Early retirement without a fortune

[Peter 14.7]

She also didn't want to spend up in case she found a miracle cure and had nothing left to live on in later life.

One of the saddest days of my life was the day I received money from her estate. I really wish she had spent up and enjoyed her life earlier. Life is short and should be enjoyed. There needs to be some balance.

That is one of the saddest things to ever read here.

Not spending in case, she lived. What a bad bet. Expecting to die.

But I agree the mindset of some parents , especially depression era babies is very hard to change.

My Father in Law died 2 year back.

He left a home owned but 57 years old and renovated poorly 23 years ago, a 1973 car, and a significant amount of cash and shares. He left it all to wife and Mother in law has life interest in the interest and a free home to live in.

Wife and I sold home, bought mum, 2 bed villa near us, did it up new bathroom, AC etc..got a her a new car 2007 Hyundai with AC, air back ABS brakes, new Huge TV, went to IKEA and replaced almost all furniture. last purchase was an iPad. Mum happier than ever.

Helps that wife in only child and no greedy siblings to manage.

Peter 14.7

 

[Peter 14.7]

I thought it wouldn't be organic free range (equivalent uncertified) unless the feed was certified.... (many feed contain imported cheap GM corn and grain etc)

The Y-man

Yeah. We use Darling Downs organic
Mix at $20 for 20kg bag. Still cheap as the free range every day. Recently feasted on termites found inside some firewood I collected. Win win.

Peter 14.7

 

[china]

But China, dear, the average person can achieve this. We earn a lot less than $100k in our day jobs.

The people I work with who are the same age as myself are perfectly satisfied with our lifestyles and we earn under $30K. I work five minute's drive from home with free parking. Get that in Sydney! It costs me less to travel to work in my car than it would on public transport.

I get 11 or 12 weeks a year paid leave (it just changed, I cant work out how many weeks leave we get any more). Not bad for turning up six hours a day for 40 weeks a year. We have an ADO system. The downside is that there are hardly any travel bargains to be had during school holiday times but we tend to avoid touristy places anyway.

I have mentioned previously that my Superannuation balance has doubled in the last five years. Actually I just checked, it has increased by one and a half times in five years.

I intend retiring on a higher income than I get now.

I find it hard to identify with this and I apologise for this as I really cannot fathom living on 30k per year. I have never had to and hope never to have to try. However, I appreciate that each to their own and if it works for you, then thats great.

However, I think that most people tend to retire on a lower income than the one they get when actively working. For me, in 2012's dollars, I require 100k in passive income to qualify for retirement and financial independence.

 

[Angel]

For China

I'll make it a bit easier for you to understand, China. My hubby earns twice what I do, but we sink about $20K a year into our retirement fund (shares, IPs). Our home is paid off and we paid cash for our current car. Our kids live at home but they pay board which covers their food, electricity and broadband.

We cant fathom living on $50 a week food for two. We spend a total of $200 a week on all food and groceries for four adults and two small dogs. That works out $50 a week each. We do not eat takeaways. We buy our meat from a real butcher, never supermarkets. That alone reduces the meat costs by half. We usually buy fruit and veges from a F and V store, but will occasionally get a top up at Coles so I don't have to make a special trip out of my way. We have an Aldi close by so I alternate big shops at Aldi for the basics and Coles for the things you cant get at Aldi (which isn't much).

We also spend a lot of money on Hubby's motorbikes and going for rides. This past year he was involved in an accident, so while he had it apart to repaint, he spent a couple of thousand dollars on motor and drive maintenance. He does the work himself, no labour charges. The bikes are owned outright. We have life experiences rather than spending on any other doodads. I still call the bikes doodads, but they came with the husband so I cant complain. This year he rode to Phillip Island via the Snowy Mountains, the Victorian Alps, the NSW south coast and Sydney, next week I am going to Melbourne. Last year we did a driving trip all through Vict and Tasmania for four weeks.

So yes, if you take off the money we invest, we each live on under $30K a year and we really Live, not merely survive.

Would you please explain to me how a single person who owns their house outright, who spends nothing on furniture and landscaping, can go through $100k a year. That is something I cant fathom. Have you bought any IPs yet? I seem to recall you mentioning that you haven't.

 

[The Fence]

yeah Pete....

Barastock Golden Yolk $12.95/20kg bag @ Tamworth Rural.

Whilst it may have some in gredients that may be non organic, the chooks when locked up use twice as much as when they are let out into the paddock. So Im assuming they get at least half their nourishment out of our paddock so Im calling the eggs organic.
maybe I shouldnt but far better than what you buy from shops anyway.

Bye the way, we try to let them out as early in the morning as possible but only after thay have laid their eggs. (image of The fence with stock whip hovering over nest...."C'mon...hurry up...!!"

The eggs are a brilliant orangy yellow and the taste is delicious.

Actually that $2/doz eggs includes the capital cost of the hens as well. Can expect them to lay 300 eggs a year for 2 years before dropping efficiency so we cycle in half as many more hens each year.

Peter, you are a good person looking after MIL like that, good on you !

 

[cimbom]

I'll make it a bit easier for you to understand, China. My hubby earns twice what I do, but we sink about $20K a year into our retirement fund (shares, IPs). Our home is paid off and we paid cash for our current car. Our kids live at home but they pay board which covers their food, electricity and broadband.

We cant fathom living on $50 a week food for two. We spend a total of $200 a week on all food and groceries for four adults and two small dogs. That works out $50 a week each. We do not eat takeaways. We buy our meat from a real butcher, never supermarkets. That alone reduces the meat costs by half. We usually buy fruit and veges from a F and V store, but will occasionally get a top up at Coles so I don't have to make a special trip out of my way. We have an Aldi close by so I alternate big shops at Aldi for the basics and Coles for the things you cant get at Aldi (which isn't much).

We also spend a lot of money on Hubby's motorbikes and going for rides. This past year he was involved in an accident, so while he had it apart to repaint, he spent a couple of thousand dollars on motor and drive maintenance. He does the work himself, no labour charges. The bikes are owned outright. We have life experiences rather than spending on any other doodads. I still call the bikes doodads, but they came with the husband so I cant complain. This year he rode to Phillip Island via the Snowy Mountains, the Victorian Alps, the NSW south coast and Sydney, next week I am going to Melbourne. Last year we did a driving trip all through Vict and Tasmania for four weeks.

So yes, if you take off the money we invest, we each live on under $30K a year and we really Live, not merely survive.

Would you please explain to me how a single person who owns their house outright, who spends nothing on furniture and landscaping, can go through $100k a year. That is something I cant fathom. Have you bought any IPs yet? I seem to recall you mentioning that you haven't.

You seem very similar to us in terms of income and saving. We make the same amount (pre-tax so minus ~20k for that) then pay 20k for rent, 20-25k is savings and we live on the rest. Part of the savings goes to our "travel fund" and the rest is invested.

 

[The Y-man]

So yes, if you take off the money we invest, we each live on under $30K a year and we really Live, not merely survive.

I thought for minute you were going to say 2 of you on $30k - now that's tight! - but I agree $30k each is what we are aiming for.

As an experiment, we have been living the past year on purely our rental income of about $48k net per year for 2 of us (so $24k each).

So far haven't seen any degradation in lifestyle (inc 1 overseas holiday).

Again, this is in a fully owned PPOR, car etc scenario.

I can see however it will be tight for replacing big ticket items like the car etc, and reno/refresh on the IP's.

I am now aiming to bump up the income to $60k net (and therefore coming to the same conclusion as you of $30k each)

The Y-man

 

[cimbom]

I think I'd be fine with about 40k net in total for both of us (assuming paid off PPOR). Obviously more would be better but I wouldn't feel deprived at all with that amount.

 

[kathryn d]

I thought for minute you were going to say 2 of you on $30k - now that's tight! - but I agree $30k each is what we are aiming for.


The Y-man

Ours is $1000 month ($500 each) for the both of us.
It isnt locked in stone, and it will increase naturally.

We did the same thing Y-man...living off rent for a year before giving up my employed income.
We were a single family income on 30K gross, so it didn't impact on our budget anyways.
Since Rob and I married in 2002, he was always a SAHD to our 3 teenage boys, and then took care of the properties when we started in 2004.

 

[The Y-man]

I am also finding the bigger the house the more the maintenance costs!


The Y-man

 

[OKFFW]

My wife and I have set our goal at $100k net passive income from investments, at which point she would be able to retire. We are not hard core "frugals" but have been managing to save approximately $45k a year for the last few years and are now investing in property as well.

Having been reading the money mustache thread linked to earlier, a fair bit of what he talks about we already implement. However, what has really struck home is the anti dumb consumerism message. I think the reason it has struck such a cord is because we already lead pretty simple lives with regards to doodads and useless stuff that's not really needed. We live a very nice life, have a nice house that we should have paid off in 3-4 years max, do the things we want to do, enjoy a bit of travel now and then and don't scrimp and scrape and count every penny. However, we just don't fork out heaps of money on useless junk and we certainly don't go into debt to fund any of the things we do spend money on.

So that then got me to thinking......"Why do we need a $100k passive income before the wife retires and how much could we possibly need before I get to retire???"

So thanks to this thread and its participants for really bringing this all into much sharper focus. I think it is time to redo the figures so we can see just how little we need before my wife can retire from her thankless job on the thin blue line!

 

[HomePage]

My wife and I have set our goal at $100k net passive income from investments, at which point she would be able to retire. We are not hard core "frugals" but have been managing to save approximately $45k a year for the last few years and are now investing in property as well.

Having been reading the money mustache thread linked to earlier, a fair bit of what he talks about we already implement. However, what has really struck home is the anti dumb consumerism message. I think the reason it has struck such a cord is because we already lead pretty simple lives with regards to doodads and useless stuff that's not really needed. We live a very nice life, have a nice house that we should have paid off in 3-4 years max, do the things we want to do, enjoy a bit of travel now and then and don't scrimp and scrape and count every penny. However, we just don't fork out heaps of money on useless junk and we certainly don't go into debt to fund any of the things we do spend money on.

So that then got me to thinking......"Why do we need a $100k passive income before the wife retires and how much could we possibly need before I get to retire???"

So thanks to this thread and its participants for really bringing this all into much sharper focus. I think it is time to redo the figures so we can see just how little we need before my wife can retire from her thankless job on the thin blue line!

I've recently come to a similar realisation myself that I spend less than half of what I earn now and have a big enough nest egg that I can continue spending what I currently do, indexed to inflation, without working another day for the rest of my life. I can work for another decade and get to the holy grail $100k+ income stream but the only reason i can think of to do this, given I'm happy with what i spend now, is pure greed.

 

[aussierogue]

Loved all the replies

Alot of what is being described (and i subscribe too) is not early retirement but "lifestyle design". The guy from 4 hour working week coined the term i think.

Yes we went from earning 250-300k per year as a family down to anything between 60 and 100 k depending on the year (its been close to 3 years now)

The great thing about having a mixture of passive income, part time jobs, a house fully paid off, one car and an anti consumer bent is that when you spend only 60k or the year - we actually saved 20k! Go us!

The first year wwe were quite nervous not knowin whether we could live (as a young family) on 60-70k per year - down from much larger. But sure enough - every year now after tax returns come in - we reconcile and baddabang....we have never been in a worse cash position.

This is key - when you get to this point - hopefully wealt creation is no longer the key. Its all about cashflow and maintaining wealth.

Sustaining a simple, enriched, healthy lifestyle is our current goal.

 

[Terry_w]

Good posts Aussierouge, OKFFW and Homepage

 

[Angel]

A few years ago I did the "What will we need for retirement" calculation.

I worked on:
$100k for health issues over and above what health insurance will give us. Motorcycle riders can look forward to hip and knee replacements etc.

$100 k for the round the world trip

and another $1m to provide us with completely replacing our current lifestyle.

As for China's 2 or 3 Million Dollars plus an eClass and a harbour side house.... Pffftt

Darling, waterfront homes rust!
My Liberty will take me all around Australia and I can get a big ute if I want to tow a caravan. Ps, I have three very close friends or relatives who have huge big caravans. I will never buy one of the Capital Suckers myself... I can always throw them a handful of green ones and borrow theirs if I really want to.

Buy a boat? Heck no, you just go on a day trip whenever you feel like it. That reminds me, my brother in Sydney bought a bloody huge boat earlier this year off some poor bankrupt soul for a fifth of its original price.

 

[china]

I

Would you please explain to me how a single person who owns their house outright, who spends nothing on furniture and landscaping, can go through $100k a year. That is something I cant fathom. Have you bought any IPs yet? I seem to recall you mentioning that you haven't.

100k after tax gives me about 70k to spend. Let me break it down as to how this is spent as a single person.

Eating out -four dinners a week (4 by 25), four lunches (4 by 15) and one weekend breakfast (one by 20). This is almost 10k a year. As a single, I often don't feel like cooking.

Groceries for the remaining meals / household personal items: 150/wk = 7.5k a year - salmon and blueberries are most costly

Phone costs: 1200 a year

Car insurance / maintenance / rego : 4k a year

Petrol: 3k a year

Council rates: 3k a year

Electricity: 2k a year

Water: 0.5k a year

Internet costs: mobile broadband: 1200 a year.

Home/contents insurance: 2k a year

Travel overseas once a year: 10k

Lawn mowing and cleaning person: 1k

Miscellaneous costs (cinema tickets, haircuts, etc) : 5k

Private health inusrance: 1.5k

As you can see, I am rapidly using up the 70k per year. Some may see this spending as excessive, especially with regards to food consumption but I often quote the 100k per year pre-tax as necessary for a relaxed lifestyle without having to significantly count dollars and cents for anything. I do not advocate constant frugality. There is no real splurge on any major luxury/discretionary consumer items, just daily activities of living. Therefore, to generate passive income of 100k per year, I stand by my assertion to have 2 to 3 mil cash/income generating assets to achieve this.

 

[HomePage]

100k after tax gives me about 70k to spend. Let me break it down as to how this is spent as a single person.

Eating out -four dinners a week (4 by 25), four lunches (4 by 15) and one weekend breakfast (one by 20). This is almost 10k a year. As a single, I often don't feel like cooking.

Groceries for the remaining meals / household personal items: 150/wk = 7.5k a year - salmon and blueberries are most costly

Phone costs: 1200 a year

Car insurance / maintenance / rego : 4k a year

Petrol: 3k a year

Council rates: 3k a year

Electricity: 2k a year

Water: 0.5k a year

Internet costs: mobile broadband: 1200 a year.

Home/contents insurance: 2k a year

Travel overseas once a year: 10k

Lawn mowing and cleaning person: 1k

Miscellaneous costs (cinema tickets, haircuts, etc) : 5k

Private health inusrance: 1.5k

As you can see, I am rapidly using up the 70k per year. Some may see this spending as excessive, especially with regards to food consumption but I often quote the 100k per year pre-tax as necessary for a relaxed lifestyle without having to significantly count dollars and cents for anything. I do not advocate constant frugality. There is no real splurge on any major luxury/discretionary consumer items, just daily activities of living. Therefore, to generate passive income of 100k per year, I stand by my assertion to have 2 to 3 mil cash/income generating assets to achieve this.

As extravagant as some of these expenses are, they only total $51900 which can be funded from a before tax income of $65K at current tax rates (including medicare levy), so you're overshooting by about $35K a year. Plus, some of these expenses could be cut down simply by being less frivolous, without having to venture into frugal territory, so even $65K a year is generous. I think you're overcooking this one China, even by your own luxurious standards.

 

[geoffw]

As extravagant as some of these expenses are, they only total $51900 which can be funded from a before tax income of $65K at current tax rates (including medicare levy), so you're overshooting by about $35K a year. Plus, some of these expenses could be cut down simply by being less frivolous, without having to venture into frugal territory, so even $65K a year is generous. I think you're overcooking this one China, even by your own luxurious standards.

That's all as a single person.

He's be needing a lot more with a partner or kids. Or both.

 

[china]

That's all as a single person.

He's be needing a lot more with a partner or kids. Or both.

I think an extra mil per extra person.

 

[china]

As extravagant as some of these expenses are, they only total $51900 which can be funded from a before tax income of $65K at current tax rates (including medicare levy), so you're overshooting by about $35K a year. Plus, some of these expenses could be cut down simply by being less frivolous, without having to venture into frugal territory, so even $65K a year is generous. I think you're overcooking this one China, even by your own luxurious standards.

No I actually feel quite frugal, no tv, no e class merc, usually fly economy class, no gym membership. Cheap house. My main indulgence is eating out. I would love to have luxurious standards.