get and still get a pension, if any?
I would like to retire and start travelling near on full time before age 60 but that is not something I can plan for at this stage. My workplace has just put up for offer 3 voluntary redundancies due to installing some robots so the older guys in the workplace that are near retirement age have jumped at it. These guys will be paid anything up to $250K so it is quite a wind fall and I imagine will easily carry them through to being able to call on their super. Hopefully in about 10 or so years I am lucky enough to have a similar thing happen to me, but obviously I can't have that as apart of a retirement plan!
While I am on this subject, are any of you swaggers qualified financial advisers? The reason I ask is my workplace offered to pay up to $600 towards financial advice but it must be with an authorised person and the offer runs out at the end of February. Id prefer to see a Swagger get the dollars than some sales shark we have in my area. Id be happy to do a session on the phone???
Thanks for any tips or advice :)
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Looking forward to any responses you may get as I am a similar age and have similar thoughts. A flaw I see in your logic is being 75 and dribbling in a nursing home might not necessarily happen as there are plenty of fairly active 80+ year olds living in their own home and the expenses that go with that so you would need another 10 years or so of income.
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Looking forward to any responses you may get as I am a similar age and have similar thoughts. A flaw I see in your logic is being 75 and dribbling in a nursing home might not necessarily happen as there are plenty of fairly active 80+ year olds living in their own home and the expenses that go with that so you would need another 10 years or so of income.
I agree but I just don't think my choice of lifestyle over the years suggests Ill live to 80+, I hope I am wrong and I still have an active life at that age, but ill be a grumpy old fart if I do.
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There are some good super benifits calculators out there.
Try this one for a start.
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/superannuation-calculator (https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/superannuation-calculator)
others here.
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools (https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools)
The retirement planner one mite be useful.
:cheers:
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You can make your assets work for you if you want
The family home is just that your family home so by the time you go the kids will probably sell it anyway. You could if you want to travel is down size to 1 apartment buy a second apartment and rent it out earning you an income that way. Or you could downsize to a suitable apartment invest the difference in blue chip shares and use the dividends as income, the shares themselves would go to the kids when you go
I have no kids so i am not emotionally attached but unfortunatly with life expectancies increasing and many people now being active till mid 80's that is 25 years of living you have to pay for at 50k per year that is 1.25mil alone then housing etc on top, i think the current ideal of leaving large nest eggs for the kids will not be the norm for much longer
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You can make your assets work for you if you want
The family home is just that your family home so by the time you go the kids will probably sell it anyway. You could if you want to travel is down size to 1 apartment buy a second apartment and rent it out earning you an income that way. Or you could downsize to a suitable apartment invest the difference in blue chip shares and use the dividends as income, the shares themselves would go to the kids when you go
I have no kids so i am not emotionally attached but unfortunatly with life expectancies increasing and many people now being active till mid 80's that is 25 years of living you have to pay for at 50k per year that is 1.25mil alone then housing etc on top, i think the current ideal of leaving large nest eggs for the kids will not be the norm for much longer
Thanks and some good suggestions. My kids will be lucky to get an actual egg when I die the way Im going but yes a small 1 or 2 bedroom house is something we will consider one day.
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I also believe that in the near future the primary residence will not be part of the means test for a pension so downsizing may work in your favour from that respect as well
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A couple is allowed $361,000 of assets other than the family home before they deduct money from the pension payment - That goes to over a million $ in assets and you have zero pension ..
So if you retire with $500,000 in super , car , camper , household items then you will lose some dollars off the pension probably about 1/3 off ...
A good thing to do is a "Transition to Retirement Fund " at age 50 .. effectively you draw from your super account up to a maximum of 10% p.a. at 15% tax .. BUT you pay into your super most of your wages and reduce your tax threshold accordingly ... I did this at 55 dropped my income by $30,000 p.a. and that went into super less 15% tax not the 31% I was paying in wages .. !!
I am still using that account even though I have "officially" retired .. Mandrakes is a bit of a hobby business and accounting wise makes no money .. Gotta luv accountants !!
Steve
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Danny, your thoughts mirrored mine when I was younger and I came to the conclusion that to know the correct answer to the money question you really have to know how long you are (both) going to live.
So at 60 I joined the wife and retired anyway, we owned our property and all our toys and probably had more super and money in the bank than the average Joe.
Roll the clock forward some 7 years and the world economy has cost us as much as we have drawn from super and its hard to get much income from cash invested.
But... we wouldn't have it any other way and not one regret.
I know blokes my age who stress too much about not enough super and have already missed out on the best years of retirement, when you are at your fittest.
Comments like I am glad I didn't retire back then - look what the global financial crisis did to my super - just dont really cut it IMO.
You can wait till your old and have plenty of super but there is no guarantee there will not be another crash anyway.
The only value in waiting till you are superannuation rich is so you have enough money for medical bills and the nursing home cos you will probably be old and decrepid by then an need it.
My strategy from my 40's was to become totally debit free ASAP, gather all the toys we wanted before retiring and top up the super and generate a healthy cash reserve with all excess cash and get out between 55 and 60.
Anyway it worked for us and I am certainly no financial adviser. Remember... you are a long time dead so don't waste too much time stressing over money. >:D
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Go see a financial advisor and sit down and chat... it can be quite interesting... and shocking.
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Best to see an independant, personal financial advisor. If they charge a fee you'll make the money back with good advice. If they're "free" it means that they are working for a commission and maybe no so independant.
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Here are a couple more retirement calculators to have a play with
The first one ( MLC) is down at the moment
http://www.mlc.com.au/SuperannuationCalculator/ (http://www.mlc.com.au/SuperannuationCalculator/)
http://www.sunsuper.com.au/assetfiles/rismodeller/modeller.html (http://www.sunsuper.com.au/assetfiles/rismodeller/modeller.html)
http://www.suncorp-online.com.au/retirement/chart.aspx (http://www.suncorp-online.com.au/retirement/chart.aspx)
Rob
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RebsWA Thanks for the confirmation :)
We live a pretty simple life down here so we do not need a huge retired income but we would love to be able to spend quite a bit of time travelling.
Our aim now, like yours at our age is to own the items we need to retire with a simple life and to be able to travel.
For those with the calculators thanks, they all seem to end up with a similar result although some of them is slightly questionable. The thing is though, we are salary sacrificing and along with employer compulsory contributions we are comfortable as to where we are heading. Sure more money will be better but the reality is that we are pre taxing as much cash as we are comfortable with at this stage in our life. As things change so will our pretax contributions.
As I stated earlier in the thread my work place currently has a $600 deal for financial advice which I am going to take up. I am sure I will get something out of it. Things like Mandrakes suggestion is something Id like to look into more. Any tax savings at this stage in life can only help ;)
Thanks every one for the advice. Its a popular topic, I am sure there are a lot of swaggers around our age that are starting to get serious about the next 10-15 years financially. I wish I had a smarter head on my shoulders years ago!
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Hi,
I haven't met any retiree yet who regrets not working a few more years for the $$$.
Both my parents retired on the Age Pension back in 1977, spent all of the work super on a camper and some toys, and hit the road for a while. Mum is still in her own home at 97 and now employs gardeners and cleaning; all on the Age Pension. It is very generous if you use it wisely.
We are both comfortable on just over the single Age Pension in $$, but are only entitled to a fraction of the Age Pension due to work super. This will rise when SWMBO reaches 65, guess we will have to dine out more often then.
cheers
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Just a point on seeking financial advise, try and get one who does not do investments as they are focused on investing your money so they get geturns, just try and get one who has straight forward advice and not looking to fill their own pockets. I speak from experience and lost much $ because of it.
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I have just retired so my thinking may be coloured by my experience. Nine years ago I was basically broke with a mortgage after a marriage break up. Now I am debt free and with the help of a redundancy have enough to be retired debt free at 61. It is amazing how quickly things turn with a bit of restraint and some disciplined saving (salary sacrificing was a big help but new limits on contributions make that a big harder) Even without the payout I probably would have been able to pull the pin in a couple of years.
At your age I would be concentrating on paying down the mortgage, if you have one, are setting things in place so that when you want to retire you have debt free roof over your head.
With that is taken care of it is not rocket science, you just have to accumulate enough assets to give you the income your require, the problem being who knows what will be happening in 20 years time, certainly no economist! You won't have to look hard to find
advisers who tell you you need a zillion dollars ... They will have a plan for you which may or may not get you there but will definitely earn them some fat fees. sure if you want to drink penfolds grange every night you will need plenty, but if you don't do it now the chances are you want want to do it when you are retired.
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I'd be wary of the calculators they tend to be optimistic at times.
Simple fact is I recently retired at 60, some calculators showed around $400000 would give me
a comfortable income it won't!
I have considerable more than that at yes, with all the big bill items paid off I'm not starving.
The simple fact is if your 60 and retiring today you need about 1 million in your super, my partner
works in the investment area of a large super scheme, she will tell you, contrary to what the super
schemes put in their glossies you will really need 1.2 -1.5 million in super if you retire today and want
to be comfortably well off.
The super schemes tell you how wonderful their doing, the scheme I'm in is one of the top in the country
performance wise. If you had around $400000 invested at year 1 and contributed heavily to bring it up to
$800000 at year six over the past 6 years your investment return would have been around $120000, yes
that's correct $20000 a year average return on a balance going from $600000 to $800000 and they
say their doing well, these are real figures not a calculator.
Yes we had a GFC but these events happen regularly and must be factored in, if they had not happened
I would be much better of but as per Murphy's law they happen when your just about ready to retire.
I would suggest that you youngies pay off all your major debts as quick as you can and poor money into
super, you would probably do better if you have a self managed fund and a re careful what you invest in
but who wants to spend hours each day in retirement doing research and managing their portfolio?
Keep in mind if married and only one is working, if you get divorced then your super nest egg is
going to take a battering, and both of you will be in trouble super wise.
Live long and live happy:)
Leigh
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Interesting stuff
I've been considering these things myself and it seems that getting costs down will make retirement easier.
So energy costs
Insulate house
Solar hot water
Solar power
Can I move to a regional area? Reduce rates and perhaps free up some capital thats in our home
What else?
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While the $1 Million for retirement has been bandied around for a while it is all relevant to how long you need it for. A new retiree will obviously need more in the initial years after retirement as they are more active and the $ amount required will generally lessen as they get older which may see the age pension being enough in later years. If we all knew when we were going to kick off it would make it easier to judge when to spend our savings but a rule of thumb is enjoy it while you can because health issues have a habit of creeping up on us and then someone else will probably enjoy spending our hard earned money :cheers:
I have seen on a few sites they recommend that a person can live about the same quality of life in retirement if they have about 65% of the amount of money they were living on before they retired, this takes into account concessions etc.
Trevor
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Interesting stuff
I've been considering these things myself and it seems that getting costs down will make retirement easier.
So energy costs
Insulate house
Solar hot water
Solar power
Can I move to a regional area? Reduce rates and perhaps free up some capital thats in our home
What else?
Moving to a regional area needs to be considered may be false economy, you will have increased fuel costs assuming you'll be
travelling to the city regularly and the medical services later in life.
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Moving to a regional area needs to be considered may be false economy, you will have increased fuel costs assuming you'll be
travelling to the city regularly and the medical services later in life.
Yup, my folks moved out to Cape Paterson from suburban MEL, 2 hour drive each way. Whilst they have great health and general facilities close by in Wonthaggi, they come to MEL at least twice a month for various stuff. Now they're both 75+ they typically stay overnight in a motel which costs more $. They do have a great life being 50m from the beach though.
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While the $1 Million for retirement has been bandied around for a while it is all relevant to how long you need it for. A new retiree will obviously need more in the initial years after retirement as they are more active and the $ amount required will generally lessen as they get older which may see the age pension being enough in later years. If we all knew when we were going to kick off it would make it easier to judge when to spend our savings but a rule of thumb is enjoy it while you can because health issues have a habit of creeping up on us and then someone else will probably enjoy spending our hard earned money :cheers:
Trevor
Also keep in mind, if you were to retire today, your drawing $50000 a year from your super and there's another GFC
which is quite on the cards if America doesn't pull their finger out and address their debt issue.
Over six years you'll drawing $300000 out of your super, even if you want to shut it down there's
still a minimum amount your allowed to draw down and the government is adverse to change the limits
as it keeps the country going.
As for old age pension, if the governments have their way their won't be one, and if they get their
fingers into to your super like they want to that will be gone too!
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I will give an opinion which is basically the opposite to what everyone has suggested.
Seeing a Financial Planner is fine, but before you do so you need to know what you want outcome you want to achieve as more than likely they will charge a fee??
Yes most of us won’t have enough money for a comfortable retirement depending on how long we live and odds are they will suggest 2 ways to prepare
1st – Salary sacrificing into Super
2nd – Some form of additional long investment/shares which can help subsidise you later in life.
First option you can do yourself by contacting your payroll section and the 2nd you need to see a Financial Planner to arrange. They are also paid commission for this service.
Just my 2cents worth (Mind you I don’t have any financial qualifications)
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A couple is allowed $361,000 of assets other than the family home before they deduct money from the pension payment - That goes to over a million $ in assets and you have zero pension ..
So if you retire with $500,000 in super , car , camper , household items then you will lose some dollars off the pension probably about 1/3 off ...
A good thing to do is a "Transition to Retirement Fund " at age 50 .. effectively you draw from your super account up to a maximum of 10% p.a. at 15% tax .. BUT you pay into your super most of your wages and reduce your tax threshold accordingly ... I did this at 55 dropped my income by $30,000 p.a. and that went into super less 15% tax not the 31% I was paying in wages .. !!
I am still using that account even though I have "officially" retired .. Mandrakes is a bit of a hobby business and accounting wise makes no money .. Gotta luv accountants !!
Steve
Mandrake- I think the transistion to retirement is available from age 55 ( it was when I did it a few years ago). Also changes to super contributions need to be checked depending on your age. I can only put in $35,000 per year but that also includes company super contributions.
It does save a bit in tax though. The best thing I did was to salary sac a car through a novated lease. Got a Landcruiser 100 TD for $60k that now has a residual payout of $18k but is worth $50k
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Mandrake- I think the transistion to retirement is available from age 55 ( it was when I did it a few years ago). Also changes to super contributions need to be checked depending on your age. I can only put in $35,000 per year but that also includes company super contributions.
It does save a bit in tax though. The best thing I did was to salary sac a car through a novated lease. Got a Landcruiser 100 TD for $60k that now has a residual payout of $18k but is worth $50k
"Mandrake- I think the transistion to retirement is available from age 55 ( it was when I did it a few years ago). Also changes to super contributions need to be checked depending on your age. I can only put in $35,000 per year but that also includes company super contributions."
It does save a bit in tax though. The best thing I did was to salary sac a car through a novated lease. Got a Landcruiser 100 TD for $60k that now has a residual payout of $18k but is worth $50k
Sounds right to me, a few years ago you could salary sacrifice up to $200000 from memory, the government has
supposedly dropped it temporarily, I believe they weren't happy about losing so much tax revenue so would be
very surprised if it ever restored to the previous values.
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Beachman
Managed share portfolio you can set up yourself through colonial or other big clearing houses just diversify the portfolio across multiple sectors to spread the risk for eg my managed portfolio contains several sectors
Aus shares (maily blue chip BHP, Telstra etc)
Global Shares
Property Securities (Mainly commercial such as Westfield trust etc)
Biotechnology (emerging sector due to aging population)
Geared share (this is more in the area of futures and some CFD's risk are bigger but so are rewards i can handle the risk atm but will drop this later in life when i am looking for security)
Emerging leaders (small cap stocks with large potential e.g ARB)
5k is usually min buy in subsequent buy ins attract the management fee, but that is it no annual fees or fees when i sell
When young get the dividends reinvested in more shares as this is like compounding interest on top of the capital growth
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Your answer is in the generosity of the company you work for - All you need to do is tell ALL staff that you know a good financial adviser and if they go through that adviser they get a complimentary bottle of special bourbon get an ABN register a fancy business name and start advising all staff at $600 / pot - not rocket science - now could you please forward $600 to me for that advice :)
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I am 37, do you really think the government is going to let me retire. I don't trust super and I only put the minimum amount in. I have put a far bit into bluechip shares and have an investment house, but I still don't see how we are ever going to retire due to basic living going through the roof. Let alone helping the kids out. My plan is to find a block of land where we would like to live, build a big shed, sell up everything, put furniture in the shed and head off around this great country. Hopefully we can travel on the interest earned and ;D build a house when we arrive home. Lets see what happens.
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Emerging leaders (small cap stocks with large potential e.g ARB)
I think 4 years ago was the time to invest in ARB when it was just ARB and TJM, now every man and his dog is making 4wd gear.
Although David Koch agrees with you :)
http://www.news.com.au/finance/money/koch-stockmarket-staples-to-buy/story-e6frfmd9-1226778478204 (http://www.news.com.au/finance/money/koch-stockmarket-staples-to-buy/story-e6frfmd9-1226778478204)
ARB CORPORATION (ARP)
ARB Corporation specialises in four-wheel drive accessories and light metal engineering works and, according to the analysts, is best in class.
Investors tend to think of research and development as healthcare stocks. But ARB have a real competitive advantage in the area.
People in the bush and who work in resources really trust ARB and it's picking up overseas as well
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Hey Danny,
They way keep changing the rules, and moving the retirement age out, you'll have plenty of time...... ;D
:cheers:
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Hey Danny,
They way keep changing the rules, and moving the retirement age out, you'll have plenty of time...... ;D
:cheers:
60 will do me mate no matter what! So ill be living somewhere in between poverty and luxury, where abouts in between will depend how much i put in I guess ;)
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I am 37, do you really think the government is going to let me retire. I don't trust super and I only put the minimum amount in. I have put a far bit into bluechip shares and have an investment house, but I still don't see how we are ever going to retire due to basic living going through the roof. Let alone helping the kids out. My plan is to find a block of land where we would like to live, build a big shed, sell up everything, put furniture in the shed and head off around this great country. Hopefully we can travel on the interest earned and ;D build a house when we arrive home. Lets see what happens.
The only sensible post so far.
Why try and maintain a city lifestyle, only big bills and headaches.
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Wow I wish I didn't start this thread now, I'm going to retire broke, so at least I'm retiring with the same income I have now!
I'm guessing most people on this earth earn more than twice as much as me and are used to living on that.
If I have super worth 1.5 million I'll be retiring on an income far better than I earn now ;D
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I am 37, do you really think the government is going to let me retire. I don't trust super and I only put the minimum amount in. I have put a far bit into bluechip shares and have an investment house, but I still don't see how we are ever going to retire due to basic living going through the roof. Let alone helping the kids out. My plan is to find a block of land where we would like to live, build a big shed, sell up everything, put furniture in the shed and head off around this great country. Hopefully we can travel on the interest earned and ;D build a house when we arrive home. Lets see what happens.
I'm with you, super rules will change.
Only thing I'd do differently is buy an older property with a larger block, fence off
the back and build a shed. Rent the house out and travel.
It's only your money while you have control over it.
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Yes super rules, will change, and it depends on what you want to do,
My parents, when they retired only had minimal superannuation and set up a pension draw it off around 10k per year or $800 per month, this goes close to paying large bills, eg, elec, rates, health insurance
Then their aged pension lets them live, they go away for holidays every year for a month or so and have a good life, if in my retirement I can do the same i wold be happy. But the pension could go the way of the dodo before then......
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Hi DannyG
Have you considered life insurance bonds? Not necessarily exciting but possible worth a look.
The way they work is that if you hold them for 10 years or more the income they earn is tax free. Each year you can put in up to 125% of what you put in the previous year and there is no limit to the number of years you can contribute.
If you pull money out earlier you will need to include that in your tax but you get credit for the tax paid by the company (A bit like franking credits). How much you include as income depends on how long you have held the bond.
As I understand it, after the ten or more years you could transfer it to you kids if you choose and it keeps the tax free status in there hands as well.
Hope this helps.
Good luck with your search.
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PM sent.
Rgds,
Rohan.
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I started a Transition to Retirement at age 55, now age 57 and salary sacrifice $25,000 inc. Gov. Guarantee 9%(not $35,000) per year at 15% tax rate as allowed by the gov. Any money above this figure is taxed at a higher rate. This is what my financial adviser told me. Hope he is right, he may be leading me astray on the amount going by what has been said previously.
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25k is correct unless you were 59 or older at 30 June in which case 35k is available for concessional contribution
http://www.ato.gov.au/Individuals/Super/Other-contributions/Concessional-(before-tax)-contributions/ (http://www.ato.gov.au/Individuals/Super/Other-contributions/Concessional-(before-tax)-contributions/)
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What's the magic number. ?
I'm 58 and I don't plan on being at work when I turn 60, and hopefully part time before that.
I know everyone has different lifestyles which makes comparison difficult, but it would be nice to hear from others who have recently retired, or in a similar position to me (itching to retire), as to what their magic number is/was.
Most people are reluctant to divulge financial information and fair enough, but even "ball park" figures would help others has some confidence that they are heading in the right direction.
My wife and I have a modest lifestyle, would like to go overseas a bit, but if money was short we wouldn't miss the overseas trips. ( Plenty to see here ).
I don't expect to live to be too old but I think my wife will receive a letter from the Queen.
Would be nice to leave something for the grand kids to give them a kick start as it seems to be getting tougher for the young ones.
We own our home but it needs a lot of TLC, probably about 100k's worth.
We have a reasonably new dual cab( 2010 BT50) but want to change over to a single cab for the slide-on under construction ( still ).
My magic number is $1.8M - $2M allowing for renovations and vehicle upgrade.
Too Little / Just Right / Too Much ?
Opinions anyone ?
RobM
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What's the magic number. ?
My magic number is $1.8M - $2M allowing for renovations and vehicle upgrade.
Too Little / Just Right / Too Much ?
Opinions anyone ?
RobM
Two million @ %8/PA would give you an income of $160,000 PA. If I was in that situation I would not be seen for dust.
Even half the amount would be just fine. Never saw pockets in a shroud or a trailer behind a hearse yet!
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47 with 20k in super, looks like a retirement based on bread an water for me. lol
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What's the magic number. ?
I'm 58 and I don't plan on being at work when I turn 60, and hopefully part time before that.
I know everyone has different lifestyles which makes comparison difficult, but it would be nice to hear from others who have recently retired, or in a similar position to me (itching to retire), as to what their magic number is/was.
Most people are reluctant to divulge financial information and fair enough, but even "ball park" figures would help others has some confidence that they are heading in the right direction.
My wife and I have a modest lifestyle, would like to go overseas a bit, but if money was short we wouldn't miss the overseas trips. ( Plenty to see here ).
I don't expect to live to be too old but I think my wife will receive a letter from the Queen.
Would be nice to leave something for the grand kids to give them a kick start as it seems to be getting tougher for the young ones.
We own our home but it needs a lot of TLC, probably about 100k's worth.
We have a reasonably new dual cab( 2010 BT50) but want to change over to a single cab for the slide-on under construction ( still ).
My magic number is $1.8M - $2M allowing for renovations and vehicle upgrade.
Too Little / Just Right / Too Much ?
Opinions anyone ?
RobM
What are you waiting for mate, go for it. If I was in your position NOW id consider pulling the pin and Im only 43...ok id wait a little while yet but get out there and enjoy it while your young enough.
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Two million @ %8/PA would give you an income of $160,000 PA. If I was in that situation I would not be seen for dust.
Even half the amount would be just fine. Never saw pockets in a shroud or a trailer behind a hearse yet!
To be safe I would say 4% per annum indexed to the cost of living so say $80000 tax free from super is still and
as you wrote "If I was in that situation I would not be seen for dust.:)
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This is the sort of encouragement I need to pull the pin. :D
Might get to go to a Myswag meet sooner than expected.
I agree with the 4% indexed as being reasonable, I've been working on 3.5% above inflation. So $1.8M would earn $63,000 per annum.
This is more than I've ever spent in one year, except for when we bought a new car.
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I am 58 next March and retired at 55 on an indexed, for life, Commonwealth pension. My wife will be on the same arrangement in 5 years. We are both so fortunate to have had long careers in the Commonwealth public service under the old CSS scheme. If anyone here understands how it operates you will understand my grin. :laugh: We live a pretty simple life and enjoy what we do. It's all about using the money you have wisely.
:cheers:
James
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I am 58 next March and retired at 55 on an indexed, for life, Commonwealth pension. My wife will be on the same arrangement in 5 years. We are both so fortunate to have had long careers in the Commonwealth public service under the old CSS scheme. If anyone here understands how it operates you will understand my grin. :laugh: We life a pretty simple life and enjoy what we do. It's all about using the money you have wisely.
:cheers:
James
Us younguns can only dream of defined benefit or similar schemes...... But with the general short stay in jobs now there isn't a lot of benefits....
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All this stuff about retirment hurts my head... I'm just gonna keep spending it like it grows on trees ;D
Why should I be any different to the wife and kids!!!!
Swannie
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I agree with the 4% indexed as being reasonable, I've been working on 3.5% above inflation. So $1.8M would earn $63,000 per annum.
This is more than I've ever spent in one year, except for when we bought a new car.
Drawing down at about 4% would basically ensure the capital would remain intact right up to carking it. What is the point in that? Surely the idea is use both capital and growth during the retirement phase of super to produce the desired income.
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Drawing down at about 4% would basically ensure the capital would remain intact right up to carking it. What is the point in that? Surely the idea is use both capital and growth during the retirement phase of super to produce the desired income.
True but how much can you draw down with running out before you cark it is the catch 22?
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Drawing down at about 4% would basically ensure the capital would remain intact right up to carking it.
Agreed.
But I'd hate to see another GFC come along and not to have something to fall back on. Chances are we will all need more as the government finds more ways to take it from us to spend on who knows what who.
Also, i don't mind the kids have anything that's left over, if there is any.
Cheers Rob
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If only we came with an expiry date.
Would make it much easier.
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If only we came with an expiry date.
Would make it much easier.
Go away, I don't want to know how long I have left. Gees, most people would spend their last years worrying themselves into an early grave.
KB
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We are both so fortunate to have had long careers in the Commonwealth public service under the old CSS scheme. If anyone here understands how it operates you will understand my grin.
Yup my missus is on it :cup:
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Yup my missus is on it :cup:
You should be ashamed of yourself...................................lucky bugger. ;D
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Agreed.
But I'd hate to see another GFC come along and not to have something to fall back on. Chances are we will all need more as the government finds more ways to take it from us to spend on who knows what who.
Also, i don't mind the kids have anything that's left over, if there is any.
Cheers Rob
Rob, if you worry that much you will never quit work!
Anyway, if you run out of money, worry about it then.
Chances are your memory will be shot by then so you won't remember what you have to worry about.
;D ;D ;D ;D
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I could invest $1m for a safe return of 80K. You've got heaps go enjoy it.
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Rob, if you worry that much you will never quit work!
Yep, you are right. I have been pushing the the date out further for the last couple of years.
My excuse is that a few years ago I took a position on a considerably higher salary than I was on previously. I'm on defined benefit super, and the super payout is based on your average salary for the last 3 years, however the salary figure used each year in the calculations can't increase by more than 20% over 3 years. (or something like that). In short, I have to work until January 2014 to take full advantage of the increase.
Hmmm, that's not far away is it, wonder what my next excuse will be.
Danny, I believe salary sacrificing any money you can is a good move. Keeping in mind that it is difficult to access prior to retiring. The best thing is that you don't pay tax on the earnings, as opposed to having your own shares, term deposits etc.
You will pay an administration fee based on the balance of your super, and with some funds this can be considerable.
Cheers
RobM
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Yep, you are right. I have been pushing the the date out further for the last couple of years.
Cheers
RobM
That simply equates to a couple of years of quality retirement you have missed out on.
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Yep, you are right. I have been pushing the the date out further for the last couple of years.
My excuse is that a few years ago I took a position on a considerably higher salary than I was on previously. I'm on defined benefit super, and the super payout is based on your average salary for the last 3 years, however the salary figure used each year in the calculations can't increase by more than 20% over 3 years. (or something like that). In short, I have to work until January 2014 to take full advantage of the increase.
Hmmm, that's not far away is it, wonder what my next excuse will be.
Danny, I believe salary sacrificing any money you can is a good move. Keeping in mind that it is difficult to access prior to retiring. The best thing is that you don't pay tax on the earnings, as opposed to having your own shares, term deposits etc.
You will pay an administration fee based on the balance of your super, and with some funds this can be considerable.
Cheers
RobM
I beleave the government of the day sometime in the future will implement something
similar to this to all super funds. Wait until there's enough self funded and see what happens. lol
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Theres some great information here so thanks very much, Ill be armed with some ideas when I see the financial adviser that my work place is paying for.
My work recently changed from a defined benefit super fund and put us all into an accumulative fund but they have given us ongoing compensation so all is not lost, this is also why they have very generously offered every employee $600 to go towards finical advice.
As I may have mentioned earlier in the thread we are salary sacrificing quite a bit of cash each week towards super but I am now thinking I may put that cash towards something else and forgo the tax benefits.
We have some very clear plans to achieve before retirement and I am very confident we will achieve them, they are modest compared to a lot of people but they will suit our simple life style ;D
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Several years ago I would have voted Super all the way, but now with super and the economy where it is I would be investing in property as my retirement funding. Mind you it needs to be closely scrutinized to make sure the correct investments in property are made,
Trevor
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Several years ago I would have votes Super all the way, but now with super and the economy where it is I would be investing in property as my retirement funding. Mind you it needs to be closely scrutinized to make sure the correct investments in property are made,
Trevor
x2 The 'trick' is to keep emotion out of it.
Investment propertyMUST be based on sound independentprofessional market analysys. The types and location of the best investment property (i.e. best capital growth) will inevitably be something totally different to what you would like to live in / where you would like to live.
Also, the best locations will have the best chance of surviving any downturn.
Also, buying 'off the plan' avoids sh!te loads of stamp duty, hence maximising $$$ to you, rather than the state tax man.
Having said that, I am also salary sacrificing.
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x2 The 'trick' is to keep emotion out of it.
Investment propertyMUST be based on sound independentprofessional market analysys. The types and location of the best investment property (i.e. best capital growth) will inevitably be something totally different to what you would like to live in / where you would like to live.
Also, the best locations will have the best chance of surviving any downturn.
Also, buying 'off the plan' avoids sh!te loads of stamp duty, hence maximising $$$ to you, rather than the state tax man.
Having said that, I am also salary sacrificing.
Buying off the plan is only any good if it is priced right and it goes ahead. A good mate of mine got badly burnt this way. :'(
remember "if it was easy everyone would be doing it"
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Investing in property can be as easy as adding an extra room to your current property.
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When I was in my late 20's a multi millionaire's advice to me was:
- Aim to pay your house off as soon as you can, preferably by the time you are in your late 40's to 50.
- As soon as you have some equity in your home use it to buy an investment property, preferably at age 35.
- Aim to purchase another investment property every two years after that for the next 8 years (total of 5 properties all up)
- When your mortgage is paid off, then use your mortgage money to put half into super and half into paying off the properties.
- By the time retirement comes all the properties should be close to debt free or at least very much positively geared, you will have salary sacrificed into super from the time your mortgage was paid off (min of 15 yrs) plus your employers super contributions throughout your working life, and all this will all add up to a very comfortable retirement.
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I am 37, do you really think the government is going to let me retire. I don't trust super and I only put the minimum amount in. I have put a far bit into bluechip shares and have an investment house, but I still don't see how we are ever going to retire due to basic living going through the roof. Let alone helping the kids out. My plan is to find a block of land where we would like to live, build a big shed, sell up everything, put furniture in the shed and head off around this great country. Hopefully we can travel on the interest earned and ;D build a house when we arrive home. Lets see what happens.
Yeah mate, I'm 39 and feel the same way.
Had a few mates lose a lot in their retirement funds in the GFC. All those years of working and then left with only half what they thought they would have........
I'm more bricks and mortar. I hope to own 2 investment properties when I retire and live off the rental income. Surely I can survive on that.
I have shares, but only safe ones as I'm too scared to takes risks. I pour any excess money into my mortgage to reduce debt.
I've heard all about offsetting and negative / positive gearing etc, but I'm so old fashioned and reckon while the rate is higher to borrow than it is to lend you're betting off getting out of debt asap.
(Just my inexperienced unprofessional opinion I know, but its mine.....)
By the time I retire I'll be crippled in pain and too old to do much anyway............
Thats why I'm living life to the fullest now...
Cheers all, drink up,
Brian
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When I was in my late 20's a multi millionaire's advice to me was:
- Aim to pay your house off as soon as you can, preferably by the time you are in your late 40's to 50.
- As soon as you have some equity in your home use it to buy an investment property, preferably at age 35.
- Aim to purchase another investment property every two years after that for the next 8 years (total of 5 properties all up)
- When your mortgage is paid off, then use your mortgage money to put half into super and half into paying off the properties.
- By the time retirement comes all the properties should be close to debt free or at least very much positively geared, you will have salary sacrificed into super from the time your mortgage was paid off (min of 15 yrs) plus your employers super contributions throughout your working life, and all this will all add up to a very comfortable retirement.
Best post yet!
But need to buy the right properties.
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Several years ago I would have voted Super all the way, but now with super and the economy where it is I would be investing in property as my retirement funding. Mind you it needs to be closely scrutinized to make sure the correct investments in property are made, Trevor
Or set up a Self Managed Super Fund and do all your property investing through that. It lets you take advantage of the super tax benefits along with letting you decide on the best investment strategy. A good financial planner is the best person to discuss it with.
Rod
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Have to agree with that RodT.
As the cost to set up the warrants for the super have come down dramatically in price and time to create them its is now a very good vehicle to purchase with. I reckon 7 out of 10 sales of mine are now to superfunds.
Its particularly good if you own your own business and want to occupy a property with that business. Pay your self rent, and when it comes time to sell the business you have an automatic investment property.
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Investing in property can be as easy as adding an extra room to your current property.
Utter BS you actually have to sell the property then to make money or it has just cost you money. I personally think property is a mugs game as you have all these people thinking they are millionares but then eat 2 min noodles cause yes they have property but none of it is liquid and the rent is just covering costs
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One thing for sure there does appear to be a lot of different scenarios. Coming up to that time in life I can see I need to get half smart on what options there are and what is available to me.
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As they say, don't put all your eggs in one basket.
I do know that a large superannuation fund like the one I'm in does a lot better job at investing my money than I would.
Yes I know they take their cut, but worth it in my opinion, based on returns. Mind you having a "growth smoothed" option helped.
Rob
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I know my Uncle & Aunty started buying Investment properties about 30 years ago and they kept bragging how every 2nd year they were buying another property and how they are set for retirement. We believed they had about 7 or 8 Investment properties.
It wasn’t until they got sick that we got a glimpse of the true cost that these investment properties had on their lifestyle & heath. Turns out my Aunty had to return to full time work and they both needed to get a 2nd job as cleaners working afterhours/weekends all to keep up with loan payments.
Again we don’t know the full picture and we believe all the investment properties were sold, but I do know the extra work and stress took a huge toll on their health in what should be their enjoyable years.
I’m not writing the above to be negative as some people do very very well out of this type of investment. Just think my Uncle/Aunty were before there time as this was all done in the period with high interest rates and no property booms. Just want to show that from the outside it looks like people are doing so well, but behind the scenes it can be a different story.
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All good feedback so far.
My strategy is to diversify and have a few different investment options. We've invested a little bit in property, brought some shares, salary sacrifice into our super every week and like most are paying off our home mortgage as quickly as possible.
I'm still decades away yet from retiring, but to date we've probably broken even on the property investment, lost on the shares, but our super and mortgage are heading in the right directions. Can't always be a winner on everything I guess.
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This thread has made very interesting reading.
I'm nearing 59 and retired in June, 2012, after 32 years in a NSW state gov job. I was in a defined benefit scheme, but opted for the lump sum payout, some say pension is better but everyone's circumstances are different.
The payout was very good, sat down with a financial advisor who set me up with a thing called an AMP flexible super retirement account of which I draw a small fortnightly wage. Although I've been on it for a little over 12 months, there is a lot more money in there than I started with.
I'm only outlining this as I believe the best thing to do is to find trustworthy financial advisor and go with it. Yes I pay fees and he earns a dollar, but if I need to spend a dollar to make a dollar then that is what needs to be done to ensure expert advice, and not have the added worry of trying to do it myself.
Wife is still working casual hours and will also retire I next couple of years. We will be debt free with some toys and able to enjoy retirement travelling.
I'll never forget what I was told at a retirement seminar -
YOUR AIM AT AGE SIXTY-FIVE IS TO BE ABLE TO GET AT LEAST $1 AGED PENSION, SO YOU CAN GET THE FEW BENEFITS THAT GO WITH THE PENSION (pension cards etc).
What I am trying to say is, put your money into super, investment properties etc, just make sure you do something so come retirement you have plenty to set yourself up for retirement.
My parents didn't, now live (just) on the aged pension.
Good luck to all and happy travelling.
'shakey'
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Utter BS you actually have to sell the property then to make money or it has just cost you money. I personally think property is a mugs game as you have all these people thinking they are millionares but then eat 2 min noodles cause yes they have property but none of it is liquid and the rent is just covering costs
Investing in anything costs something, whats wrong with selling for a profit and down sizing later in life or doing the same again ?
I'd rather spend money on my own home and enjoy the comforts while living in it. We had 3 properties at one stage and I'm glad there gone, they all returned a profit better than super. 15k in reno's on one returned 50K profit in 2 years while living in it and I didn't have to eat 2 minute noodles unless I chose to, I do like the beef though.
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Utter BS you actually have to sell the property then to make money or it has just cost you money. I personally think property is a mugs game as you have all these people thinking they are millionares but then eat 2 min noodles cause yes they have property but none of it is liquid and the rent is just covering costs
Then your not doing it correctly and are getting poor advice............seek a financial planner and divest whats not working.
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Then your not doing it correctly and are getting poor advice............seek a financial planner and divest whats not working.
Yep, you don't have to sell the property to get cash flow from it. Equity mate!
Aaron
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Nobody seems willing to put even "ball park" numbers up. Like I said in an earlier post, I'm aiming at 1.8 - 2M by 60, ( just under 2 years, and then out) but I might be very wrong.
There might be people out there living happily on half that, ( in which case I've lost a couple of years of quality retirement as suggested in an earlier post) or it might take a lot more than that.
Everyone is willing to offer "strategies" on how to make money for retirement, but the big question is, how much do I need to retire.
You could argue for ever and a day about property/shares etc. I'm sure most people have good and bad stories about both.
I reckon there are plenty of people following this thread who have retired and could contribute by saying something like " we retired two years ago with about $??? in liquid assets and it suits us, we get to go camping, etc. etc." .
Anybody thinking about retiring in the next couple of years would have some sort of number in their heads, so how about sharing ?
Ok, I've had my little rant (that's what happens when you drink red wine while cooking dinner).
There has been a lot of good advice in this thread and I'd like to add my "two bobs" worth.
You don't have to only think about how you invest your money, but also how you spend it. Don't buy anything on credit that isn't essential. eg. Instead of buying a 60" LED smart TV on your credit card, save up enough for a 32". The $1000 that you don't spend on the 60" will save you 5 times that if you put it toward your home loan.
Not buying toys on credit and not needing the latest and greatest has worked for us ( wife and I ), and we have only had average wages.
Cheers RobM
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I personally think thats horses for coarses Rob and the exact reason why no one has stated the "figure" they are happy retiring with.
Work it out backward from what you need to live on. If I retired today I would need to think of things like our house mortgage but the next guy might not. The numbers are individual and private but the yields are common relative to your own risk. :cheers:
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For those who have a mortgage and really want to make a difference, an offset account and living off a credit card that is paid off monthly (so you pay no interest on it) will reduce your repayments by tens of thousands of dollars over 30 years.
If you have a separate savings account and a home loan, you are throwing money out the window
Aaron
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For those who have a mortgage and really want to make a difference, an offset account
Yep. Both my kids now have offset accounts, and they are also a good place to stash a bit of cash. While it isn't earning anything while in the account it is helping the kids by reducing their mortgage interest. It is still accessible (if the kids will return it) and I believe if gifted for 5 years it won't be used in assessing a part pension. ( correct me if I'm wrong). If you never need it back then you're lucky and so are the kids.
Edit: I don't think all offset accounts are equal. I know that with QCCU 100% of the money in the account is used to offset the loan but I have been told that not all are that generous.
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To answer your 'what figure' question, we think we will survive on approx. $55000 pa. There is only one way to find out! There are only two times, NOW and TOO LATE.
I am basing my figures on information like this;
http://www.superguide.com.au/how-super-works/a-comfortable-retirement-how-much-super-is-enough (http://www.superguide.com.au/how-super-works/a-comfortable-retirement-how-much-super-is-enough)
And this;
Calculating a Comfortable Retirement
To help guide you to your number, financial firms have devised income and actuarial models that come up with a target multiple of your final year’s salary. Benefits consultant Aon Hewitt says that by age 65 an average full-career worker needs to have banked 11 times annual pay. That means a household earning $75,000 a year would need to have saved $825,000. Work to age 67 and the multiple drops to 9.4 ($705,000); retire at age 62 and the multiple rises to 13.5 ($1 million).
The fund company T. Rowe Price advises a multiple of 12 times final pay, while Fidelity calculates that a multiple of eight times pay will do the trick. All the firms use slightly different assumptions. But you can see that they are in the same ballpark and, more importantly, that it’s a big park.
Looking at it another way, BTN Research estimates that, assuming 5% average annual investment returns, for every $1,000 of monthly income you want over a 30-year retirement, you need $269,000 in the bank. Let’s consider that same household making $75,000 a year. To replace the commonly recommended 80% of income in retirement — or $60,000 in this case — the household would need $5,000 a month. In this calculation, this household’s number is $1.35 million, or 18 times final pay. A higher investment return would bring the numbers down.
Finally, there is the approach that Dallas Salisbury, president of the Employee Benefit Research Institute offers: You need 33 times what you expect to spend in your first year of retirement—after subtracting Social Security benefits. Let’s take that same household, which spends every penny of its $60,000 income in retirement. Say this household collects $20,000 a year in Social Security. That leaves it spending $40,000 from other sources. So this household still needs a nest egg of $1.32 million, or just shy of 18 times final pay.
Don’t be discouraged. These are just estimates. A household with two good traditional pensions plus Social Security, and zero savings, might be in fine shape while a household with $1 million in the bank and no guaranteed lifetime income ends up struggling. That’s why your spending–not your savings–may be the most important part of the equation.
Basing your number on final pay has another flaw. What if you are frugal and live on far less than you earn? The household that earns $75,000 a year but saves 20% and thus spends only $60,000 need not squirrel away as much as a household earning $60,000 a year but which through credit spends $75,000. The latter household, by the way, is headed for real trouble — and, sadly, this situation is not uncommon.
Read more: Retirement: How Much Do You Need to Retire?
http://business.time.com/2013/02/11/sizing-up-the-big-question-how-much-money-do-you-need-to-retire/ (http://business.time.com/2013/02/11/sizing-up-the-big-question-how-much-money-do-you-need-to-retire/)
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Danny,
It turns out that for most of us, whatever we have in super won't be enough. But here's my two bob's worth.
1. Remember that super is not an investment. It is just a tax effective vehicle in which to hold investments. You can have a self managed fund, which usually needs a balance of at least $250K to be cost effective, or you can go into an industry fund or a privately managed fund. The industry funds tend to have the lowest fees, but are still more expensive than an SMF for balances over $500K. It costs about $2,500 to set up a self managed super fund cheaply and two or three times that amount if you want to structure it to borrow to invest in property within super. Fees are about $2,000 a year to run it.
2. Pick the right super fund based on fees and historical returns. For a small charge, you can get onto the Super Ratings website http://www.superratings.com.au/ (http://www.superratings.com.au/) and see comparative figures for all of the funds. In particular, look at how they went during the GFC, when some of the higher flying funds lost their pants. As balance grows, you can roll it over into your own SMF is you want to.
3. Work out your risk profile. Right now, if the market dropped by 20% it wouldn't kill you. If the same thing happened at age 70, it would be a disaster. So you tend to take on lower risk investments with lower returns, more cash and bonds, as you get older. High returns almost always attract higher risk.
4. The "Balanced" option in most super funds is not balanced at all, at they all seem to have about 70% of their dough in shares. But, at your age, that would be fine.
5. I will retire next year at age 65 with about $1.2M in super plus a house that we own. With a wife 12 years younger than me and two teenage kids, that's not going to be enough. So the plan is to downsize our house in ten years time to pump up the balance.
6. It all depends on what sort of lifestyle you want to have in retirement and how your lifestyle and health care costs change as you get older. That's why no one can nominate a number.
7. I think a grand or two spent on a good independent financial planner is not money wasted and you are smart to be thinking about all this stuff at this time of life.
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Danny,
It turns out that for most of us, whatever we have in super won't be enough. But here's my two bob's worth.
1. Remember that super is not an investment. It is just a tax effective vehicle in which to hold investments. You can have a self managed fund, which usually needs a balance of at least $250K to be cost effective, or you can go into an industry fund or a privately managed fund. The industry funds tend to have the lowest fees, but are still more expensive than an SMF for balances over $500K. It costs about $2,500 to set up a self managed super fund cheaply and two or three times that amount if you want to structure it to borrow to invest in property within super. Fees are about $2,000 a year to run it.
2. Pick the right super fund based on fees and historical returns. For a small charge, you can get onto the Super Ratings website http://www.superratings.com.au/ (http://www.superratings.com.au/) and see comparative figures for all of the funds. In particular, look at how they went during the GFC, when some of the higher flying funds lost their pants. As balance grows, you can roll it over into your own SMF is you want to.
3. Work out your risk profile. Right now, if the market dropped by 20% it wouldn't kill you. If the same thing happened at age 70, it would be a disaster. So you tend to take on lower risk investments with lower returns, more cash and bonds, as you get older. High returns almost always attract higher risk.
4. The "Balanced" option in most super funds is not balanced at all, at they all seem to have about 70% of their dough in shares. But, at your age, that would be fine.
5. I will retire next year at age 65 with about $1.2M in super plus a house that we own. With a wife 12 years younger than me and two teenage kids, that's not going to be enough. So the plan is to downsize our house in ten years time to pump up the balance.
6. It all depends on what sort of lifestyle you want to have in retirement and how your lifestyle and health care costs change as you get older. That's why no one can nominate a number.
7. I think a grand or two spent on a good independent financial planner is not money wasted and you are smart to be thinking about all this stuff at this time of life.
Thanks Keith, Can I be rude enough to ask is that figure not enough because your wife is 12 years younger and you have the expense of teenage kids? Or is it simply your lifestyle choice needs more funding than your super is able to provide?
For the record I am in an industry fund that has me in a 'balanced' plan, we just went from a defined benefit to an accumulative fund.
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Yep. Both my kids now have offset accounts, and they are also a good place to stash a bit of cash. While it isn't earning anything while in the account it is helping the kids by reducing their mortgage interest. It is still accessible (if the kids will return it) and I believe if gifted for 5 years it won't be used in assessing a part pension. ( correct me if I'm wrong). If you never need it back then you're lucky and so are the kids.
Edit: I don't think all offset accounts are equal. I know that with QCCU 100% of the money in the account is used to offset the loan but I have been told that not all are that generous.
Most offset accounts are 100% these days. Some charge a fee to have access to them though. Another tip; I bet if you all walked into your banks and asked for a better interest rate, 90% of you would get it. We did it the other day, and as a result are now able to save a further $800 per year. That's a lot of money over 30 years!
Aaron
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Just be careful which financial planner you hand over your hard earned to!
I work in finance (home loans) and some of the most financially unorganised people we deal with are FP's and accountants. I shake my head when I think these people are handing out advice to others on how to invest their money, when they are up the proverbial creek themselves.
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Nobody seems willing to put even "ball park" numbers up. Like I said in an earlier post, I'm aiming at 1.8 - 2M by 60, ( just under 2 years, and then out) but I might be very wrong.
There might be people out there living happily on half that, ( in which case I've lost a couple of years of quality retirement as suggested in an earlier post) or it might take a lot more than that.
Everyone is willing to offer "strategies" on how to make money for retirement, but the big question is, how much do I need to retire.
You could argue for ever and a day about property/shares etc. I'm sure most people have good and bad stories about both.
I reckon there are plenty of people following this thread who have retired and could contribute by saying something like " we retired two years ago with about $??? in liquid assets and it suits us, we get to go camping, etc. etc." .
Anybody thinking about retiring in the next couple of years would have some sort of number in their heads, so how about sharing ?
Ok, I've had my little rant (that's what happens when you drink red wine while cooking dinner).
There has been a lot of good advice in this thread and I'd like to add my "two bobs" worth.
You don't have to only think about how you invest your money, but also how you spend it. Don't buy anything on credit that isn't essential. eg. Instead of buying a 60" LED smart TV on your credit card, save up enough for a 32". The $1000 that you don't spend on the 60" will save you 5 times that if you put it toward your home loan.
Not buying toys on credit and not needing the latest and greatest has worked for us ( wife and I ), and we have only had average wages.
Cheers RobM
RobM, IMO there are too many variables involved to post up $ amounts for a comfortable retirement.
Suffice to say that I have been retired for over 6 years (second time) and had less in super and cash than you are aiming for at retirement yet still enjoy a great lifestyle.
For the first year or so of retirement I really had trouble coming to terms with no money coming in after 45 years of a regular income.
My father said to stop worrying about it and enjoy life as we were a lot better off than they were on the pension, and you never know when your number is up.
So I have since conditioned myself to not worry about it and enjoy life, and that's the way it is now.
Since retiring we have toured parts of Europe and the British Isles, every year go on 6 week fishing holiday staying in a caravan park, have flown to Qld for the past 3 years for R&R, get out in the camper/caravan when we can, have bought and sold new and used cars and 4wd's, have bought and sold new and used campers and caravans (we maintain 2 caravans, 2 vehicles and a boat), have done some renovations on our property, don't skimp on our favourite beverages, eat like kings and have survived the GFC.
The above is not a brag its just to give an idea of what we get up to.
I got a small inheritance when my folks passed on and with that we still have about 3/4 of what we started out with.
We are not from financial backgrounds so have a financial advisor and although not scared to spend up still try to be aware the money pot.
We are certainly not going to sit around while we are at our healthiest for this time in life and not enjoy the many pleasures retirement offers.
What the hell is the good of amassing a fortune if you get too old or unfit to enjoy it! Your kids will love you more though.
How many retirees do you run into in life who (with hindsight) wished they had done it earlier.
Anyway, in our case we were debit free several years before retirement and had all the "toys" we wanted, so had a good idea of the cost of living.
Being a few years older than my wife things were structured some years back in preparation for my turning 65 when I started getting the full age pension.
By the time I am in the late seventies I might have to tone things down abit but I will worry about that then.
Any regrets? Not a one!
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There is some interesting data around about what the average amount people have in super when they retire..and it is substantially lower than a lot of the figures in this thread.
" the average super balance at retirement was $192,000 for men and $112,000 for women." SMH Feb 2013.....The Australian quotes similar numbers.
I figure there are a lot of people out there with a lot less super than me (when I retire)..and all of the retired people I know are very happy and living comfortably and really not missing out on things...so unless everyone I know has as much super as I do, then my expectations of what 'really' is required or what I 'really' need might be a bit over stated.
I also think that a lot of what I think I need now, I won't need when I retire..2nd car, work expenses (to and from work, work clothes, lunches etc), daughters expenses, dinners out etc etc.
And as I get older, I will do 'less'....and hence need 'less'.
MarkVS
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Well there has been a lot of good posts since last night. All valuable stuff. I never expected for anyone to be able to tell me how much I need to retire but the sort of info that has been shared is the sort of info that can be evaluated and applied to my situation. What I'm getting from the more recent posts is I think I'm on the right track.
RebsWA, every one who I speak to who is retired wishes they had done it earlier. Thankyou for giving me an insight into your lifestyle, and qualifying it with the "ball park" figure. I would be more than content with a similar lifestyle. In fact even a more modest one, just don't take my shed or my :cheers: away .
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Thankyou for giving me an insight into your lifestyle, and qualifying it with the "ball park" figure. I would be more than content with a similar lifestyle. In fact even a more modest one, just don't take my shed or my :cheers: away .
Spot on! I have a large farm style shed/workshop that I have just extended. It houses all the toys and my home brew activities.
Have been known to sample the odd brew or ten up there with a mate or two from time to time.
I named the shed "MODERATION" and painted that over the workshop door.
I occasionally have to explain that for many years it was suggested that I drink in moderation, so for the last 10 years or so I have complied.
Seriously tho, in retirement each partner needs a little private space every now and then. The house for her and the shed is the perfect getaway for him.
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When i win the $70,000,000.00 this tuesday i will retire in comfort trade my home made soft floor on a $15000 imported trailer and travel australia for a couple of months then retire to fraser island for a year then travel the world
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I also believe that in the near future the primary residence will not be part of the means test for a pension so downsizing may work in your favour from that respect as well
The primary residence has never been an asset used to calculate pension rights.
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The primary residence has never been an asset used to calculate pension rights.
That'll change. I also believe that super assets will eventually be hit with a hefty death duty. Just my view.....
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Death duty ,,,, Cant afford to retire ,, live or die so where dose that leave me now
ls it too early for :cheers: all this thinking at this hour of the day :( ::)
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The primary residence has never been an asset used to calculate pension rights.
But it can be sold out from under you're feet if you require palliative care and your house is your only asset. Happened to my wife's grand mother. She was a crafty old duck. When she was diagnosed with cancer, she immediately signed her house title over to her grand chilren so it couldn't be sold to pay for what turned out to be 6 months of palliative care.
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But it can be sold out from under you're feet if you require palliative care and your house is your only asset. Happened to my wife's grand mother. She was a crafty old duck. When she was diagnosed with cancer, she immediately signed her house title over to her grand chilren so it couldn't be sold to pay for what turned out to be 6 months of palliative care.
One very switched-on lady...... :cup:
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Thanks Keith, Can I be rude enough to ask is that figure not enough because your wife is 12 years younger and you have the expense of teenage kids? Or is it simply your lifestyle choice needs more funding than your super is able to provide?
For the record I am in an industry fund that has me in a 'balanced' plan, we just went from a defined benefit to an accumulative fund.
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Regards Danny
www.tassiecampers.com (http://www.tassiecampers.com)
Danny,
It's all of the above. All the women on my wife's side of the family have lived into their late nineties and I expect my wife will as well. So we will need to provide for her for some 25 years after I kick the bucket.
The plan is to live reasonably well, a least by our own standards, for ten tears or so and then progressively cut back on expenditure.
I've told the love of my life that, after retirement, she won't be having to take in washing. But, by God, she won't be sending any out either.
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Sooooooo, I started this thread almost 3 years ago and the old super topic has come up again at my place!!
My 'employers super fund' has recently been bought out by a bank and is now a retail fund.
I have been looking at the new fee's and charges as best as I can understand and at the moment they appear to be quite reasonable still. In fact I think they are slightly better than an industry fund I am looking at (australian super) and their life insurance and permanent disability premiums are half the cost of the industry fund.
So I am struggling to find a reason to jump ship. 99% of my work colleagues all jumped over to media super (media super came to our work place and had a big union push towards the labour party at election time as they do) but when comparing the returns, my existing fund has outperformed media super and is on par with australian super, so i am again struggling to find a valid reason to step out of the retail fund and into the industry fund.
Am I missing something here??
All the 'experts' at work are telling me I am mad to stay with the retail fund and I should be going into an industry fund. They have about as much knowledge on the subject as me though, which is pretty close to zero..............so any financial people out there able to point me in the right direction???
I hate doing my own research on things I know very little about, but after spending a lot of time doing my best to look at all the costs and returns I just cant find the major differences with the funds I am comparing. My super would be tiny to most of the rich people on here, but to me it is looking substantial enough to not want to make a bad move at this stage in my life.
I am hesitant to ask and/or pay a real expert as they are generally biased towards a commission paying client in my experience!
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I went against much advice and moved from ANZ super to HESTA.. All investments are cash and offer small but steady returns.. I'm very happy now I am retired as this small return doesn't affect our pension payments..Mandrake.
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Sooooooo, I started this thread almost 3 years ago and the old super topic has come up again at my place!!
My 'employers super fund' has recently been bought out by a bank and is now a retail fund.
I have been looking at the new fee's and charges as best as I can understand and at the moment they appear to be quite reasonable still. In fact I think they are slightly better than an industry fund I am looking at (australian super) and their life insurance and permanent disability premiums are half the cost of the industry fund.
So I am struggling to find a reason to jump ship. 99% of my work colleagues all jumped over to media super (media super came to our work place and had a big union push towards the labour party at election time as they do) but when comparing the returns, my existing fund has outperformed media super and is on par with australian super, so i am again struggling to find a valid reason to step out of the retail fund and into the industry fund.
Am I missing something here??
All the 'experts' at work are telling me I am mad to stay with the retail fund and I should be going into an industry fund. They have about as much knowledge on the subject as me though, which is pretty close to zero..............so any financial people out there able to point me in the right direction???
I hate doing my own research on things I know very little about, but after spending a lot of time doing my best to look at all the costs and returns I just cant find the major differences with the funds I am comparing. My super would be tiny to most of the rich people on here, but to me it is looking substantial enough to not want to make a bad move at this stage in my life.
I am hesitant to ask and/or pay a real expert as they are generally biased towards a commission paying client in my experience!
I have worked in wealth management for the ultra wealthy, and for many years have run my own SMSF.
No-one has a crystal ball for future returns of either style of fund. No-one.
I would answer your query this way: Do you have any future guidance that will mean you definitely are better off changing from Retail Fund to Industry Fund? Not just the union rep's sales spiel but ACTUAL evidence the return will be better? If not, then stay where you are, as the change of funds will cost you fees - which may erode any returns anyway.
Basically I would say unless you REALLY are convinced to change, stay where you are.
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A couple of years ago I read a very interesting article where they compared two different retirement strategies using historical data for the last 40 years.
1st – Remaining in an ‘average fund’ all your working life
2nd - Moving your Super each year to that year’s top performing fund
Surprisingly the first option came out on top by a considerable amount. The main reason was each time you move funds you have to pay entry and exit fees which not only ate into any potential additional profit, it also ate into the existing account balance.
In regards to funds being owned by a Bank v Retail Fund v Industry Fund and which is better. My gut feel is something like a balanced fund over a 10 year period would give a similar result. Reason is they all have similar guidelines where they can’t be too aggressive as that can lead to loss and odds are they are all investing in the same thing.
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I went against much advice and moved from ANZ super to HESTA.. All investments are cash and offer small but steady returns.. I'm very happy now I am retired as this small return doesn't affect our pension payments..Mandrake.
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Ps Mandrake, the Age Pension calculations are not based on the earnings of the fund or assets you're invested in. It's based on your overall asset position which includes your super which is now 'deemed' whether you're in Personal or Pension accounts. Watch this space re the assets test as 1 January 2017 is D Day for many pensioners who will either get a little more if just over the minimum threshold and are on a part pension. Or if you are close to the new maximum then maybe lower payments and if over the new maximum amount then No Soup For You... They're saying they will ensure these people keep the health care card though...
The other is your income test. Whichever gives you the least amount of money - that's the one you're assessed under.
Also - keep in mind that although Cash feels nice and safe - you're actually just treading water or going backwards as inflation eats up your interest.
McT
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Also - keep in mind that although Cash feels nice and safe - you're actually just treading water or going backwards as inflation eats up your interest.
McT
Mid way thru the year I swapped my super to cash ( from balanced ) when super was heading down, and I probably avoided some losses, but timing it right is the hard part....?and timing when to swap back was just as hard.....not worth the trouble if you are young, but at 58, I was trying to preserve as much money as I could.
As said, cash ( approx 3% ) is a good option when super is 1% or in the negative, but even a few weeks back up to 6 or 8%, a normal super fund will far outperform cash.
The GFC turned the last 10yrs into pretty average earnings for super, but hopefully the next 10 will be a lot better ?
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Thanks gents.
It is only a $75 exit fee from my current fund so the fee's involved are not an issue.
Ill base my decision on past history returns rather than projected forecasts from sales people. I am leaning towards going to a 'safe' large industry fund, especially one that has a very user friendly online system that allows me to move the money around free of charge.
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Hesta gives u 2 swaps per year . You can use one of their plans or make up your own .. Mine is currently 20% cash 80% Bonds..return is around 4to5%..after the GFC where my anz lost $20000 I switched to cash with a massive salary sacrifice to try and make up the loss..My super is now an income stream account at roughly 5%.
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Hesta gives u 2 swaps per year .
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My super (Mine wealth ) gives me 6 swaps/yr. In retirement, you want good interest rates, but you also want low risk and consistent returns, so I can see where you are coming from !
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Danny G & others... I'm a big fan of Vanguard Fund managers (they manage portfolios as big as the Australian economy).
They have some really interesting reading on their website. The PDF showing the best performing asset classes over time may have you rethinking your picking last years winner as a strategy.
https://static.vgcontent.info/crp/intl/auw/docs/resources/power-of-diversification.pdf (https://static.vgcontent.info/crp/intl/auw/docs/resources/power-of-diversification.pdf)
Their home site.
https://www.vanguardinvestments.com.au/retail/jsp/home.jsp (https://www.vanguardinvestments.com.au/retail/jsp/home.jsp)
There is some self promotion at the end of this - but this is information all retirees and people thinking of retiring should have some interest in. It's a pretty good read.
https://static.vgcontent.info/crp/intl/auw/docs/resources/plain-talk-guides/ptg_investingforretirement.pdf?20161020 (https://static.vgcontent.info/crp/intl/auw/docs/resources/plain-talk-guides/ptg_investingforretirement.pdf?20161020)|163125
Know your appetite for risk (percentage of growth assets being Shares & Property verse defensive being Cash & Bonds) and know that there is no such thing as No Risk. Even cash is risky as you're taking a position that it will still perform better than shares, property & bonds.
Maybe just me - but I find this very interesting...
http://www.nikkoam.com.au/files/investment_research/tam_greed_fear_research_paper.pdf (http://www.nikkoam.com.au/files/investment_research/tam_greed_fear_research_paper.pdf)
Last point - don't confuse Super as being the "Investment". It's not - it is the taxation structure that holds the underlying assets. It's the percentage of assets held in your super account and their performance which determines your outcome.
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Best to invest your money in Aussie and American muscles cars...returns far outweigh any super fund 8)
Swannie
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Best to invest your money in Aussie and American muscles cars...returns far outweigh any super fund 8)
Swannie
Hence your 'investment' in the 200 ??!! Nice one... Gives amazing return on capital invested - 5 seconds to 100??
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Hence your 'investment' in the 200 ??!! Nice one... Gives amazing return on capital invested - 5 seconds to 100??
I'm lucky that my employer picks up the tab for all my 200 costs 😁. My Torana appreciated 300% in 7 years all I did was buy it, back it into the garage put cover on it.
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My Torana appreciated 300% in 7 years all I did was buy it, back it into the garage put cover on it.
Shame...shame.....and didn't drive it ?? >:(
Have you sold it yet ?
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Shame...shame.....and didn't drive it ?? >:(
Have you sold it yet ?
Yep I did bud. Sold it to a mate who already had an LC,LJ xu1, SLR 500 and needed a hatch to finish his collection. Got my sights on the next 1 now
Swannie
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Yep I did bud. Sold it to a mate who already had an LC,LJ xu1, SLR 500 and needed a hatch to finish his collection. Got my sights on the next 1 now
Swannie
Had a chance in 1982 to buy an A9X 4 door, 25,00K's, immaculate........but I thought it was too dear at $9500 !! lol
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I am of the opinion that to pay off your family home is a bit of a nice thought but if you put that money into some other income producing investment an used that money to pay the home off you would be better off
example first house cost $27000 mortgage 240 a month(interest rates about 13% if I maintained the payments an used the extra money that I would have been paying if I was paying rent an bought bank shares with an average dividend of 5% franked the house would have been payed off in 25 years and the shares would be enough to contribute a nice side income just think of a mortgage of $ 27000 at todays interest rates
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A couple of points to consider:
Be careful using past performance as an indicator of future performance. Consider this, if a management team is getting good results guess what the competitors do......they poach them, leaving the B team to run the fun.
Consistent out performance of the average is pretty much impossible, 85% of managers failed to outperform the index last year and this is pretty common over the years.
Be careful thinking industry funds are "safe" options, in reality they're like any other fund with the largest component of performance coming down to asset allocation. In recent years some high profile industry funds have been caught not revaluing there assets to hide losses from investors. One particular funds that is currently amongst the top of the charts lost $500m of investors funds a few years because of some dodgy hedging.
In reality performance largely comes down to the underlying asset allocation of the fund/s and the cost of administrating the account, traditionally industry funds were cheap but that is not always the case these days with the banks etc getting very sharp, especially on the bigger account balances.
Taking advantage of free switches to move to the highest yielding fund doesn't work, history shows that chasing history's hero results in worse performance than picking a strategy and sticking to it. Switching also triggers capital gains tax at a rate of upto 15% which is a significant cost to recoup within the fund.
On a final note, watch bonds if you are trying to be very conservative as bonds can fall in value as interest rates rise. People are often shocked when their bond portfolio falls in value.
My tip is to talk to a financial planner who charges a fee for his/her advice, if they're any good they won't care what fund you use but they will help you build a long term strategy.
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I like the balanced approach, Super, I am in a defined benefits scheme, Shares and property they all seem to have ups and downs. I have seen a financial planner from my super scheme and paid for advice.
Read think listen talk to people so you can hopefully make your own informed decision.
greg
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I've been talking about it on this thread for the last 3 years.
Well I finally put my hand up and got a redundancy last Thursday.
I think I might have been pushed in the next round of head chopping so I got in first.
Read Townsville Magpie's blog if you would like to know what's going on in Townsville these days.
It is closer to the truth than what you will read in the daily rag.
http://www.townsvillemagpie.com.au/mayor-mullets-mendacity-laid-bare-millions-of-dollars-flee-townsville-as-national-arts-patrons-walk/ (http://www.townsvillemagpie.com.au/mayor-mullets-mendacity-laid-bare-millions-of-dollars-flee-townsville-as-national-arts-patrons-walk/)
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I've been talking about it on this thread for the last 3 years.
Well I finally put my hand up and got a redundancy last Thursday.
Congratulations, your at a good age for it IMHO I hope the second part of your life is everything you hoped it would be :)
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Thanks Danny,
One of the first things we would like to do is head back down your way for a while
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Interesting article in the Australian regarding super and the aged pension. https://www.google.com.au/search?q=Find+the+sweet+spot+for+super+.au (https://www.google.com.au/search?q=Find+the+sweet+spot+for+super+.au) (Going through google gets past the subscription)
Seems I've been wasting my time salary sacrificing into super all these years to build up a decent amount ???
No doubt the rules will change again though so still would rather be self funded.