Repayments from super

That would be about right - there is $15k of child support in there which would go away if I lost my job. Also $8k of child care costs which goes away once the youngest starts school. But yes that leaves $100k of expenses plus rent - my partner earns $90k, so less tax plus family tax benefit which we would get in a job loss scenario for me plus interest income might just about cover the expenses. But not the rent, which would have to come from savings.

If my job loss became permanent (can be hard finding something in late 50’s/early 60’s), then we would need to look at tighter budgeting to reduce costs.

Obviously timing is important - as long as we are both working, then our cash savings and super savings increase and the kids are getting closer to leaving school and thus contributing to their costs (three of the kids are now in high school).

 

Your basically betting that you can continue working and beat the clock while your kids grow up. Your super can either buy the ppor or pay for your expenses. It cant do both. Also the ppor will cost more than just interest.

Realistically, aiming for a cheaper ppor and cutting expenses now would change a lot. Your financial situation just isnt that great for your age.

 

Statistically, our net wealth is acfually above average for our age and would be well above median given the distortion to the mean from very wealthy households.

https://www.smh.com.au/money/saving...e-of-the-nation-s-wealth-20181005-p507wn.html

I will keep tracking prices and saving and see what happens. The risks that you mention reduce with each year as savings increase and kids get older.

 

Median already avoids some distortion from very wealthy households. Remember your job risk increases each year as you get older too.

Your super is above median. Balance that against your lack of PPOR, above average number of kids and below average age of kids for your age. Your expenses are also far higher than median. Obviously dont know the details of your circumstances but you didnt get any gains from the recent large sydney boom.

Fact is you cant afford a 1.5m PPOR and spend anywhere near what you spend now. And thats even if you can maintain that for another 10 years. Using super money for the PPOR makes things worse, since the PPOR doesnt produce income. Think about what your situation would look like if you bought the PPOR and then had to take a pay cut.

Alternative might be keeping renting for a few years, increase savings, and aim for a cheaper PPOR. Then part of the super is left to produce some income while your partner keeps working.

 

Your in for a rude suprise, kids are relatively very cheap until they leave high school its after that the big expenses come, cars , uni fees and support, accommodation expenses sports , hobbies social life, expanding horizons just to name a few. There is more to wealth than just $. Your super is performing very poorly in one of the greatest bull markets it should be earning 2 or 5 times what it is, You will end up going backwards when the correction hits.. You don't own a PPOR. You cant get by on 300k., It is what you do with your $ and what it can do for you that make you wealthy. If you need to work I wouldn't consider that wealthy. Cash savings are a wasted resource, funds should be used to build growing assets and income that can be drawn on so you have a higher level of available funds than the cash. You may need to study the power of compounding.

 

Once my kids leave high school, they will need to work if they want a car, hobbies and support. HECS will sort out uni fees. As to accommodation expenses, these are an existing cost - if they want their own accommodation, they will need to pay for it. Might sound tough but that is reality.

As mentioned the super is in cash so an equity market correction will have no impact on me. It is in cash because the intention is to use most of it to buy a PPOR. Basically when I got divorced from my ex five years ago, she got the debt free house, I got the cash and super, with the intention that most of it funds a PPOR. I do not want to take equity risk now given the potential near term use of the funds. The reason the super balance is substantial is due to it being in equities pre and post GFC (was in cash when GFC hit).

 

You buy the ppor with most of the cash and super, what are you living on if you stop working? you would have to draw down significantly from the principal.

 

Depends when it happens - super is still growing and my partner would continue to work so that is two sources of funds. Government pension kicks in at 67.

 

This is not ideal but how about considering getting something in the low $1mil range for PPOR?

Start with a good broker, @Rolf Latham that has been responding to your posts is highly knowledgeable.

 

Doesn’t work at present as for that price I can’t get something that fits five kids and is within reasonable commuting distance of their schools. Of course, if prices continue to drop that may become feasible.

Our youngest is likely starting primary school in 2021, so will start looking in about a year’s time. Will have another year of savings and hopefully job certainty under our belt by then.

 

The downside of property is illiquid and high transaction costs. Buy too much PPOR, use up too much of your cash, and you wont survive even a period of unemployment.

Job certainty in your 50s? Thats taking a big risk.

How sure are you that you are not just convincing yourself about the job security thing because you dont want to downgrade your living standards?

 

Have not been on here for a while so thought I’d update my thread.

I ended up buying a house for $1.4m in August 2020, pretty much at the Covid lows, so reasonable timing. Debt less cash is now about $0.9m, with my super at $1.3m and the wife’s at $0.3m. I reach super preservation age next month which is good timing as looks as though I may be retrenched. Payout would be about $0.2m after tax. If I lose my job, intention is to pay off mortgage from super which would leave me with cash/super of $0.6m and wife also has $0.3m on super (not accessible for 10 years). Not ideal if I can’t find another job as will likely need to draw down some of the cash to top up the wife’s salary until kids are older. Still, no regrets on buying the house; was good to get out of renting.

 

Can you put the money in an offset rather than paying off the house? Gives the same result, just transfer house payments from the offset.

Advantage to you is that it gives you immediate access to funds should the need arise, without the stress of finance applications, which may be difficult if you are not working.

Given the publicised labour shortages, you should have no trouble getting a job, even if not in your referred field of expertise.

Well done on getting yourself a PPOR!

 

Well done.

Your situation is not anywhere near as bad, as some on this forum suggested. You have 10 years to build the combined super back up again. Plan B for retirement, can always be to 'downsize', i.e. move to a cheaper area once the kids are independent and free up capital.

 

Yes. that is the plan so that there are nil interest payments and can draw down cash for living expenses as required to top up my wife’s salary.

If my job continues, then I won’t need the plan B although of course we might decide to downsize at some stage. If I can’t get another job then plan B will work well - could be cheaper area or just a smaller place in the same area. Haven’t really thought about what we will do once kids leave school - it’s close for the oldest ones but our youngest has another 11 years at school.

 

Get some financial advice on that. It doesn't sound like a good idea to me.

 

Why would you suggest it’s not a good idea?

 

tax, investments and estate planning needs to be considered. It may be better to take out the minimum and keep the loan going. Something advice is needed on