Interested in how people are planning ahead for retirement (or maybe not), regardless of age. Basically: 1) Will you have enough funds (say min $30k pa) to comfortably retire for the rest of your life? 2) Will you only have enough super/investments to last only a number of years and then have to go on age pension? 3) Will you have very little and be reliant solely on the pension? 4) If planning to be fully self sufficient how will you get there? Shares? Property? PMs? A mix? We still have a long way to go but after paying off the ppor we plan on saving up a large deposit and purchasing an investment property. It is clear to both of us that the standard 9-12% contribution will only be enough to last us 5-10 years!!! We see no other real choice. PMs/Shares are too volatile. Property should bring a reliable weekly income.
Financial repression by governments paying off their present and future debt burdens and welfare promises has the potential to screw every asset class one way or another. Bonds and mandated purchases of bonds by super funds will probably be the worst affected. Property brings a reliable erosion of capital along with semi-reliable weekly income. Saying that, if saving 10% of your income for your entire working life is not enough to retire on then your expectations of length and quality of retirement are too high. Your grandparents, great grandparents, etc, etc would be appalled. Anyway, first rule is to live well within your means. Other things follow.
Look at the superannuation statistics. It's a fact that over 90% of Australian's won't have anywhere near enough super. Super is a joke. It's another tax to prop up the stock market and other paper assets.
Ignoring people who haven't had super their whole working lives, the issue is the current models are based on spending 20-25 years growing up and getting educated to the point that you're actually vaguely useful. Spending 40-45 years working and saving 9-12%. Retire and live above the so-called poverty line for 20-25 years. How many of our ancestors expected to work for only half their lives? The assumption that people will do so (principally because of mandated retirement/pension laws) is the thing that should change. It's simply bullcrap and unsustainable as a society.
Thanks to everyone for their response. However none of you have volunteered how you actually plan to achieve financial independence upon retirement. Are you going to rely on equities, property, 100% pms, a mix? How will you go about building a reliable income stream?
10% will not be enough in most cases. Say the average salary is $50k, you get $5k super pa. Multiply $5k pa by 40 years of work. It equals $200k. Double that if you have a wife that also works for 40 years. the grand total is $400,000 Although this seems like a lot, it wont be anywhere near enough when talking in future dollars. Most estimates show that more like $800k to a $1m+ in todays dollars will be needed for a comfortable not extravagant retirement.
I have four kids. I plan to start brain washing them that it is a good idea to look after their parents in their old age as soon as they start to understand it! But seriously... Having lived in some very simple surroundings in my life, and my wife the same, we will be happy living in a tent.. So long as we have a bed that provides adequate rest, and that we are together! But more seriously.. Owning ppor, working all my life, even if only one day a week after 70... And not splashing out too much. And move to Africa. Shiny
I still can't see how exactly you plan to fund your retirement. Pms only? cash only? Are you saying you won't be able to?
How are my retirement plans coming along? Brilliant. Not likely to ever give up work and quite enjoying it actually.
Why it is commendable that the posters ^^^ are thinking about their plans for later life, the ball of life doesn't always bounce the way you expect it to. The old saying "the best laid plans of mice and men" comes to the fore. The first thing you want the ball to do is to give you, your wife and your kids, a bill of good health. The second thing for the ball to do is bounce well for your children.. With the way relationships are these days, there is nothing so daunting as to have any of your children involved in an unhappy marriage/relationship. If your child has limited $ what do you do if grandchildren are involved and the situation becomes nasty. With the fast advance in medicine, what will you do when you are informed that medicine is available but unfortunately it cost $2000 a month as it is not on the list of cheap drugs. I advocate (for what it is worth) that indeed try to save and invest for the future but don't let life pass you by now, so don't be obsessed with saving. My Grandmother used to say Spend a little, Save a little and waste a little and that is what I have tried to live by. It has worked for me so far. I have had a few setbacks with regard to $ but I have seen them off. The goal posts are always on the move..In the 1930's a fund was set up by the Australian government for old peoples pension. Where did it go? Into Consolidated Revenue , thats where!. Money was also placed into trust for aborigine stockman, where did it go, the government did give some back but how many were alive to make a claim. You fellows have some hard decisions to make, best of luck fellows. Regards Errol 43
Compounding interest mate.. Theres a simple compound interest calculator here http://www.moneychimp.com/calculator/compound_interest_calculator.htm If someone puts in 5k pa for 40 years (It would go up with your wage of course but lets just say 5k) and invests it in a balanced option (mix of property, bonds, shares, etc) they could probably exceed 5% pa return when averaged out. So 5k for 40 years at 5% would get you $634,198.81. If you were more aggressive with your investments you could perhaps average a higher return. With 8% pa you would have $1,398,905.00 as you can see, that extra few percent makes a huge difference and thats why you need to make sure you get the lowest possible expenses on your superfund.
Thanks my name is Ben. My mistake. Still seems hard to believe, as at the moment it seems a struggle and the super fund doesn't seem to be growing as much as hoped for.
^^^ v good Not much to contribute as my head's all over the place about retirement. I'm virtually retired now. I'm a saver by instinct but I've never been maker. I'm relying on luck in the stock market and precious metals and ongoing family benevolence to be frank.
Even that $400K super (today) would be enough to last 15-20 years together with part pension if living a relatively simple life. If you aim to save another 10% of your income privately then you could have another $400K or so of assets providing a more comfortable retirement. Each asset class has advantages/disadvantages. Property is stable but you cannot sell a little piece of it if needed and you can get hit with land tax.
Yes I was disagreeing, I'm just sorry it was in such a blunt way. With super there are many different factors affecting your balance. Such as, but not limited to:compounding interest, performance/management fees, and becoming more prevalent today, death, TPD and salary continuance insurance premiums. Compounding interest: Most long term investments such as share/property funds and superannuation funds benefit from compounding interest. A quick example of Compounding interest- you invest $1,000 into a share fund that's earns 10% for the year or $100. You now reinvest that $100 giving you $1,000. Your share fund again earns a 10% gain but this year it nets you $110 for a total of $1,210. Given a longer investment period and continuing contributions and your end result could be massive. Management fees: Here is where it gets complicated, many superannuation funds have many different fees that are charged at different rates and in many different ways, from a % of gains to a % oF the total balance, most have minimum and maximum fees. Death, TPD and income protection insurance: Most super funds now have an opt-out policy on these, which means as soon as you sign up to the super fund you start paying premiums. The downside to this is many people who have multiple superfund accounts or insurance end up paying multiple premiums. As for myself I'm just entering my mid twenties. My goal is 1.5-2mill between my wife and i across a range of investments including super, manged fund, personal share portfolio, pm's, and a term deposit
