Can you retire on 1mill?

Discussion in 'Investment Strategy' started by Cmelderis, 13th Feb, 2020.

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  1. Cmelderis

    Cmelderis Well-Known Member

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    Just for fun ( I certainly dont have 1m in cash sitting anywhere )
    Could you retire on 1mill? What would be your strategy? IPs / ETF's/ buy a business that someone runs for you?
    I am not talking a flashy retirement lifestyle just an average retirement lifestyle.
    Will be interesting to see what opinions/strategies everyone would have!
     
  2. D.T.

    D.T. Specialist Property Manager Business Member

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    Yes, i think its possible if you either 1) Go to a cheaper country or 2) Have your house paid off already.

    If house is paid off, assuming you don't have kids, you could invest it in a fund and get 50k per annum which isn't great but liveable. Might be doable for a single person, trickier for a couple, very tricky for a family.

    Once you're at that level though, it becomes easier to leverage into other things and grow bigger quicker. Its not the time to slow down and stop, imho.
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Yes. Would I? No.

    Does it depend on your retirement age? Definitely.
     
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  4. euro73

    euro73 Well-Known Member Business Member

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    Unless you have no other debts are prepared to live a frugal life , I think it would be difficult. And with all that extra time on your hands you will probably spend more money than if you were at work Mon to Friday . I suspect people don't account for that reality, and they end up eroding their capital, meaning they need ever higher returns just to maintain a basic lifestyle.... and they find themselves having to take greater and greater risks... or go back to work.

    Debt free and at least $2 Million ... I would suggest that's what you need to retire and generate 100K without needing to erode capital. At a minimum.... unless you are happy with a modest retirement.

    You're almost better off with little to no cash than $1Million...at least you'd get concession cards, health car card, discounts at the RSL, etc... :) $1 Million cash would price you out of pensions or access to any sort of discounting for pharmaceuticals etc...
     
    Last edited: 13th Feb, 2020
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  5. Tonibell

    Tonibell Well-Known Member

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    Of course you can - and most do.

    The strategy would be carefully crafted around government benefits, the RSL and half price Tuesday movies - from my observation.
     
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  6. Morgs

    Morgs Well-Known Member Business Member

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    Plenty of people do it on much, much less....
    It isn't enough for me personally... I think many here talk about $1m pa cashflow for retirement! (I think that is too much though)
     
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  7. thydzik

    thydzik Well-Known Member

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    better to spend it and go on the pension.
     
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  8. Tofubiscuit

    Tofubiscuit Well-Known Member

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    or buy a big enough place that you can rent a room or granny flat out for cash. Then collect the full pension benefit
     
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  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    You certainly could. If spend say $20,000 per year that would last 50 years, even without income/
     
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  10. Clive Palmer's Yacht

    Clive Palmer's Yacht Well-Known Member

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    I'd think if you had $1m in super and other investments/cash, plus paid off house, your strategy would be to use up the capital. By the time you run out (let's assume late 70s), you go onto pension - which is ok as you're not as active/spending as much (eg travelling overseas).

    If you have kids, you can still plan on leaving them an unencumbered house.
     
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  11. MTR

    MTR Material Girl Premium Member

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    Can I add to this:D

    Cheap wine $7
    Cheap cruises for travel
    Op shop for clothing
    Ikea dining, for value
    Minimise energy consumption

    btw nothing wrong with this, my mother lived very well on old age pension:D
     
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  12. MTR

    MTR Material Girl Premium Member

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    You could I guess but I expect you will erode the capital?
     
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  13. Cmelderis

    Cmelderis Well-Known Member

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    I love $7 red wine and IKEA veggie bfasts, not together though lol
     
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  14. Lacrim

    Lacrim Well-Known Member

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    $1mill returning 4-5% pa with a paid off PPOR and zero dependants/partner would be possible....with a budget SEA holiday or two thrown in there as well.
     
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  15. MTR

    MTR Material Girl Premium Member

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    I like Big oaky chardonnays, buttery
     
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  16. Tonibell

    Tonibell Well-Known Member

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    Is IKEA food considered better value than a good RSL bistro roast dinner ?

    We don't have one local but didn't really consider it a food destination.

    Might need to make a trip.
     
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  17. Scott No Mates

    Scott No Mates Well-Known Member

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    I hear that the mushrooms are a real buzz. :confused:
     
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  18. Cmelderis

    Cmelderis Well-Known Member

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    Its pretty bloody cheap! $3.50 for veggie bfast $4 with meat ( IKEA family member prices ) Dinner wise $5 spag bol $5 nachos $8 f'n'c
     
  19. significance

    significance Well-Known Member

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    Invested conservatively, $1M will get you a return of around $40k/year, which is enough to live on frugally if your medical expenses aren't too high (PhD students live on just under $30k/year and mostly rent rooms in share houses to make it work, while single pensioners get about $24k/year if they have their own home or $27k/year with rent assistance).

    If you aren't going to live forever, you can also draw down your capital. For example, if you retire at 60, you can draw $65k/year if you aim to die with a balance near zero at 85. The value of this will gradually drop with inflation.

    If you can tolerate more risk, a growth investment strategy will give you more to play with.

    Here's a calculator to help work this out: Retirement Drawdown Calculator | Noel Whittaker
     
  20. Trainee

    Trainee Well-Known Member

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    cheaper than making it yourself?

    weird question. Could you retire on 1m? Of course. Would you want to?
     
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