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Retire at 60

Discussion in 'General Property Chat' started by tn8701, 5th Oct, 2016.

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  1. tn8701

    tn8701 Member

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    Hi All


    I’m planning to retire at 60.

    Please comment if you think this is achievable or where I can improve & fast track my plan.


    Background


    · I’m 32 yrs & wife 27yrs
    · I have 40k in my super, My wife has no Super self-employed.
    · My wage 70k p.a. 9.5% super contributions
    · My wife wage 20k p.a. No super
    · Wife : currently looking after the kids, planning on returning back to part time work in 2 years.

    · We own our PPOR outright current value of 580k
    · We have one investment property with granny flat. Value $1.1 Mil debt of $1Mil
    · Rental property after interest and expenses is making a profit of $5,000 p.a
    · Currently paying off 30k off loan principal p.a. Aiming at increasing this to 40k when wife resume work in 2 years’ time.


    Overall goal


    · In 28 years when I will be 60 years old Pay off the $1M.
    · In 33 years when I will be 65 years old to have approximately $300K in super and using this to renovate the PPOR & investment property so it can continue generating net rent at 1k p/w

    live happy ever after!!!
     
    Last edited: 5th Oct, 2016
  2. Bran

    Bran Well-Known Member

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    1k pa won't get you far
     
  3. tn8701

    tn8701 Member

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    Correction 1k per week
     
    Bran likes this.
  4. Mumbai

    Mumbai Well-Known Member

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    At 32 years and earning 70k, you have done really well.

    With your IP, you mentioned that you have 1mill debt. Even at 4% and interest only term, repayments come to 3500 pm.
    You must be getting really good rents for both property to be 5k pa positively geared after expenses.
     
  5. Indifference

    Indifference Well-Known Member

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    @tn8701 With that financial position at such an age, you're underestimating your potential. With no mortgage your ability to divert income to investments is now much greater hence your financial position can improve rather rapidly.

    You should be aiming for 50 IMO rather than 60 and even then, you could do it sooner if you committed to it. Perhaps aiming for an extended transition to retirement from about 45 would be more motivation ;)

    Well done on your current position.... you're going strong.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    +1 earns $20k, might be worth contributing $2k/annum to super so she'll pay no tax on her drawings. Low fee/stable industry fund. Sure the funds are tied up until you're 67 but with regular contributions it wii grow. However you'll need to weigh up how much tax she's paying on any other income unless it's more than 15% there's no savings.
     
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  7. Hodor

    Hodor Well-Known Member

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    Easily achievable, you're in a great position.

    Plenty of options to speed up retirement, just depends what path(s) you want to take.

    Two options off the top of my head are.

    Buy one more IP and let that tick along, sell it nearing retirement to pay down/off debt sooner.

    Acquire/build a share portfolio for income. Plenty of info here on the other assets board or check out investchat.com.au
     
    Sonamic likes this.
  8. C-mac

    C-mac Well-Known Member

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    I agree with Hodor. Based on your income level (will it be increasing? At 32 you are entering your 'prime career income earning years' which is typically the next 15 years to about 45 for most industries - lawyers/doctors etc. are obvious exceptions), it could be smart to diversify.

    I also think you'll need to rely on more 'active' property strategies instead of 'passive' ones. This means, ones where you don't just buy, sit, and wait. Instead, you buy, 'do something' to the property (this could be anything from cosmetic reno, structural reno/extension, subdivision if allowed, granny-flat addition, or full-on bulldoze current house and build new unit block etc.).

    Shares could also be a neat tactic to passively grow small volumes of return as you save for your next/big property project.
     
  9. Big Will

    Big Will Well-Known Member

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    You are doing extremely well, I am 30 but I am not even close to paying off my PPOR, how did you do it?

    Things I think will be an issue - 300k in super is not going to go to far at all. If the rules do not change you will need to draw down a minimum of 4% p.a. at 65 which increases up to 14% (see source). Even at 4% your super will only pay you 12k and this is 30 years in the future. They say today you need about 1M in todays dollars to retire comfortably with super which would give 40k p.a. Either way your super is going to fall way short.

    You IP is doing very well to be 5k+ are you sure you are including all expenses though? It isn't just rent minus mortgage, there is Rates, Insurance (building and LL), Repairs/Maintenance (should allow 1k p.a.), Water (depending on state), vacancy period, pm fees etc. Some expenses you may not have (e.g. PM) but if you have included them all that is amazing!

    Depending on how tolerant you are to risk, you should probably consider drawing equity from the PPOR to purchase another one of those IPs again. As you and I are in what most would consider accumulation phase where we want to grow our portfolio as big as possible and we can hold along with we can sleep at night with. As we have time on our side to undo any mistakes or downturn that will happen.

    Source:
    Minimum and maximum drawdowns | HESTA
     

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  10. tn8701

    tn8701 Member

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    Thank you all

    I did a lot of buy low renovate/sell in my early 20s that how I paid off the ppor. As for the gf it getting 1k p/w in rent interest is only about 42k p.a 5k for other expenses the remaining 5k is profit.

    My only worries is job security these days which is holding me back from borrowing more to do this again.
     
  11. Flipper

    Flipper Member

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    You seem in a fantastic position for your age.

    Why 60? Why not 45? Not sure its popularity on this forum, but have you heard the lifestyle concept of FI/RE? Stands for Financial Independence / Retire Early.

    There are many information sources out there; I'd especially recommend bloggers such as mrmoneymustache.com to get a taste of whether the idea is for you or not.
     
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  12. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Awesome effort so far! Why aim for 60 when you could aim for 40? Also just remember a $1000 per week may support you and your family now but with inflation in 33 years you may need a whole lot more.
     
  13. tn8701

    tn8701 Member

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    Yes that what I'm worried about inflation in 33years time will the property generate enough to for a comfortable retirement for two.
     
  14. Biz

    Biz Well-Known Member

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    Your property will be old and crusty in 33 years. Don't look so far ahead, plan 5 years ahead and play what is in front of you. Property has been good the last few years but there might be better options going forward, don't ignore them.
     
  15. kierank

    kierank Well-Known Member

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    40k pa would only fund a modest lifestyle for a couple.

    A couple requires a pension of nearly 60k in today's dollars if they want to fund a comfortable lifestyle. If they are under 65 and take the minimum 4% pa, they would require $1.5M in super.
     
  16. Indifference

    Indifference Well-Known Member

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    Only if they want to preserve the capital infinitum & then leave the 1.5M in their will....
     
  17. ellejay

    ellejay Well-Known Member

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    Correct, not everyone wants to do this and not everyone needs extra $$$ p/a in retirement to subsidise kids and grandkids. I've spoken to so many people in their late 50s recently who have well paid jobs, have had them long term, even 1-2 investments but no sign of retirement on the horizon as they 'rent' the houses out to close family at minus return, and subsidise the lifestyles of kids and grandkids. Nothing wrong with this, it's a choice, but not everyone needs to do it, so some will be very comfortable on $40k or so.

    I agree with others who said that 40s rather than 60 would be a realistic goal depending on your needs and wants before and after retirement.
     
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  18. tn8701

    tn8701 Member

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    I'm only planning ahead only because I'm worry about my job security and I don't know if my job will be there in 10 years or my earning will drop dramatically in the next 30years.
    I just want the financial freedom at 60 to not stress out about money.
     
  19. ellejay

    ellejay Well-Known Member

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    Keep reading. A lot more is possible, up to you whether or not you decide to aim for it.
     
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  20. WattleIdo

    WattleIdo renovating Premium Member

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    H
    Once you get the prestige and the big bucks, it soon becomes entrenched. The mind gets set and it's hard to believe you can live happily on a quarter of your income. More and more I wonder why all those baby boomers are still in their top tier jobs - come on, they've been getting paid very well for decades and decades. They can afford to let go. Not that they all should, just that if they wanted to, they could.
    @tn8701 Well done with the early years! You'll be out and free and looking for something to fill up your days before very long.