You "Only" Need $1m to retire comfortably.

[VYBerlinaV8]

I may be being too simplistic here but if you guys have $3m equity in property why spend so much time worrying about how you can make sufficient income from that to retire? Do you really need to leave the whole $3m on your death? Anyway, if you're in your 40s now surely by then the amount would have grown fairly substantially. Apologies if I'm misunderstanding but why wouldn't you just sell some and live off it, and leave the rest as you desire.

I guess it comes down to how much we think that we need..

For me it's about structuring things to take advantage of the asset base without incurring too much risk.

Why sell down, incur CGT and reduce your yield if you don't have to?

 

[ellejay]

For me it's about structuring things to take advantage of the asset base without incurring too much risk.

Why sell down, incur CGT and reduce your yield if you don't have to?

Sounds good. I think I'm just a lot more simplistic. I see CGT as just another thing I have to pay as a consequence of being productive. As annoying as it is I wouldn't see any benefit in leaving millions to someone else who may not need quite that much, just to avoid paying tax. As for yield, I'd probably keep a couple of very cheap, high yield, positive geared properties ticking away in the background, being paid off by the tenants, that would replace other properties as I sell down.

I'm not criticising by the way, just interested to hear other peoples' plans.

 

[VYBerlinaV8]

I'm not criticising by the way, just interested to hear other people's plans.

I feel the same way. Reading about others' plans and debating strategy on this forum has been a wonderful learning experience for me.

 

[china]

My plan is to have $3M equity in the IPs, independent of the PPOR. I figure I'll borrow against the IPs, although not up to the maximum. I'll also still be in full time work when this happens, and expect somewhere from 5-10 years overlap. Thus I'll be able to reduce debt using cashflow from working, rents and dividends.

I'll be first to admit the strategy is not very specific. In reality I'll probably tweak it depending on how things are going.

When I wrote the original post I had wanted to retire at 45. I'll be 40 later this year, and really enjoy my job (and it's quite well paid), so no real need to get out just yet. If I can work for an additional 5 years to significantly improve my retirement position, then as long as I continue to enjoy work that what I'll probably do.

Same age, same goal. But my $3m will be a mixture of cash and shareholdings to generate pre-tax $100-120k pre-tax. I am almost at this level of holdings, despite my share portfolio down 100k at close of market today. Unfortunately, I have recently decided that I would like a higher value PPOR so will definitely need to work till 45.

 

[C-mac]

Not sure if its been mentioned, but any modeling for retirement pre-tax/post-tax income would need to include inflation, no?

That means that those invested in property as a retirement wealth vehicle; would be relying on both rents and capital growth increases at least in line with inflation, every year, for the term of their retirements.

Hopefully inflation doesn't spiral out of control in our lives and that a 2 litre jug of milk in 2030 only costs say $5-6, and not $15-16!

 

[VYBerlinaV8]

Not sure if its been mentioned, but any modeling for retirement pre-tax/post-tax income would need to include inflation, no?

Yes it does - absolutely. I set my goal using 2005 dollar terms.

My guess is that I will need to add 60% to all of my numbers to allow for my first retirement goal about 6 years from now.

 

[mrdobalina]

Not sure if its been mentioned, but any modeling for retirement pre-tax/post-tax income would need to include inflation, no?

Growth in assets and growth in dividends/rents should cover address that.