Can you retire on 1mill?

Memories....... I was on that scheme, it got abolished

 

The very generous CSS was closed to new members in 1990, but some people are still retiring on it now. The PSS defined benefit scheme was closed to new members in 2005 but some of us are still on that, too. If I keep contributing until I’m 65, I should be able to retire with a PSSdb pension about matching my current income (adjusted for inflation).

 

yeah I am not in it but got a few mates in PSS schemes and I look it up and I said this is why you never left public service, it the hidden millions that most don't realise until closer to retirement to get a similar income on my mate salary you need at least $3-4 million in this low rate environment.

Those that left regret that decision because they wasn't paying attention to the pension

 

extrordinary

 

And throw in a few of those excess franking credits loved by many.

My (very) rough calculations based on 30% franking are:

$36,000 for a refund of $7,500
$40,000 for a refund of $7,100
$50,000 for a refund of $6,400

 

I suppose as long as the distribution isn't slashed, you have no intention of selling, and have a long term perspective; then value fluctuations are a bit of a moot point. Takes commitment though.

 

Yep....but great unwashed will protest that is rubbish.

Lets face it most people (90%) of the population is not financially literate. Hey I even know some property investors who struggle to calculate rate on a IO loan...

 

Yep ...spot on ...he has come to realization he will not sell and seen that it goes back to normal within 2 years. Even after the GFC it went back after 3 years.

 

I know several lucky individuals who have a defined benefit pension because they elected to remain in the db scheme rather than join the accumulation super scheme. Some of them 'retired' for about a week and were then re-hired in their original roles. Not a bad situation considering it resulted in an 80% increase on the income they were getting a week earlier.

 

it depends on your time horizon, most people don’t start well into 30s, Still have the ability to see a couple of cycles.. if financial literacy was better taught at younger ages, and people started at 18-20. Most people will reach it with just a simple mix of shares and a couple IPs

 

They are starting to teach it in schools...but the issue is also discipline.

I hear people saying about Super...I am not going to contribute more...even just 2-3k per annum pre-tax...would make a huge difference down the track. This is pre-tax..for most people that is only about $30-40 per week after...they could do that by shopping around for better health insurance, mobile plans, etc.

 

I laugh at people who laugh at some people on this forum..who want 150k ...

 

With SAPTO, a couple can earn nearly $60,000 tax free, once they are 65+

 

Possibly will result in another debate or whatever but while it may be possible to retire with $1m or on the income initially generated by that amount, the other side of the equation does seem to be overlooked.

Increase in expenses.

Assuming a person owns a home (rental aspects is a whole different ball game) you need to pay to stay in it with rates, insurances, etc. If those fixed costs increase by say 5% pa yet your income doesn't......

Should it costs $10k pa it would mean you would need an additional $500 after the first year, $525 the next and so on. A starting point of $50k pa of income may be fine but if the other aspects are not accounted for it doesn't take much imagination to see what will eventually occur.

 

This is why you need to use an inflation-adjusted return in your calculations. If you are aiming for $50k/year, you need to make sure that’s after inflation. Have a look at the calculator that I linked to a few posts up: this takes inflation into account, and also lets you work out how much capital you can afford to draw down, depending on age at retirement.

 

For those who need to draw down capital that would be a very useful calculator. Good of you to post it.

I am in a more fortunate situation compared with others.

 

Some people will just choose to draw down capital, rather than needing to I think. Not everyone feels the need to pass on their entire fortune to the next generation. I think it's a pretty good scenario if you can leave wealth to family and set them up very well but still be able to draw down some capital in retirement to splurge and enjoy some extra luxuries.

 

I would hasten to add that the calculator ASSUMES the same amount (indexed) spend throughout your retirement years...to give an example..i input 150K p.a. to spend once i retire ....as i may want to travel (or skydive) quite a bit..but as i age...may not have the stomach /knees to travel as much...

(but of course, medical may increase..but just saying...formula need to be tweaked to your own circumstances)

 

Nicely put @ellejay.

Frankly I don't bother too much about the official inflation numbers. The reason being it doesn't necessarily apply to one's actual cost. As an example I recently received an insurance renewal. The increase in dollar terms was $43 which was about 4% over last year. That is greater than official inflation numbers and more relevant - to me at least.

 

That's my intention. Set my daughter up so she has zero financial worries and has endless choices and freedom in life BUT also instil good values in her with a sense of responsibility, gratitude and appreciation for what she has. And to always, always, always help the poor and less fortunate.