Can you retire on 1mill?

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

Join Australia's most dynamic and respected property investment community
Tags:
  1. Cmelderis

    Cmelderis Well-Known Member

    Joined:
    10th Sep, 2015
    Posts:
    480
    Location:
    Perth
    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

    Joined:
    3rd Jun, 2015
    Posts:
    9,189
    Location:
    Adelaide and Gold Coast
    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.
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,101
    Location:
    Sydney or NSW or Australia
    Yes. Would I? No.

    Does it depend on your retirement age? Definitely.
     
    See Change, AxeLy, skater and 2 others like this.
  4. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia
    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
    Rickdanby, Redom, AxeLy and 4 others like this.
  5. Tonibell

    Tonibell Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,107
    Location:
    Sydney
    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.
     
    JacM, AxeLy, datto and 6 others like this.
  6. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,791
    Location:
    Sydney NSW
    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)
     
    See Change, Beano and Cmelderis like this.
  7. thydzik

    thydzik Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    550
    Location:
    Perth
    better to spend it and go on the pension.
     
    Saints lad, TwoDogs and Cmelderis like this.
  8. Tofubiscuit

    Tofubiscuit Well-Known Member

    Joined:
    1st Nov, 2018
    Posts:
    1,481
    Location:
    Sydney
    or buy a big enough place that you can rent a room or granny flat out for cash. Then collect the full pension benefit
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,672
    Location:
    Australia wide
    You certainly could. If spend say $20,000 per year that would last 50 years, even without income/
     
    AxeLy, See Change, datto and 5 others like this.
  10. Clive Palmer's Yacht

    Clive Palmer's Yacht Well-Known Member

    Joined:
    23rd Apr, 2019
    Posts:
    280
    Location:
    Sydney
    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.
     
    AxeLy and ellejay like this.
  11. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World

    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
     
    AxeLy, ellejay and Cmelderis like this.
  12. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World
    You could I guess but I expect you will erode the capital?
     
    AxeLy and Ross Forrester like this.
  13. Cmelderis

    Cmelderis Well-Known Member

    Joined:
    10th Sep, 2015
    Posts:
    480
    Location:
    Perth
    I love $7 red wine and IKEA veggie bfasts, not together though lol
     
    AxeLy, ellejay and MTR like this.
  14. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    $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.
     
    Toby and Cmelderis like this.
  15. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World
    I like Big oaky chardonnays, buttery
     
    Player and Cmelderis like this.
  16. Tonibell

    Tonibell Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,107
    Location:
    Sydney
    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.
     
    MTR and Cmelderis like this.
  17. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,101
    Location:
    Sydney or NSW or Australia
    I hear that the mushrooms are a real buzz. :confused:
     
    datto and Cmelderis like this.
  18. Cmelderis

    Cmelderis Well-Known Member

    Joined:
    10th Sep, 2015
    Posts:
    480
    Location:
    Perth
    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

    Joined:
    6th Sep, 2019
    Posts:
    164
    Location:
    Queensland
    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
     
    AxeLy, wombat777, Brisbane04 and 2 others like this.
  20. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,258
    Location:
    Australia
    cheaper than making it yourself?

    weird question. Could you retire on 1m? Of course. Would you want to?
     
    AxeLy and Cmelderis like this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia