Can you retire on 1mill?

Yep. You can’t plan without making assumptions, but choose assumptions that suit your own circumstances. The calculator is designed to be quick and easy to use, but it isn’t hard to make your own calculations with whatever assumptions you prefer. Or see a financial planner if you don’t have the confidence.

 

I would make a good son-in-law for you, @Sackie .

 

And a much earlier access to the inherited wealth compared to marrying someone of similar age? Sorry I know it’s a bad joke but helps your application to stand out. Anyway don’t get offended.

 

But then you phoned the insurance company and told them to make it the same price or lower than last year or you would be taking your business some place else

 

If you assume the $1,000,000 was in any LIC or the like (Shares), which averaged around 4.0% capital growth and 4.5 % for dividend.
If you draw down at $80,000.00 and increase that by 2% for inflation each year.
Not sure if tax would need to be paid so assume 0% Tax
We’d get 27 years, if you could get the capital growth up to 5.5%, you’d never run out.
This may help

 

I also don't feel the need to pass on everything to my son and intend to dip into some of the capital in the next 10-20 years.

 

#1 looking out for #1. Love it.

 

1 million in the US will certainly give you a very comfortable income just round figures in oz dollars if purchased through a vehicles such as SMSF.
10 x $100,000 properties.
10 x $1,100 income per month (Gross).
10 x $750* Approx net income per month.
= $90,000 PA

 

The economics of inheritance are a little strange for most people anyway. By the time I receive an inheritance from my parents, I'll be on the verge of retirement myself (or hopefully already retired). Any inheritance that I receive won't be "setting me up in life" -- it'll come too late for that. If I have planned well for my own retirement, that inheritance will be largely irrelevant to me. Hence, I think it makes more sense for parents to get their kids a good education when they are young and plan to draw down their own capital in retirement, rather than worrying about leaving an inheritance for their children to retire on. To that end, I am encouraging my parents to spend more in their retirement and will aim to die with a balance near zero myself.

 

A million with children that need help to buy a house is almost nothing.
Helping children who live in cities like NYC, London, HK is quite different from living in Andamooka!
The ten cheapest places to buy a home in Australia | Daily Mail Online

 

not really, spent way too much money to retire on 1m,

also the pension
1,396.20 a couple per fortnight, which is $700 a week,

how do you even survive in sydney or melbourne on $700 a week, even if you have your own home paid off.

let alone in 30 years time lol.

 

I was curious about the pension vs $1m cash.

Pension for couples is $36,582pa, asset limit is $394,500.

$1m is $605,500 in excess of the asset limit which completely cuts out the pension.

Assuming average real returns of the Australian sharemarket of 6.5%, on $605,500 is $39,357.5

Which is a benefit of $3k more annually over the pension.

 

Interesting.

Have you also considered in that number the concessional benefits available, e.g. reduced PBS contribution payments, rates, etc?

Forgot to give a couple of numbers. PBS Concessional Contribution for drugs is up to $6.60 compared with the general public of $41. Annual threshold is $316 and zero payments after that compared to $1,486 and then $6.60 for the likes of me - not that I use the PBS to that extent but some do.

 

Except that you also still have $1M in the bank if you are spending only returns and not drawing down the capital.

If we take your assumption of a 6.5% return and add an assumption of 2% inflation, then you can draw $61,500/year (increasing with inflation) from a $1M investment over 30 years of retirement. So with $1M available, you're really almost $25,000/year better off than a couple relying solely on the pension. If you choose not to spend the capital, that's up to you. Further, your assets would fall below the pension asset limit after about 23 years (assuming the limit is adjusted for inflation, too), so you'd get a part pension from then on, too.

 

Yeah I agree
Compared with Andamooka it's pure luxury

 

Except....it depends. Superannuation is not assessed as an asset until age 67. So if one partner in a couple is considerably younger then there is a possibility of a part pension depending how the assets are split. If retirement is before 67 then some capital may be drawn down. Then there’s franking credits .... it’s tricksy

 

Before tax.
If the $1m was in super it may allow an age pension + franking refund and without any personal tax.

One issue with comparisons like this is market risk. All markets except cash correct. The frequency is tied to risk. High risk = larger falls = frequency.

 

The pension gets pretty much indexed with inflation, which is why I left it off both.

I already mentioned spending it would be better.
Can you retire on 1mill?

There would be some compounding affects not factored it, but I think 6.5% is high, even though that's a figure I pulled from google.

Also pension is not guaranteed to always exist.

 

If you leave inflation off, then you are better off by even more than the $25k/year that I calculated with the million dollars than with the pension. By factoring in 2% inflation, I effectively reduced your 6.5% to 4.5% for my calculations. To say you are only $3k/year better off with $1M invested is ridiculous.

6.5% is a reasonable figure for a balanced/growth investment strategy. Many retirees prefer a low-risk strategy, for which 4% is more likely.