What Assets & Income do you need to Retire?

[quoll]

It's not just a theory Graeme.

Mark

I guess I still say theory because I haven't got myself into that spot yet. I hope that I have sorted out the wants and desires versus the needs and almost needs that just make things a bit nicer.

I think we are running along similar tracks, started out investing and looking at flash cars and thinking big incomes, but as the journey has progress and you make mistakes and realise just how much TIME is taken up and what you could have done, then you realise that driving an older car or shopping at discount variety stores, the trappings of wealth aren't that important.

I just hope that when I do get to where we want to be that we don't change the plan again to try and get flash holidays or expensive clothes, just a bit concerned on how people alter their behaviour when associating with high wealth individuals. Currently happy to be the high wealth individual with the cheap little car, growing vegies at home, eating nice food, going out a bit, hitting the beach and having a few holidays but still working 1/2 the year.

Just have to wait and see what happens.

Regards
Graeme

 

[Mr. Fabulous]

the trappings of wealth aren't that important.

Exactly.

I just hope that when I do get to where we want to be that we don't change the plan again to try and get flash holidays or expensive clothes, just a bit concerned on how people alter their behaviour when associating with high wealth individuals. Currently happy to be the high wealth individual with the cheap little car, growing vegies at home, eating nice food, going out a bit, hitting the beach and having a few holidays but still working 1/2 the year.

I'm a little different in that having a lot of wealth isn't really important to me. By that I mean it'd be nice, but it's not something I'm conciously working towards. Having enough is. My goal is to get to enough.

I associate with wealthy individuals daily in my profession and they aren't any different to non-wealthy people. If having a cheaper car and growing vegies and all that is what makes you happy, then just do that. If anyone looks down on you or insinuates that you should be doing 'more' because you are wealthy then just look them in the eye and say:

BITE MY SHINY METAL A.SS

People like that may have money, but they are worthless.

Mark

 

[JIT]

Quote:
Originally Posted by Ausprop
but if you are exiting to live like a janitor is that really appealling?

Depends what you mean by living like a janitor. If it means having enough to keep clothes on my back, a roof over my head and food in my stomach, plus a few luxuries like internet and records, then bloody oath. I did some serious soul searching a couple years ago and really trimmed down on my wants.

I discovered I would gain enough passive income to be able to stop working in half the time I initially thought. That's a lot of free time that I am now in control of. A big house and fancy cars and whatever else people like/want just does not even come remotely close to being as important to me as time. I hope those massive incomes and massive houses are worth losing all that precious time for.

As I've said before - time is the one thing that can never be replaced. It's become even more important to me in the last ten months or whatever since my niece was born. It kills me that I only get to see her once or twice a year. I want to be able to visit her more often, just to hang out. She is by far the most precious person in my life and I miss her like crazy.

It's also quite a motivator that although I like my job, I'd rather sit and home and watch the grass grow than go to a job - any job.

Mark

Hi Mark,

I like your philosophy.

I figured I could retire even sooner if I moved to another country, but there's some cons to that though.

If you add a wife/kids to the mix it changes the picture too.

Just wondering what sort of $ figure you've put on ''enough'' for passive income, gross/net assets?

I've found it a difficult question to answer.

 

[rambada]

Interesting discussion. Especially in the current climate. I think 12 - 24 months prior the answers would be different.

My goal is $1M net
Passive income $100k net

Now retirement - what does that really mean?
1 RE project per year
1 new international travel destination per year
1 new Australian travel destination per year
1 month camping each year

So while I am 'retired' from wages, my wealth production continues through current investments & future RE projects.

Currently 60% there.

 

[Mr. Fabulous]

Hi Mark,

I like your philosophy.

I figured I could retire even sooner if I moved to another country, but there's some cons to that though.

If you add a wife/kids to the mix it changes the picture too.

Just wondering what sort of $ figure you've put on ''enough'' for passive income, gross/net assets?

I've found it a difficult question to answer.

Hi JIT,

It was relatively easy for me. Firstly, I don't have a wife/kids, so these are significant expenses I don't need to factor in. Also, I have a good understanding of where my money goes each month. I know how much needs to go where at all times. When I get paid, it gets split into the various expenses. So what I did when calculating 'enough' was determine how much I need in a given 12 month period and added about 30% on top to account for inflation and re-investment in order to continue to grow my asset base.

I won't ever have a huge house and luxury cars and all that jazz but I'll have my freedom, which is priceless.

Mark

 

[WillG]

How much is enough?

Very difficult question to answer. Over the past couple of years I have tried to answer this question and every year I continue to get different answers.

This question often assumes "retirement is completely stopping full time work and living off passive income from investments". This is not the only way!

My current thinking ...

Rather than focusing on a 'stop work retirement', I am focusing on a 'slow down' after the age of 40. The 'slow down' includes only working max 40 hour weeks in jobs I enjoy, more time with the family, no wasting money on useless stuff etc. The slow down will last for 20 years and I will probably be working part time towards the end. At the end of the 'slow down', my assets will provide an increasing passive income to cover living costs and holidays.

The 'slow down' at 40 assumes the PPOR is payed off and you have accumulated enough IP's & other investments to ensure growth over the 20 years will provide enough capital growth and income at age 60. 20 years should easily allow the IP's to be payed off if you continue to save 10% of income each financial year

To answer the question ... I can't answer the question specifically but a 'slow down' 20 years before a full retirement starting with PPOR payed off & 3-5 IP's with an LVR < 50% should give you enough to passive income at retirement.

 

[JIT]

Time

Hi there,

Interesting responses Mark and WillG.

I agree with Mark re. the critical importance of TIME, and having the FREEDOM to control this central aspect of our existence.

But also agree with WillG, in that there can be a middle way that does not necessarily require ''financial freedom'' in the traditional sense. see_change wrote a great post about this some years back (but I can't find it now).

For example...working part-time doing a JOB you enjoy/are good at, that pays reasonably well, is secure and in demand, and gives you the flexibility to take as much or as little holidays as you want (not easy, I know!).

After much searching though, I found that perfect JOB for me a couple of years ago...

I'll be 30 next year, and plan to only ever work 40hrs/week maximum from then on. I suspect though, that this will drop to 30-35 hrs/week after 5 years or so, which will probably end up being my "cruising" work pace.

So my ''slow down'' is starting very soon!

I think I'll always be investing in one form or another, not only to generate more passive income, but also because I enjoy it, almost like a hobby.

I'm only aiming for about 5-6 residential properties in total, including a PPOR, as a maximum, which is my ''enough'' ($2MM-$3MM purchase value). After that I'll be focussing on commercial property investing, directly, or more likely, indirectly in its various forms, as a yield-orientated asset class for my overall portfolio, and for pure interest/fun.

And also, as Mark suggests, living simply, not gearing up to your eyeballs with PPOR's and car's etc., and not having too many material attachments in life...makes everything so much easier too.

I don't think I'll avoid the wife/kids though, otherwise I'll have way too much time on my hands, and I'd be more than happy to spend most of my time here anyway!

I also think that ''full retirement'' on a passive income at a relatively young age is not so tax-effective either. Even more so if you're single and with no income-splitting beneficiaries. I recall discussing this with Dazz some time back and re. his plans to LOE. Nonetheless, if the passive income figure is high enough, one probably wouldn't mind paying a bit of tax on it I guess.

That sums up my current thinking on this topic!

 

[Mr. Fabulous]

Figured I might mention - I also plan to live in Asia or South America for a while, too. Aussie dollars go a long way in places like that.

Mark

 

[battle on]

Figured I might mention - I also plan to live in Asia or South America for a while, too. Aussie dollars go a long way in places like that.

Mark

Unfortunatly it's not going too far in Singapore at the moment

 

[Mr. Fabulous]

Well, good thing I have no intention of living in a police state like Singapore then.

Mark

 

[sash]

There are quite a few on SS who have this in terms of pruchase value.

Whilst, I agree with the LOE concept...it can be flawed particularly in times like this where banks could potentially call loans in.

My strategy is to get the income via positive cashflow preferably about $100k pa....and then substitute that with some LOE if needed. Remember also that the ongoing depreciation will give some level of taxc relief....so if you have a 100k income...it could be a 120K income based due to depreciation.

I'm only aiming for about 5-6 residential properties in total, including a PPOR, as a maximum, which is my ''enough'' ($2MM-$3MM purchase value). After that I'll be focussing on commercial property investing, directly, or more likely, indirectly in its various forms, as a yield-orientated asset class for my overall portfolio, and for pure interest/fun.

 

[want2bewealthy]

Im going infinite and dont have a 'set goal' so to speak, I want as much as I can get and will evaluate my plan along the way but right now Im in the acquisition mode and going hard at it.

I plan to have the ability to retire at around 37 (28 now) and also my partner.

My main goal is to be able to look after my Family and give us the best lifestyle I can, I want to be able to spend time travelling with my wife and not ever have to worry about where the money will come from, I want us to have the freedom to do anything we want to do, without limits.

 

[Tash_85]

Im hoping to retire by the time im 45,.... another 22 yrs of working. Hrmm may even focus on 40 but not sure if that goal is achievable.

I already feel the rat race, I have had a job since i was 14 but until the last 2years never really valued or understood the concept of money. I do go out and enjoy myself but i worked really hard the last 1 1/2 yrs to pay off ridiculous types of debt. ie personal loan for an o/s holiday when i was 20, a couple of credit cards, a new bed i put on an interest free store card. Things i would never consider doing now. It was really annoying paying for something i had enjoyed 2 yrs ago. It was like i was throwing my money away.

Anyway, my goal is to have 5 houses paid off in full. Im not sure if this is achievable on a 50k single person income. Even if i do meet someone and get married i have always been financially independent which i am proud about. I do think it would be alot easier with 2 incomes but if you havnt met someone what can you do.

I look at my parents and just feel sorry for them, they work 2 under paid jobs, work all the time, dont go out much because they are too tired, most of their money goes on bills etc. Its terrible the lifestyle they have and i really dont want to be like that. I want to be able to go on holidays without saving for 6 months before i can go. My parents havnt even gone on a holiday in prob 20 yrs its shocking. I want to be smart and pro active while im young because you cant rely on just an income.. unless your on maybe 200k a yr which is not many people at all. ah

 

[chilliaa]

Well all i can say is that i need far fewer assets in 2008 to generate my desired future retirement income.
From a long term perspective 2008 and probably 2009 will be viewed as opportunties of a lifetime.

 

[AUSPROP...]

Well all i can say is that i need far fewer assets in 2008 to generate my desired future retirement income.
From a long term perspective 2008 and probably 2009 will be viewed as opportunties of a lifetime.

only if you can deny your animal herd instincts. never easy!

 

[Mr. Fabulous]

only if you can deny your animal herd instincts. never easy!

Yes it is. I don't have 'animal herd instincts'. I do what's best for me and if that means going against what everyone else thinks is appropriate (which is usually the case), then that's how it is. I couldn't give a rat's what anyone else says/does/thinks, I'ma do what's best for me. I'm No. 1 in my world.

Mark

 

[devo76]

I must be easily pleased. I want a PPOR in a area that i can walk to some nice cafes/shopping and also be near the water so i can fish/swim. Does not have to be a beach or in a city area.Somewhere warm for the wife and maybe some decent barra fishing. That is my retirement. A very cheap one compared to some on here. As far as supporting this life style.My career should give me about $60,000 PA in todays dollars in super at the age of 50 not including extra payments or the wifes super.Plus another 4 paid for properties giving me a total of around $1000 to $1200 in rent. This would have me and the wife leading a very happy lifestyle. I am 32 so this is very achievable. I am aiming a lot higher but with these goals i will be happier a lot sooner and even if all my current plans dont come off. I will still probably reach my happy retirement at 50.

 

[The Y-man]

I want a PPOR in a area that i can walk to some nice cafes/shopping and also be near the water so i can fish/swim. Does not have to be a beach or in a city area.Somewhere warm for the wife and maybe some decent barra fishing. That is my retirement. A very cheap one compared to some on here.

I have come to the conclusion (after living in my PPOR now for 2 years) that the choice of PPOR is very important for this reason.

I feel that a well selected PPOR can mean that you are less compelled to go on holidays etc. If you are the type that enjoys going on a holiday to somewhere warm where you can lounge next to a pool and read book all day, then I suggets your PPOR should be located somewhere warm with a swimming pool!

Cheers,

The Y-man

 

[Kristine..]

Yes, Y-man, very good point

Hence our HOTTA purchase. We have lived in the hills for nearly thirty years but Mike misses being near water, so going to live near water but within the Melbourne Metropolitan area.

We have never really done the 'holiday' thing ... never could see the point in saving up for a year just to spend it in two weeks. Reckless spending, in my opinion, just for the sake of it.

Having said that, travelling about a bit is one of the things I would like to do, but not yet. Having just spent 5 months in UK, well, wherever you go there you are! It was a complex 5 months and I certainly did enjoy my weekend in the Netherlands but once it's over it's like yesterday's dinner

I am of the opinion that a quality Home is a very important emotional and financial asset. In my Third Age I want one of those!

Cheers
Kristine

PS Anyone know someone with an Endless Swimming Spa? We are at the very preliminary design stages of the HOTTA and the general consensus is that even though there is a very large salt water pool at the end of the street a small private pool would still be fun.

The Endless Swimming Spa would fit into a corner and be economical to operate. Any comments - without hijacking the thread, of course.

 

[battery]

i want to retire at 30 then spend my days traveling the world and driving through the mountain passes of Europe in my Porsche GT3 RS