I don't know about retiring, but I'd like to reach the point where I don't require a 'day job' to secure further lending, by 35. Maybe 40 is more realistic, but I'm aiming for 35. 7 years to go. Not sure how the timeframe works if a big recession is thrown in the middle of it...
What age do you plan to retire?
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Alex you and I may feel 100% secure with shares or property respectively, but HandyAndy did mention that he basically wanted "Guaranteed" income.
I think it all comes down to your personal feeling of security; I can get this from residential real estate on the east coast, HandyAndy needs a term deposit.
Luce, the thing that pushed me to retire at 30 was that I was actually aiming for 33... for the quite simple reason that it rhymes! Financially free by 33. I found that this rhyme got stuck in my head and helped me a lot.
Or maybe yours can be "Feeling alive by 35"
$1.25m @ ING 7.6% = $95k - tax = $57K.
The number is getting smaller and inflation is getting bigger.
Dave
There is a cost to anything that is guaranteed. With only a term deposit you're guaranteed to have a crap lifestyle if you start 'retiring' too early, because of the lack of capital appreciation.
Alex
As a matter of interest
what is the guarantee that ING will always pay 7.6%.Would there be a day when they would pay 3% for example taking HA888's example down to $37,500 before tax ?
Dave
Well, to be fair, he didn't say 'only' a term deposit.
Seeking inspiration!
I'm 31 and my spreadsheet tells me that my wife and I can afford to cut down to one part-time job each. This is pretty important to us because we'd love to take our kids (aged 1 and 3) out of childcare and spend as much time with them as possible NOW before they go off to school in a few years.
There are two significant problems with this plan...
(1) No man in my family or circle of friends has ever left work on account of his investment success. This is a HUGE mental barrier for a bloke like me (and my wife).
(2) Our property portfolio is negatively geared and therefore our LOE plan would rely on some capital growth and the ability to borrow against the growth without being able to demonstrate a high income. We feel confident that this could occur but "confident" doesn't pay the bills.
I wonder what the SS forum has to say about my situation/mindset?
Regards - Ben
I'm 31 and my spreadsheet tells me that my wife and I can afford to cut down to one part-time job each. This is pretty important to us because we'd love to take our kids (aged 1 and 3) out of childcare and spend as much time with them as possible NOW before they go off to school in a few years.
There are two significant problems with this plan...
(1) No man in my family or circle of friends has ever left work on account of his investment success. This is a HUGE mental barrier for a bloke like me (and my wife).
(2) Our property portfolio is negatively geared and therefore our LOE plan would rely on some capital growth and the ability to borrow against the growth without being able to demonstrate a high income. We feel confident that this could occur but "confident" doesn't pay the bills.
I wonder what the SS forum has to say about my situation/mindset?
Regards - Ben
Well done on your path to financial independance
Have you considered paying expenses and interest in advance in current financial year then live off IP cashflow in the following year. This would give you+wife a year off work to spend with the kids.
I agree that it is vitally important to spend as much time as possible with the kids - especially when they are young.
Good luck
Depends on your estimate of annual growth on assets vs after tax spend on lifestyle.
My wife has given me a benchmark of 0.1% growth before we feel comfy enough to pull the pin.
None of this single or even double digit growth projections for her. Of course, we haven't even approached the Banks, and they have the final say of course, so it doesn't matter what our XLS projects for us....but we reckon the Bank might just feel comfy enough at that stage to support us in LOE.
I'm currently tracking at 0.35%, and when we get the Shed under our belt, it'll be down to 0.24%.
Not long to go now.....
Are you taking the piss Daz?
If you had $10 mil in property you only expect it to go up by $10,000 per year?
So for you to be comfortable on LOE you'll need numbers bigger than my calculator can do ?
Dave
No. It's too important a subject to muck around with. I joke around alot on the fluffy stuff....but this subject IMO is where the rubber meets the road.....when ya jump off the work merry-go-round, ya better make damn sure the sideshow you have going is going to rough it out no matter what. I have no wish going back to the boss cap in hand saying we didn't quite cut it...and please sir can I have my old job back.
I've seen 4 people so far try this in my industry, and they thought they had enough on the go to get by, but quickly found out the cost of living has gone through the roof, far moreso than the quoted fanciful CPI.
being quite young, still in our 30's.....we've got a few winters to get through yet, so the chestnut cabinet needs to be well stocked.
Well, that's the thing BB, it's not just me, and it's not just me and the wife....we're talking about the whole crew surfing on this gig, and there's a fairly big crew with some hefty bills coming our way (like 3x5 years worth of private school fees to mention but one).
Of course, that doesn't take into account the largest and most dominant factor, and that's the institution who is prepared to stump up the cash and come along for the ride with you. They also need to feel very comfortable.
Having just gone through the very unpleasant experience for the first time in our lives of having the Bank telling us to sit back and relax, the honeypot is empty and there ain't no more coming your way......and all of the unpleasant choices that onflow from that.....I don't ever want to put myself in that position again.
We both want the fixed - must have - domestic expenses in our lives to be absolutely inconsequential in the scheme of things. If that means working on a pretty decent wicket in a pretty cushy job for another 2 years...well so be it. Until the boss gives me the willy's of course, and then I might review it earlier.
We considered this but then gave it up when the short term blip turns into long term pain. You've brought forward the majority of your expenses into the current year, allowing nothing to be claimed in the year that you take off.....so you are effectively paying big mobs of tax on the rents before you actually get your mitts on it. Of course, if your rents are significant, you have nothing to offset the income against - cos you did it all the year before.
Unfortunately, the pain of the year's sabbatical comes later when you need to re-enter the workforce, if you are lucky enough to find a well paying job again, and pay for expenses and tax before you have anything to live off, and the chance of saving enough in the cookie jar within that year to repeat the process is almost impossible unless you have one of two things, an enormous salary or a tiny interest bill.....in which case it isn't worth doing anyway.
Of course, if you are investing in assets that don't produce a lot of yield - like residential properties - this tactic can be fraught with danger.
WiilG - have you gone down this path before ??
Luce, the thing that pushed me to retire at 30 was that I was actually aiming for 33... for the quite simple reason that it rhymes! Financially free by 33. I found that this rhyme got stuck in my head and helped me a lot.
Or maybe yours can be "Feeling alive by 35"
What a great idea! A nice little rhyming mantra that sticks in your head and works its magic!
Feeling alive by 35! Love it!True if the income is significant. If you have no PPOR debt, modest means, cover basic costs you may still be under the combined tax free threashold (currently 22k combined - will soon be $28k combined. This isn't counting the other government benefits such as full Family Tax benefit for another $8k)
If you are able to take a year off without pay from your current job this is not a problem. A lot of larger organisations do offer such options
Repeating the process in consecutive years probably wouldn't work because of Tax
This 'tactic' isn't for everybody and will only work with advance planning. It would be dangerous if you have an expensive lifestyle
My wife is curenty on her 2nd year of Maternity leave and I am planning to either go part time or take a year off. My situation is perhaps a bit different because my IP's are positive geared and I have some cash savings parked in offset accounts. Such a plan will have an impact on my longer term goals, I won't 'save any money in the cookie jar' and will live a modest existence during this time.
Hi All
I've been reading this thread with great interest.
I am an Aussie aid worker/human rights lawyer, working in Sudan with refugees in camps, and live here with my husband and 8 month old baby. I love my job! I'm 35 and I don't ever plan to retire, not even when I turn 65! Don't want to stop working 'till I die because my work means a lot to me.
However, my goal is by the time I am 40 to be able to have enough passive income to be able to stop working if I ever wanted or needed to. And I would love it for my hubbie to retire, I know he would enjoy it!
cheers
Leilah
I've been reading this thread with great interest.
I am an Aussie aid worker/human rights lawyer, working in Sudan with refugees in camps, and live here with my husband and 8 month old baby. I love my job! I'm 35 and I don't ever plan to retire, not even when I turn 65! Don't want to stop working 'till I die because my work means a lot to me.
However, my goal is by the time I am 40 to be able to have enough passive income to be able to stop working if I ever wanted or needed to. And I would love it for my hubbie to retire, I know he would enjoy it!
cheers
Leilah
