I heard of an old fella (~85yrs) who just had an operation to insert a shunt (?) somewhere inside him, and the actual device itself cost $38,000. If he didn't have private health insurance, I'm not sure how much Medicare would have covered. So is $58kpa really a huge amount when taking into account unexpected medical expenses, and the potential for needing at home care and support?
$58,325 is comfortable for who??
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I heard of an old fella (~85yrs) who just had an operation to insert a shunt (?) somewhere inside him, and the actual device itself cost $38,000. If he didn't have private health insurance, I'm not sure how much Medicare would have covered. So is $58kpa really a huge amount when taking into account unexpected medical expenses, and the potential for needing at home care and support?
Public system covers this stuff I am pretty sure. I know many oldies who don't have private health cover and they get on just fine in life, they get generous discounts for their mediation as well.
We have a long way to go before we end up like the US.
Hmm, tell us about the oldies who don't have private health cover, and who have chronic illnesses. Public system sucks if you are waiting for a non-life threatening operation. Other oldies don't spend money on Pvt Health Insurance premiums but pay in cash for their medical procedures which can work out quite well for the generally healthy.
I know a few oldies on the pension suffering life threatening diseases and cancers etc. All seem to be getting treated on medicare and doing fine. Sometimes it would be the same doctor - in fact i recall someone telling me that they had private health insurance but it worked out better if they came through as a public patient and they even had the same doctor.
No, your pension will be tax free. Between now and then though, the investment earnings of your fund will be taxed at 15% along with the 15% on the contribution.
http://www.mutualofomaha.com/tools/...im-retired-how-long-will-my-savings-last.php#
$850,000 earning 9% (Say NAB shares 100% FF dividends grossed up).
$4680/month ($58,325 p/a) with 2% increase each year for inflation.
Calculator above is great for a play. You have to tinker with it so the graph continues upwards. If it starts to slope downwards, you then know it starts to bite into your capital and you will run out.
Definitly dont take my advice on the NAB shares, just using it as a suitable share that gets you the 9% p/a earnings.
pinkboy
$850,000 earning 9% (Say NAB shares 100% FF dividends grossed up).
$4680/month ($58,325 p/a) with 2% increase each year for inflation.
Calculator above is great for a play. You have to tinker with it so the graph continues upwards. If it starts to slope downwards, you then know it starts to bite into your capital and you will run out.
Definitly dont take my advice on the NAB shares, just using it as a suitable share that gets you the 9% p/a earnings.
pinkboy
Yes, life-threatening illnesses get treated asap in the public system. Non-life-threatening illnesses don't. Examples that I know of can be hernias and gall stones, orthopaedics and joints, torn tendons and ligaments.
When taken to the emergency dept by the ambulance, if admitted to hospital IN AN EMERGENCY they have to admit you as a public patient so you can be treated immediately. A private patient cannot be treated until their private doctor arrives, which can be any time at all that suits the doctor. He could be at least an hour's drive away, or not even in the same town.
Depends on how you live your life until retirement - if you are used to 50-60k pa then 50-60k pa will be enough, if you are used to $2-300k pa then anything short of that will be a compromise in retirement. For me it would be hard to imagine my life on 58k (especially as a couple), I can see for some here it wouldn't be a problem. No one is right or wrong it's just what you are used to and what you expect out of life.
I just think it's a bit of a low aim to spend a life time investing trying to only generate $58k (which is only $25k pa over the age pension). Hopefully over a lifetime of investing most people will do much much better than $58k pa passive regadless of what they spend.
I just think it's a bit of a low aim to spend a life time investing trying to only generate $58k (which is only $25k pa over the age pension). Hopefully over a lifetime of investing most people will do much much better than $58k pa passive regadless of what they spend.
I don't think that is what people are aiming for. There seems to be two groups around here. The first wants to execute the plan in 10-20 years so they can replace their income and exit the full time rat race in their 30s-40s and the second group wants it all.
What if living expenses is less than income? I'd be keen to exit the full time rat race as soon as basic living expenses are covered by investment income.
Will then look to work start working part time or take up short term contracts to supplement the investment income and to have some 'play' money.
There's no rule that says you have to spend up to your income level as it rises through your career. Admittedly most people do, and then some, because that is what our consumerist society indoctrinates them to do. If you can do everything that sustains, not overindulges, you and makes you, not the Joneses, happy on less than $58K now, a higher income during your working years translates to being able to retire even sooner.
MMM illustrates this nicely in his usual blunt way in the following post http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/. eg. if that $58K is half your take home pay, you could retire in around 17 years. This math is why he was able to retire after only 10 years in the work force and I managed to retire 20 years before the "system" expects me to have. FWIW, my retirement income is greater than $58K, yet I struggle to spend anywhere near that much hence I still manage to save in retirement.
Excellent post HP. A great problem to have. Means you'll have a good buffer in leaner years.
May I ask where your retirement income is sourced from and is it held outside of super?
Dont forget that just because a person is "retired" this doesn't mean they will never make any money again. I am an advocate of getting out of a job asap. No point int working like a slave until you are 65 just to hit some random figure.
And if you are going to rely on the pension, then all you have to do is make your capital last till you are 65 or 67. e.g. if you are 47 now it is only 20 years before you could qualify to get the pension. So your investment income now will be supplemented by the pension in 20 years, so you could slowly draw down capital for the next 20 years and then rely on the pension. This is perhaps a very dangerous approach if the pension won't be around (very unlikely) or will be pushed back to a later age (very likely).
And if you are going to rely on the pension, then all you have to do is make your capital last till you are 65 or 67. e.g. if you are 47 now it is only 20 years before you could qualify to get the pension. So your investment income now will be supplemented by the pension in 20 years, so you could slowly draw down capital for the next 20 years and then rely on the pension. This is perhaps a very dangerous approach if the pension won't be around (very unlikely) or will be pushed back to a later age (very likely).
Are you even allowed to do that I heard my mate say whos father retired early that they wont let you spend all your money as heaps of people would go out buy expensive cars an caravans etc and use up all their money then rely on the government pension. Pretty sure the government would be straight onto this and putting an end to it. Kind of defeats the whole purpose of superannuation to start with in the governments eyes anyway.
Yes we are allowed to spend all our Super in the years before we get to pension age. That is what Super is there for, particularly for the oldies who never had super when they first started employment. The government got onto this problem many years ago, probably when you were still in nappies.
My father retired "early" at age 60 in 1980ish. He and Mum managed to cruise through and otherwise waste a Commonwealth Govt employee's defined super fund (google it) that had enough cash in there to buy three median Brisbane houses. They lost the lot in two years. He went straight onto an age pension which was available at that time to ppl over 60 (mum didn't, she is much younger than him). Nearly every other 60 year old in the country also quit their jobs and went onto the pension. [I remember it well. My brother and I both worked in banks and we were disgusted with them for not buying at least one or two houses].
Very quickly the Age Pension age was put back up to 65. More recently it has gone to 68 (for myself) and will go to 70 for someone much younger than me. It might be more than 70 when you get there, but you will have had at least 40 years to work it out. These days we would get taxed heavily (disincentive) to draw out the lot, I believe, but there is currently no tax on small monthly withdrawals, called an allocated pension, that we can take as an allowance once we are 60. This is something the new tax reforms will be looking at changing.
There are recent threads on Somersoft you can search regarding Pensions and Superannuation. There is a lot of good info there.
My father retired "early" at age 60 in 1980ish. He and Mum managed to cruise through and otherwise waste a Commonwealth Govt employee's defined super fund (google it) that had enough cash in there to buy three median Brisbane houses. They lost the lot in two years. He went straight onto an age pension which was available at that time to ppl over 60 (mum didn't, she is much younger than him). Nearly every other 60 year old in the country also quit their jobs and went onto the pension. [I remember it well. My brother and I both worked in banks and we were disgusted with them for not buying at least one or two houses].
Very quickly the Age Pension age was put back up to 65. More recently it has gone to 68 (for myself) and will go to 70 for someone much younger than me. It might be more than 70 when you get there, but you will have had at least 40 years to work it out. These days we would get taxed heavily (disincentive) to draw out the lot, I believe, but there is currently no tax on small monthly withdrawals, called an allocated pension, that we can take as an allowance once we are 60. This is something the new tax reforms will be looking at changing.
There are recent threads on Somersoft you can search regarding Pensions and Superannuation. There is a lot of good info there.
I wasn't really talking about super, but about personal assets. Even if you retire you can't get your super until you are 60 (or 55 in some instances).
But considering super means there is an even greater buffer in there. Retire early, spend all your capital and then living on a combination of your super and pension.
I have been walking around work all this year in a zombie-like trance trying to work out how soon Hubby and I can leave our jobs. As you can tell, I have been thinking about this a lot , managing to work myself into another bout of depression this past week.
Dinner last night was lovely, those European river cruises will leave you wanting more! We came to the conclusion that if we sell up all the houses now and pay off the mortgages, we will still have a big bag of cash, but no home. We are actually worse off than we were in 2010 before we bought the first IP. (Gladstone will do that to you). I now know we could drop all the cash into QSuper and draw out the $58k per year and it will last ten years. Mark is now 58 and he has hated his job for longer than I am over mine. Worst case scenario, we get ten years then he collects pension and I get whatever casual work when I am not eating my heart out in Tuscany or Thailand.
But all this education means we will do much better than that. If we live overseas for a few years, we will require less than $58k per annum and so the cash will last longer or better still, we will be able to buy a block of land somewhere here to come back to when we don't want to fly any more or we want to park the caravan next to the big shed and go play in the shed where all of Mark's tools will be stored.
Dinner last night was lovely, those European river cruises will leave you wanting more! We came to the conclusion that if we sell up all the houses now and pay off the mortgages, we will still have a big bag of cash, but no home. We are actually worse off than we were in 2010 before we bought the first IP. (Gladstone will do that to you). I now know we could drop all the cash into QSuper and draw out the $58k per year and it will last ten years. Mark is now 58 and he has hated his job for longer than I am over mine. Worst case scenario, we get ten years then he collects pension and I get whatever casual work when I am not eating my heart out in Tuscany or Thailand.
But all this education means we will do much better than that. If we live overseas for a few years, we will require less than $58k per annum and so the cash will last longer or better still, we will be able to buy a block of land somewhere here to come back to when we don't want to fly any more or we want to park the caravan next to the big shed and go play in the shed where all of Mark's tools will be stored.
Wouldnt you be best off keeping your IP and using the money you can collect from the tenant to supplement your super and then when you are in retirement and the funds are winding down to nothing you can sell the IP.
That's my plan to keep my IP which I would have paid off by the time I hit 70 and also my PPOR will be paid off by 70. Then my super which Im hoping will be around the $600K mark at 70 which I dont think will be enough. So the plan is to live off my super and also keep collecting rent each week for my IP which should see me through retirement. Then when things look pear shaped hopefully just before Im about to kark it I can sell the IP or leave it to my children. What are the tax implications of collecting rent for an IP when retired, im guessing the governement has its big fat hand inside the pie.
That's my plan to keep my IP which I would have paid off by the time I hit 70 and also my PPOR will be paid off by 70. Then my super which Im hoping will be around the $600K mark at 70 which I dont think will be enough. So the plan is to live off my super and also keep collecting rent each week for my IP which should see me through retirement. Then when things look pear shaped hopefully just before Im about to kark it I can sell the IP or leave it to my children. What are the tax implications of collecting rent for an IP when retired, im guessing the governement has its big fat hand inside the pie.
I am very fortunate to receive a defined benefits pension from the time I spent in the ADF, which pays for all of the essentials to live. I also have my investments, split about 50/50 between non-super and super in mostly shares, which bumps me over the $58K income mark. Obviously I can only access the non-super part right now and that is mostly in franked-dividend yielding shares which is taxed at only 4.5% if I keep my taxable income below $80K. Under current government policy, I can access my super in about 13 years, but I expect that will move out further and I have taken that into consideration with my non-super/super balancing. Finally, my house is owned outright, so accommodation costs are minimal.
