Super, Retiring Income and Pensions

[DannyG]

There are a few threads already on these subjects but nothing specific to what I want to know so here goes.....

Im a long way off retiring (unless I win a substantial amount of money) being 44 at my next birthday but I have been putting a lot of thought and effort into my super the last year or so and I am happy enough at this stage that it is going to put me into a position Ill need to be when I retire.

But maybe my logic is flawed and my plans may not work in the real world so I want to get advice from those that have retired or know a bit about this type of thing.

Lets just assume any assets are to be left to kids at death so as for using them for income while we are alive is a non event so assets are out of the equation.

Is it feasible to retire at age 60 and live on a super income of approx 45k per year for the next 15 years? Again lets assume there is no mortgage or very little living expenses. We would ideally like to be living on the road for a big part of the year.

That would get me to the age of 75 if I am lucky enough to live that long and then I imagine life would be a lot simpler and living from a pension may be feasible....especially if I am laying in a retirement home dribbling all day??

How much income from super can you get and still get a pension, if any?

I would like to retire and start travelling near on full time before age 60 but that is not something I can plan for at this stage. My workplace has just put up for offer 3 voluntary redundancies due to installing some robots so the older guys in the workplace that are near retirement age have jumped at it. These guys will be paid anything up to $250K so it is quite a wind fall and I imagine will easily carry them through to being able to call on their super. Hopefully in about 10 or so years I am lucky enough to have a similar thing happen to me, but obviously I can't have that as apart of a retirement plan!

While I am on this subject, are any of you swaggers qualified financial advisers? The reason I ask is my workplace offered to pay up to $600 towards financial advice but it must be with an authorised person and the offer runs out at the end of February. Id prefer to see a Swagger get the dollars than some sales shark we have in my area. Id be happy to do a session on the phone???

Thanks for any tips or advice

[MDS69]

Looking forward to any responses you may get as I am a similar age and have similar thoughts. A flaw I see in your logic is being 75 and dribbling in a nursing home might not necessarily happen as there are plenty of fairly active 80+ year olds living in their own home and the expenses that go with that so you would need another 10 years or so of income.

[DannyG]

Looking forward to any responses you may get as I am a similar age and have similar thoughts. A flaw I see in your logic is being 75 and dribbling in a nursing home might not necessarily happen as there are plenty of fairly active 80+ year olds living in their own home and the expenses that go with that so you would need another 10 years or so of income.

I agree but I just don't think my choice of lifestyle over the years suggests Ill live to 80+, I hope I am wrong and I still have an active life at that age, but ill be a grumpy old fart if I do.

[Mace]

There are some good super benifits calculators out there.

Try this one for a start.

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/superannuation-calculator

others here.

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools

The retirement planner one mite be useful.


 

[chester ver2.0]

You can make your assets work for you if you want

The family home is just that your family home so by the time you go the kids will probably sell it anyway. You could if you want to travel is down size to 1 apartment buy a second apartment and rent it out earning you an income that way. Or you could downsize to a suitable apartment invest the difference in blue chip shares and use the dividends as income, the shares themselves would go to the kids when you go

I have no kids so i am not emotionally attached but unfortunatly with life expectancies increasing and many people now being active till mid 80's that is 25 years of living you have to pay for at 50k per year that is 1.25mil alone then housing etc on top, i think the current ideal of leaving large nest eggs for the kids will not be the norm for much longer

[DannyG]

You can make your assets work for you if you want

The family home is just that your family home so by the time you go the kids will probably sell it anyway. You could if you want to travel is down size to 1 apartment buy a second apartment and rent it out earning you an income that way. Or you could downsize to a suitable apartment invest the difference in blue chip shares and use the dividends as income, the shares themselves would go to the kids when you go

I have no kids so i am not emotionally attached but unfortunatly with life expectancies increasing and many people now being active till mid 80's that is 25 years of living you have to pay for at 50k per year that is 1.25mil alone then housing etc on top, i think the current ideal of leaving large nest eggs for the kids will not be the norm for much longer

Thanks and some good suggestions. My kids will be lucky to get an actual egg when I die the way Im going but yes a small 1 or 2 bedroom house is something we will consider one day.

[chester ver2.0]

I also believe that in the near future the primary residence will not be part of the means test for a pension so downsizing may work in your favour from that respect as well

[Mandrake]

A couple is  allowed $361,000 of assets other than the family home before they deduct money from the pension payment - That goes to over a million $ in assets and you have zero pension ..
So if you retire with $500,000 in super , car , camper , household items then you will lose some dollars off the pension probably about 1/3 off ...
A good thing to do is a "Transition to Retirement Fund " at age 50 .. effectively you draw from your super account up to a maximum of 10% p.a. at 15% tax .. BUT you pay into your super most of your wages and reduce your tax threshold accordingly ... I did this at 55 dropped my income by $30,000 p.a. and that went into super less 15% tax not the 31% I was paying in wages .. !!
I am still using that account even though I have "officially" retired .. Mandrakes is a bit of a hobby business and accounting wise makes no money .. Gotta luv accountants !!
Steve

[RebsWA]

Danny, your thoughts mirrored mine when I was younger and I came to the conclusion that to know the correct answer to the money question you really have to know how long you are (both) going to live.
So at 60 I joined the wife and retired anyway, we owned our property and all our toys and probably had more super and money in the bank than the average Joe.
Roll the clock forward some 7 years and the world economy has cost us as much as we have drawn from super and its hard to get much income from cash invested.
But... we wouldn't have it any other way and not one regret.
I know blokes my age who stress too much about not enough super and have already missed out on the best years of retirement, when you are at your fittest.
Comments like I am glad I didn't retire back then - look what the global financial crisis did to my super - just dont really cut it IMO.
You can wait till your old and have plenty of super but there is no guarantee there will not be another crash anyway.
The only value in waiting till you are superannuation rich is so you have enough money for medical bills and the nursing home cos you will probably be old and decrepid by then an need it.
My strategy from my 40's was to become totally debit free ASAP, gather all the toys we wanted before retiring and top up the super and generate a healthy cash reserve with all excess cash and get out between 55 and 60.
Anyway it worked for us and I am certainly no financial adviser. Remember... you are a long time dead so don't waste too much time stressing over money. 

[Bird]

Go see a financial advisor and sit down and chat... it can be quite interesting... and shocking.

[Patr80l]

Best to see an independant, personal financial advisor.     If they charge a fee you'll make the money back with good advice.   If they're "free" it means that they are working for a commission and maybe no so independant.

[RobM]

Here are a couple more retirement calculators to have a play with

The first one ( MLC) is down at the moment

http://www.mlc.com.au/SuperannuationCalculator/
http://www.sunsuper.com.au/assetfiles/rismodeller/modeller.html
http://www.suncorp-online.com.au/retirement/chart.aspx

Rob

[DannyG]

RebsWA Thanks for the confirmation
We live a pretty simple life down here so we do not need a huge retired income but we would love to be able to spend quite a bit of time travelling.

Our aim now, like yours at our age is to own the items we need to retire with a simple life and to be able to travel.

For those with the calculators thanks, they all seem to end up with a similar result although some of them is slightly questionable. The thing is though, we are salary sacrificing and along with employer compulsory contributions we are comfortable as to where we are heading. Sure more money will be better but the reality is that we are pre taxing as much cash as we are comfortable with at this stage in our life. As things change so will our pretax contributions.

As I stated earlier in the thread my work place currently has a $600 deal for financial advice which I am going to take up. I am sure I will get something out of it. Things like Mandrakes suggestion is something Id like to look into more. Any tax savings at this stage in life can only help

Thanks every one for the advice. Its a popular topic, I am sure there are a lot of swaggers around our age that are starting to get serious about the next 10-15 years financially. I wish I had a smarter head on my shoulders years ago!

[austastar]

Hi,
   I haven't met any retiree yet who regrets not working a few more years for the $$$.


Both my parents retired on the Age Pension back in 1977, spent all of the work super on a camper and some toys, and hit the road for a while. Mum is still in her own home at 97 and now employs gardeners and cleaning; all on the Age Pension. It is very generous if you use it wisely.


We are both comfortable on just over the single Age Pension in $$, but are only entitled to a fraction of the Age Pension due to work super.  This will rise when SWMBO reaches 65, guess we will have to dine out more often then.


cheers

[areyonga]

Just a point on seeking financial advise, try and get one who does not do investments as they are focused on investing your money so they get geturns, just try and get one who has straight forward advice and not looking to fill their own pockets.  I speak from experience and lost much $ because of it.

[rossm]

I have just retired so my thinking may be coloured by my experience. Nine years ago I was basically broke with a mortgage after a marriage break up. Now I am debt free and with the help of a redundancy have enough to be retired debt free at 61. It is amazing how quickly things turn with a bit of restraint and some disciplined saving (salary sacrificing was a big help but new limits on contributions make that a big harder)  Even without the payout I probably would have been able to pull the pin in a couple of years.
At your age I would be concentrating on paying down the mortgage, if you have one, are setting  things in place so that when you want to retire you have debt free roof over your head.
With that is taken care of it is not rocket science, you just have to accumulate enough assets to give you the income your require,  the problem being who knows what will be happening in 20 years  time, certainly no economist! You won't have to look hard to find
 advisers who tell you you need a zillion dollars ... They will have a plan for you which may or may not get you there but will definitely earn them some fat fees. sure if you want to drink penfolds grange every night you will need plenty, but if you don't do it now the chances are you want want to do it when you are retired.

[HKB Electronics]

I'd be wary of the calculators they tend to be optimistic at times.

Simple fact is I recently retired at 60, some calculators showed around $400000 would give me
a comfortable income it won't!

I have considerable more than that at yes, with all the big bill items paid off I'm not starving.

The simple fact is if your 60 and retiring today you need about 1 million in your super, my partner
works in the investment area of a large super scheme, she will tell you, contrary to what the super
schemes put in their glossies you will really need 1.2 -1.5 million in super if you retire today and want
to be comfortably well off.

The super schemes tell you how wonderful their doing, the scheme I'm in is one of the top in the country
performance wise. If you had around $400000 invested at year 1 and contributed heavily to bring it up to
$800000 at year six over the past 6 years your investment return would have been around $120000, yes
that's correct $20000 a year average return on a balance going from $600000 to $800000 and they
say their doing well, these are real figures not a calculator.

Yes we had a GFC but these events happen regularly and must be factored in, if they had not happened
I would be much better of but as per Murphy's  law they happen when your just about ready to retire.

I would suggest that you youngies pay off all your major debts as quick as you can and poor money into
super, you would probably do better if you have a self managed fund and a re careful what you invest in
but who wants to spend hours each day in retirement doing research and managing their portfolio?

Keep in mind if married and only one is working, if you get divorced then your super nest egg is
going to take a battering, and both of you will be in trouble super wise.

Live long and live happy:)

Leigh

[Alan Loy]

Interesting stuff

I've been considering these things myself and it seems that getting costs down will make retirement easier.

So energy costs
Insulate house
Solar hot water
Solar power

Can I move to a regional area?  Reduce rates and perhaps free up some capital thats in our home

What else?

[areyonga]

While the $1 Million for retirement has been bandied around for a while it is all relevant to how long you need it for.  A new retiree will obviously need more in the initial years after retirement as they are more active and the $ amount required will generally lessen as they get older which may see the age pension being enough in later years.  If we all knew when we were going to kick off it would make it easier to judge when to spend our savings but a rule of thumb is enjoy it while you can because health issues have a habit of creeping up on us and then someone else will probably enjoy spending our hard earned money

I have seen on a few sites they recommend that a person can live about the same quality of life in retirement if they have about 65% of the amount of money they were living on before they retired, this takes into account concessions etc.

Trevor

[HKB Electronics]

Interesting stuff

I've been considering these things myself and it seems that getting costs down will make retirement easier.

So energy costs
Insulate house
Solar hot water
Solar power

Can I move to a regional area?  Reduce rates and perhaps free up some capital thats in our home

What else?

Moving to a regional area needs to be considered may be false economy, you will have increased fuel costs assuming you'll be
travelling to the city regularly and the medical services later in life.

[D4D]

Moving to a regional area needs to be considered may be false economy, you will have increased fuel costs assuming you'll be
travelling to the city regularly and the medical services later in life.

Yup, my folks moved out to Cape Paterson from suburban MEL, 2 hour drive each way. Whilst they have great health and general facilities close by in Wonthaggi, they come to MEL at least twice a month for various stuff. Now they're both 75+ they typically stay overnight in a motel which costs more $. They do have a great life being 50m from the beach though.

[HKB Electronics]

While the $1 Million for retirement has been bandied around for a while it is all relevant to how long you need it for.  A new retiree will obviously need more in the initial years after retirement as they are more active and the $ amount required will generally lessen as they get older which may see the age pension being enough in later years.  If we all knew when we were going to kick off it would make it easier to judge when to spend our savings but a rule of thumb is enjoy it while you can because health issues have a habit of creeping up on us and then someone else will probably enjoy spending our hard earned money

Trevor

Also keep in mind, if you were to retire today, your drawing $50000 a year from your super and there's another GFC
which is quite on the cards if America doesn't pull their finger out and address their debt issue.

Over six years you'll drawing $300000 out of your super, even if you want to shut it down there's
still a minimum amount your allowed to draw down and the government is adverse to change the limits
as it keeps the country going.

As for old age pension, if the governments have their way their won't be one, and if they get their
fingers into to your super like they want to that will be gone too!

[Beachman]

I will give an opinion which is basically the opposite to what everyone has suggested.

Seeing a Financial Planner is fine, but before you do so you need to know what you want outcome you want to achieve as more than likely they will charge a fee??

Yes most of us won’t have enough money for a comfortable retirement depending on how long we live and odds are they will suggest 2 ways to prepare

1st – Salary sacrificing into Super
2nd – Some form of additional long investment/shares which can help subsidise you later in life.   


First option you can do yourself by contacting your payroll section and the 2nd you need to see a Financial Planner to arrange. They are also paid commission for this service.

Just my 2cents worth (Mind you I don’t have any financial qualifications)

[Diver]

A couple is  allowed $361,000 of assets other than the family home before they deduct money from the pension payment - That goes to over a million $ in assets and you have zero pension ..
So if you retire with $500,000 in super , car , camper , household items then you will lose some dollars off the pension probably about 1/3 off ...
A good thing to do is a "Transition to Retirement Fund " at age 50 .. effectively you draw from your super account up to a maximum of 10% p.a. at 15% tax .. BUT you pay into your super most of your wages and reduce your tax threshold accordingly ... I did this at 55 dropped my income by $30,000 p.a. and that went into super less 15% tax not the 31% I was paying in wages .. !!
I am still using that account even though I have "officially" retired .. Mandrakes is a bit of a hobby business and accounting wise makes no money .. Gotta luv accountants !!
Steve

Mandrake- I think the transistion to retirement is available from age 55 ( it was when I did it a few years ago).  Also changes to super contributions need to be checked depending on your age.  I can only put in $35,000 per year but that also includes company super contributions.

It does save a bit in tax though.  The best thing I did was to salary sac a car through a novated lease.  Got a Landcruiser 100 TD for $60k that now has a residual payout of $18k but is worth $50k

[HKB Electronics]

Mandrake- I think the transistion to retirement is available from age 55 ( it was when I did it a few years ago).  Also changes to super contributions need to be checked depending on your age.  I can only put in $35,000 per year but that also includes company super contributions.

It does save a bit in tax though.  The best thing I did was to salary sac a car through a novated lease.  Got a Landcruiser 100 TD for $60k that now has a residual payout of $18k but is worth $50k


"Mandrake- I think the transistion to retirement is available from age 55 ( it was when I did it a few years ago).  Also changes to super contributions need to be checked depending on your age.  I can only put in $35,000 per year but that also includes company super contributions."

It does save a bit in tax though.  The best thing I did was to salary sac a car through a novated lease.  Got a Landcruiser 100 TD for $60k that now has a residual payout of $18k but is worth $50k

Sounds right to me, a few years ago you could salary sacrifice up to $200000 from memory, the government has
supposedly dropped it temporarily, I believe they weren't happy about losing so much tax revenue so would be
very surprised if it ever restored to the previous values.