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Well, I'm 70 and fully retired for some years now. When I had my 21st birthday my mother told me to start planning my retirement then. Seemed ridiculous at the time but I took her advice and started my investment journey. Its had ups and downs but our income per year now is more than 100K and we live pretty well. A new car every 5 years, private health insurance and two overseas trips a year plus we also have enough to help out the kids with their mortgages. No govt pension of course. The secret, if there is any, is to start early to get the benefit of compounding.
@@SuperGuyAu Yep, there were. There are so many more options these days to grow your wealth. ETFs didnt exist back in the 70s. Stocks like CBA and Qantas were still owned by the government and you got a piece of paper when you bought stock. Hill Samuel was the first CMA and who knew it would grow into the behemoth Macquarie Bank. How times have changed.
I’ll be retiring not long after 60, no ifs or buts! I’ve spent most of my working life doing shift work so want that to end as soon as possible. I’ll live my lifestyle according to what I have in super, I should be able to enjoy a few overseas trips and regular domestic travel. That’ll do me!
Whem investing, Don't put all your eggs in one basket rather diversify into different asset classes. to help mitigate risk. you should consult with an advisor to help you in this process
Opting for an inves-tment advisr is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a while, and my portfolio kept increasing by 10% monthly.
Something that you didn't mention here is that as you get older, the less you will generally spend. If you retire at 65, then spending $100k is quite feasible. But as you progress to your 80s and beyond, many people completely slow down. Less travelling, etc. Therefore you would require a lot less money.
Exactly. Some of my relatives are 80 years old and get compulsory super withdrawals of $150k per year. One was complaining recently that he would be lucky to spend $30k per year and the rest is just piling up in his bank account. I’m suggesting he send it to his nephew, me and I’ll spend it on wine, women and song, and the rest I’ll simply waste 😂
I think the stats show something slightly different. As you reach your 80s, healthcare costs may start to increase, as will costs of living as many tasks you used to undertake yourself (e.g., cleaning, gardening) may/will need to be paid for. There are also things like taxi fees once you lose the ability to drive, etc. So it's not just a simple reduction in costs as you age.
Most people don't understand the costs of Aged Care. They go into a retirement village thinking they will leave in a box or that they won't need care and will stay in the family home until they die. Wrong! Once you are unable to look after yourself, Aged Care is a common solution (not the only one I know) and requires minimum $500K as a deposit, plus a daily fee, which can be hundreds of dollars a day (as well as taking your full pension). OK, so maybe you've spent it all and rely on the pension only, there can be "concession" placement available if you're lucky. However, you don't know when it's going to happen and if you've been planning adequately then you are bound to have assets that are deemable. Just going through this with my father. It's heartbreaking!
Aged care facilities that are subsidised by the government are not allowed to reject those on the aged pension with limited assets, if the facility is not fully occupied. And they can't take all your aged pension. Only about 85%, leaving some money for incidentals like newspapers, new clothing, hair styling etc. There is no obligation to pay the "deposit", which is fully refundable on leaving the facility. Residents can pay a higher daily accommodation fee instead if they don't have the full amount on entry. Been there, done that with the old man.
@@johnoneill1011 “residents can pay higher daily accommodation fees instead” is exactly what I’m talking about. This can amount to hundreds $ per day. Many aged care facilities are also charging extras package like newspapers, alcohol, etc as mandatory and no longer optional ( in WA). We chose one with extras optional but deposit is $650k. The village that my father has left is going to take 6 months to rennovate and also charging him monthly fees. Therefore can’t pay deposit until it sells. Also govt deems the RAD as means tested whereas while you still own the property it’s not. Double-dipping IMHO.
Thanks for this, I found it very informative. There are so many junk news articles online these days advising how much people need to retire. Most experts are way off the mark with their recommendations, and equally most Australians have saved far too little for anything even close to a comfortable retirement.
I’m 40, I wasted a lot of my early life in very poor paying jobs (e.g., postdoc academic). Finally got a good income the last couple of years. I think I’m pretty boned, for retirement. I am buying my first house at the end of the year. I have a 20%c deposit. I’ll probably just get that paid for. No chance of retirement savings on top of that.
I go a second job, extra 16 hours a week, and salary scarified all that money into super, i am mid fifties, it will make a big difference to me, and it should for you too. I did that second job for 10 months, very difficult, but worth it. And no take away or eating out.
I'm in the same boat but still making a low income despite my best efforts over the years. I'm 39 with $70k towards retirement. I can hardly save anything even though I'm frugal with everything. Realistically my retirement is at the bottom of a bottle of whiskey and fentanyl.
Assuming you are still an academic employed in one of our universities, your EBA gives you one of the most generous superannuation schemes in the country, typically with 15.4% SGC and ability to add half again on top, compared to 11% for us punters. UniSuper is a top performing default fund. She'll be right mate.
If you are not bothered about being near family and not really going to get much pension then the other consideration is to spend some of those earlier retirement years (e.g 60 to 70) living in South East Asia somewhere (Malaysia/Thailand/Vietnam etc) as your cost of living will be much lower + you get the benefit of relatively lower cost travel. a 5hr radius flight from KL gets you to a lot of cool different cultures to experience / adventure etc. You will need to have private healthcare insurance though. You may find the cost of private healthcare etc reaches a tipping point in which case it may make sense to return to Aus in those later years (75+). And if not living in Aus then you can rent your home out too which can cover a huge portion of your cost of living in S.E Asia. (I am comfortably retired : but my cost of living in SE Asia is < 30k/year and i have a really good lifestyle of keeping fit and healthy and travelling a lot in a safe friendly environment.) KL to Perth isnt too far/expensive to fly if needed.
I'm having trouble reconciling the Assets and Income Tests results. If someone has say $800k in super assets, the Assets test seems to reduce the age pension by a lot more than the Income test using deemed interest earnings on $800k
What you said about getting the pensions getting $100k from super is misleading. The 100k is considered in the income test and therefore reduces the amount of pension. If you get $100k, you don’t get any pension or the benefits
Superannuation pension income is not actually considered income in the Income Test. A superannuation balance is deemed to earn a certain rate of return. The actual pension income you draw down is not assessed. The information in this video is accurate.
Advisors often generalise that in retirement you need about 70% of your pre-retirement income to live a similar lifestyle to when working. So, if you retired after earning $140k p.a. (e.g. retiring state high school department head), you might expect to live well on $100k p.a., assuming no debts and a fully owned home and car with no need to renovate for a decade or more. Superguy suggests you would need about $2m in super. If you joined NSW Dept of Education 35 years or more ago, you're sweet because that's about the indexed tax free reversionary defined benefit pension you will receive. If you joined after that, there is no DB pension for you, so good luck finding that $2m unless you have a partner who also worked for several decades. BTW, that $140k pre-tax income is about 50% higher than most folks .
Defined benefit funds are getting phased out, which is unfortunate for some, but probably also unsustainable due to an aging population. I don't think many people actually need $100k for retirement - I just ran the numbers!
@@SuperGuyAu If retirement was just about "need" why bother living that long to suffer the aches, pains, surgeries and other indignities of old age? Retirement should be about wants and indulgence in things you could not consider until you got your hands on your super on retirement. We have zero debt. Between us we are obliged by government to withdraw about $180k p.a. via super pensions. It (and a lot more from elsewhere) gets spent, but not all on us. That's what grandkids are for: to soak up what you don't spend on yourself or charities.
Is a subjective question how much currency you need per year to live comfortably. I don't believe that after 70 years of age you need anywhere near this amount of dollars. I look around at all the 70 + year old people I know and very few of them do overseas holiday trips, buy new cars every few years or live a lavish lifestyle. From 60 to 70 years of age you may live it up while you still have the health to travel overseas,etc. I believe that practically after 70,expenditure shrinks a lot. I think as retirees can all stress far too much about what we believe we need in dollars & security. If you have your house paid off or sufficient passive income to pay it off, I think this is the major expense.
Just to simplify it , in order to earn $100,000 a year (assuming you had no other income) you would need a 2M investment earning 5% a year in dividends or interest after taxes. . Take whatever retirement income you are earning and deduct it from the 100k to figure out what you need. For example, If you are earning 50,000 a year from social security, then you would simply need 1M from an investment account earning 5% after taxes.
Initially, yes. But as your asset base inevitably declines to a certain point, your would become eligible eventually - even if only for a few short years before running out of money entirely.
Thanks for the video! I just wondered why the low withdrawal rate if you're making 5% return p.a. In theory you would die without ever touching the principal. If you withdrew $150k p.a. on $2.5m you would only deplete the capital by 1% per year. or $25k. As you get older you will naturally spend less so doesn't this make sense to spend some of the money you spent years accumulating?
I'm 45, female and retired. I moved out of Australia to be able to do this and live more than comfortably on 50k per year. I started planning in my 30's. It is never too late
@@jamessmithson-br7rm Lol. Political stability is very important. It's very hard to invest your life savings or plan for the future if the regime takes away your savings. I want a good time AND a long time. But, you do you.
I was smart/lucky enough to get into a defined benefits scheme at age 18 just before the scheme was closed to new entrants. I’ve contributed an average 6% salary for the past 37 years. Now, I’m 5 years away from retiring at 60 with a $2.3M payout. That decision as an 18 year old was the best I ever made.
Similar here. Joined the public service at 19 and retired at 55 on a 150k defined benefit pension indexed for life. They closed the fund in 1990 but I chose to remain in it. Best decision ever.
What about those who don't have this sort of money in super. I would suggest many would only have say 300k super. How does one then live? Would love to see videos on this. All advice around tends to be on the 1million plus.
We are 70 and 75 and travel full-time. We own no real estate. Our budget is $100K a year (US dollars-we’re Americans). Our social security is 70K a year and we take 30-40K a year from our investments that total $750K. It should last until we join the chorus of the singing void!
Awesome- I could live OK on $100000 US. Hell, I could raise a family on that social security alone. Ours in Australia isnt quite so generous. All the best.
By the time I retire, I've heard that my social security benefit will be reduced by 30%. Such it is for my generation. Learning to pinch my pennies now.
It would be nice to see some projections where a coupe retires at 60 with spending of $100K pa for the first decade, then living expenses drop $10K-$15K each successive decade. What retirement amount would be required to retire at 60 for this scenario?
No one *needs* $100,000 in retirement. And no one *needs* $100,000 for 40 years after retirement. You only started to cover off on this towards the very end of the video, which no one is going to watch, because they'll watch the first few minutes, panic about how they're going to have $1.4Mil in super by retirement, and go lay under a table in the fetal position. This is a poor video and I gave it a thumbs down
@SuperGuy Love your work. Can you tell us why you chose a 5%return for the example? It seems a little low. Are the figures indexed on inflation 2.5% including pensions and thresholds? Also really keen to see if you produce something like a stepped spend. For example decade 1 from 60yo 100k, decade 2 90k, decade 3 80k or such
Nice format in these videos. Thanks for sharing. A question I always have when seeing super videos is what is meant by retiring on 100k per year. 100k when? 100k now may seem sufficient but 100k in 20 years won't even cover living expenses. The disclaimer says a 2.5% rate of inflation is accou ted for but 100k is 100k. How is the decreasing value of money factored in when the 100k sum remains constant?
@@SuperGuyAu actually that’d be good. I only looked at it once, a while back, so don’t know the ins and outs like you would…but I know that our pension system benefits homeowners more than renters
Say the average price of a property is $800000; would you (if you had it), pay this amount outright for a house to avoid renting, or keep that money invested and use it to pay for your rent each year? If I had that money it'd be hard to let it all go on a house. Lots of people own homes worth well over a million, which for me is an outrageous amount of money to have invested in a bloody house. People with houses will always appear better off-but thats mostly because they were better off to begin with, and were better with money to begin with, and were also forced to 'save' into their property. Of course, its complicated. If you don't have a house, id be salary sacrificing like a madman into my super.
@@theowenssailingdiary5239salary sacrificing into super is good but there’s a cap for yearly contributions, after which you get taxed more on those contributions. So you need to have alternative plans for any money you want to invest over that cap.
This is so misleading! If you live below your means and save “dollar saved is dollar earned” you don’t need the 70% pre retirement earnings they throw out as the rule. You need to work hard while you’re young and not waste money on eating out, drinking too much/smoking going out for coffee etc. learn to cook, make coffee at home, find the best prices when you need durable goods/cars etc. use rebates and point rewards all you can to save. If you’re fortunate enough to have your house and car paid for at retirement you also have the equity of the house if you want to sell and downsize/relocate. I swear they throw out the high numbers so you keep putting money into the fund manager machine.
Thanks for the very intuitive one! I am just wondering how one can be eligible for age pension while having 1.3m to 2.5m (as in the first table) of net asset? Please help me understand the logic. Cheers 😅
No. The key to retirement is never to retire. Even a small part time job will give you that extra mental edge to enjoy your money longer than to have to use it for care.
I don't need $100K. I retired debt-free, have two homes (one is my getaway ranch where I hunt, fish and get drunk listening to the birds singing), two cars, travel (in the last 2 years Germany, Costa Rica, Slovenia, three trips to Italy) and pretty much do what I want. My average monthly expenses are about $5K/ month. I sleep until noon My nest egg is higher than when I retired. I learned how to cook as a hobby, which has saved a lot of money. I have also grown my own hydroponic veggies since 2008. I don't buy expensive cars and I drive them for years. One is 2018 and the other is 2016. The 2016, my ranch truck, has over 150,000 miles on it. Before I make significant purchase i ask myself "What problem am I solving?". That one question will stop you from making a lot of frivolous purchases.
When it comes to "Retirement", people always look to financial health and often neglects the fact that without physical or mental health, most of your retirement funds will be spent on care rather than on a chosen lifestyle. Having that magical figure, whatever it is, in your super/investments means nothing, if you are not in the right mind to enjoy it. Note, I said in the right mind as you don't have to be physically fit to enjoy your life, but it will be your mind that will decide whether you are having a good time of your life.
It's based still on super, and that is a problem considering the harm it is starting to do from the super funds. And the changes the union super funds want should send shivers down the spine of anyone. But it is interesting how much of a investment portfolio you would need. Little off it yet lol
Obviously I'm going to need to work until I'm 105 to save that kind of money and that's if I don't spend a cent until then, I know a lot of retired people who are very comfortable on a lot less than that.
Hello Chris, 100K Tax free would be an amazing life, But having watched a few of your videos today is this a reality! I saw your video on the Bureau of Statistics Super balances and working on a self-preservation age of 60 the "Average" Balance was (rounded up) 360K With the "Mean "being 180K - This is a long way off from 1.5M to receive 100k - From me my Super Balance is better than the Average but not looking like 1.5m anytime soon.
I’m only 30 and one of the questions we have around calculating a retirement number is how do we make sure we’re factoring in the fact that $100,000 today will buy a lot more than $100,000 30 years from now. Is that what the part where it says 2.5% inflation has been factored in relates to?
Thanks for the video. Would like to see more breakdown though on retirees who don't own property, that they live in (i.e not renting it out as an investment property and therefore not assessed when applying for age pension) and who are not eligible for the aged pension (exceed assets test threshold). Owning a property and not owning a property (i.e. renting) used as a primary place of residence makes a huge difference to what you need. Rent can vary of course. But a table could break that down based on rent brackets. There are many asset-rich cash-poor old age pensioners getting full pension, owning properties, that are their primary residence, in the million to millions of dollars. Whereas there are self funded retirees with much less wealth, cannot afford to own a property to live in and (therefore pay rent) but have investments and subsequent income streams that exceed the assets test thresholds for a pension or at best a greatly reduced pension, but overall are lucky to be much more than what a full old age pension amount is. Would be nice if the government recognized this by making the threshold higher for those not owning and living in their own property.
This makes NO sense. How can a couple with 2.5 million in super, with a return of 5%, ie, 125k, can be eligible for a pension? And given that he's talking about an income of 100k, that they have already exceeded, it makes even less than NO sense. We are on defined benefits which gives us 125k a year, which means we don't really have a "super balance" and are NOT eligible for any pension. We are eligible for the seniors health card.
I can see how it sounds ridiculous. But the age pension referred to is the entitlements that the couple would eventually be eligible for in their very late years of retirement once their super balance has reduced to a point below the upper threshold.
Is that $100k escalating each year to match inflation via the investment returns assumed? Tables would not be useful if the $100k was a fixed (ie not inflation linked). Please comment.
Damn, I’m 41 and could retire…. Except most of my net worth is tied up in my home and it’s to nice to sell and downsize. So I got keep working haha booooo
I so wish I had put more money into my super compound interest is one of the best kept secrets - I’m approaching 64 and only have $400k in my super - I’m close to owning my home though it requires major renovations
I've read a number of articles that say typical growth of your super in the accumulation phase is less than 7%. Most of the super forecasting calculators don't let you plug in anything more than 6-7% growth. Is this realistic or are they simply being really cautious? I also see recommendations to reduce your risk profile the older you get which may explain that logic. My super has been seeing 9-10% growth on average over the years, I see no reason why I cant continue that even when in accumulation.
We've been in a fortunate decade with a strong economy (excluding Covid blip) and strong returns. With an aggressive portfolio, you should consider the implications on your retirement if your super balance was to fall 30-40% in your first year of retirement, while you are also drawing an income from it. I think average long-term returns of 6-7% is used because retirees tend to reduce risk and aim for more certainty of outcome throughout retirement.
Super is a great investment. But it relies on people doing the hard yards early...... and of course that isn't always possible. Returns are good over the long term, earnings are taxed at lower rates and salary sacrifing gives immediate savings because of tax benefits. Over 60 then no tax. And you don't need $100k for 40 years---- you'll be a 100yo!!! What are you going to do with it then?? Would be interesting to see the figures based on $100k p.a till say 70yo then slide down to $50k pa till 80 then $50k till 90.
Why don't you do a video showing people how to find/use tools and calculators to work this stuff out for themselves- and then maybe a video on but-wiping 😀@@SuperGuyAu
Exactly. I’m 58, retiring in 3 years which will see me with 1.3m in super and savings. I’m planning on having my money last until I’m 72/73, then I’ll be almost mid 70’s and by that stage, I’ll be a couch potato.
Get yourself a 'how long will my super last calculator', but keep in mind that the returns are never consistent, so they can be very misleading. Google ' how long will my super last'.
Earning 100k including the pension will not happen. Even with a deeming rate of 2.5 % and earning of %10. Centerlink has income and asset thresholds. You will be cut off. This guy offered no facts or figures. Thumbs down from me.
I wasn't aiming for any particular amount per year when I started savings in super in my 30s. Compulsory super only just started at 3% of gross income. I became self employed anyway, so it was up to myself to save in super. Most of the time I do the maximum allowed at 25k per year purely for tax advantage, reducing my gross income. With the benefit of time, the balance snowballed greatly since my mid 50s, last year exceeded my own income. I have seen too many poor retiree, living in the outskirt of Newcastle in a weatherboard home. Eating sausage and mash for their tea. They didn't have many options. This year after turning 60 I will start a transition to retirement and work less. If I have spare money I would put into my adult children's super to give them a boost.
Every kid should receive 10k at birth-invested for life. Only accessible at 60 if you've been a Good boy and stayed off the gov nipple. Any welfare received during your working years should be deducted from this 'pension' fund. The fund cannot be inherited at death. I haven't done the math on this-just a whim. 10k would be a shitload at 7% return above inflation (aggressively invested of course).
Dont complain about Australian retirement funds. In Aus our employer must ivest 11% of you income for you into a superanuation account (like 401K I believe) from the time you start work untill you retire. Should add up to a tidy sum without you even adding to it. Of course if you do add to it you will be in clover.
A good video but I'm suspicious of these figures. 5% return and 2.5% inflation is not very realistic. My research says 7% and 4%. Your $100k is much more realistic. It also depends what sort of assets you have, but that's another discussion. Positively geared property can return more than 10%, especially over the long term. A 20% investment and a 20 year loan paid by rent can give you 10 times the original investment.
Based on this information I will never be able to retire & will continue to work until the day I die - wow, what a pleasing thought (NOT) to now live with for the rest of my life.
Retirement seems like a impossibility to me my advise to young people is get a trade as tradesmen dont have to pay tax Put you money into property as fixing up a property is an excellent way to launder money Super is a bad investment in my experience as it normally returns less than inflation Learn to lie really well as it helps Be good looking looks are the most important thing Don’t feel bad ripping people off
The main reason isn't a higher income desired... It is sequence of return risk. The what if. All your scenarios assume the market just earns them 5%. Most people aren't retiring because they are scared of a market crash and losing their money in the early years of their retirement.
I'm 45 and retired. I left Australia to be able to do this. My investments bring in around 50k a year and i live on 36k of that so i haven't had to touch the principle. You will ask me how but many will scoff. It's a mix of income from properties, savings and money made in the last crypto bullrun. I am set to make 1 mill+ in this run too. Love it or hate it, it's how i did it. Good luck to you!
I retired at 49 due to physical ailments. I own my home and am living off 4% of my managed funds which is mainly dividends to reduce eating too far into the capital. Another 2% is going into super and management fees, The plan is to have the maximum super in draw down pension phase that is tax free after I turn 60. My living costs aren't bare-bones FIRE style frugal but are certainly not extravagant
My mother gets a pension how much is it... 24'k and she gets by OK, I looked at my own basic expenses and it's below 30 k, 50 to 100 k especially the latter is far too much and unrealistic as I have never actually worked in a job that gets over 100 k PA if I can still get by on a salary of 60 a year and have money left what are all these people doing with their money?Millions of older people in Australia are on the pension and they also don't have any superannuation. When you get a pension you get a concession card for transport, a cut in your bills, rego is free. It's 2.50 a day to go amywher on a bus, ferry, bus or train and the pension is indexed to inflation.do these 60 to 100 k a year people have an expensive drug habit? The average person coming up to retirement has got about 200 k in superannuation, if they retire early the super on 50 k a year is only going to last about five years. Then it would be chewing into your savings until you could get a full pension with 300 k in the bank but you can get a part pension up to 600 k I think, where your rates and other things are discounted so your money will last slightly longer and the 200 k super plus the savings will last more than 20 years, at that point when you are 85 do you think you will be wanting to drive around everywhere and burn up your remaining dough? My advise is if you retire early like at 55 you might actually get bored of hanging around by yourself and actually return to work again which happens frequently.
plenty to do when retired that are frugal, cooking from scratch, gardening, gardening for elderly neighbours, walks around your town, coffee with friends in a park, travel outside of school holidays, I could go on :)
My understanding is the age pension cuts out when you have assets of around $1,000,000 for a couple who own there own home. And super balance is counted in the asset test, so you would receive no age pension.
It's more like 1.2m but you're right. That's to get any kind of pension. The full pension qualifier is to have less than about 451k not including PPOR. The gotcha is that to get a pensioner card concession that gives you cheaper health, energy and transport etc you need to be receiving at least a part pension which is why there is a point at which, if you are fully self-funded (do not qualify for part pension) you could actually be worse off financially overall, than someone with less assets and on a part pension. I think the pensioner card concessions should be on a sliding scale in order to reduce this slightly unfair scenario. Of course - the pension is a benefit as such - it is not intended as a primary income stream if you have been working and saving for most of your career. The way to more freedom and comfort is to plan for your own independence and that means maximising your investments from an early age - compound growth is your friend and there are very few quick fixes outside of winning the lotto, inheritance, or maybe picking a great stock at the right time ;)
Challenge is how to pay 0 tax other than funding it from super which is quite tough unless it’s growing from within the fund. For example , I believe non concessional contributions are still capped below two million of total super balance ?
