Retirement Incomes....will you be in the top 3%!

I have always believed that there are many approaches one can employ to make a success on this wealth creation journey or, as I posted earlier, "there are many different fruit trees in the wealth creation/self-funded retirement orchard".

Some fruit trees will die before bearing fruit, some will bear a little, maybe poor tasting fruit and some will bear an abundance of great fruit. We all know that, if one doesn't plant a tree, one is not going to have any fruit; one will be relying on the Government for the quantity and quality for their fruit.

So, instead of slagging off about anyone's fruit tree, I feel it is more important to work out how long does a tree take to bear its fruit. That is, how long will it take to get into the Top 3%.

Some-one aged between 20 and 30 has many choices as they can be aggressive in their investing (and have time to plant another tree if the first one doesn't bear any/sufficient fruit) OR they can pick a tree that will bear fruit in 20 years time.

But some-one aged between 40 and 50 has less choices as they will feel that can't be (overly) aggressive in their investing (as they don't have time to plant another tree if the first one doesn't bear any/sufficient fruit) and they don't have 20 years for their tree to bear its fruit. The risk is their retirement income will be low (or lower than their desired lifestyle requires).

For my generation (baby boomers), to make it into the Top 3%, the retirement income threshold is woefully low. According to the OP, it is $67,000. I believe most of my generation knew WHAT to do and HOW to do it but never had a compelling reason to do anything (the WHY). Just like our parents, many believe the Government would come to their aid (even though we were told over and over for the last 30 to 40 years that such an approach would put severe pressure on the country's Budget). And the Government so far has.

I have concerns as to whether later generations will be anymore successful. I know they have Super but will it be enough to fund the retirement lifestyle they desire and will it last (as we live longer).

Should they be planting trees in the orchard as a supplement to their Super (a Plan B)?

Until the "pain of doing nothing" is greater than the "pain of doing something", I fear nothing will change. I am not convinced that later generations have a compelling reason to take action and the threshold to get into the Top 3% Club will remain low.

Can we discuss/debate this issues for a while ?

 

You are starting to make sense Kierank..about the cents..it must be all the barbequed cane toads youse had.

100% agree....like the toad in boiling water most people will not realize they are boiling till it gets too hot. So another wards most people will only do something about getting enough when it is too late.

 

Well said along the lines of JR, when he said:
- There are two types of pain you will go through in life, the pain of discipline and the pain of regret. Discipline weighs ounces while regret weighs tonnes.
- Each of us has two distinct choices to make about what we will do with our lives. The first choice we can make is to be less than we have the capacity to be. To earn less. To have less. To read less and think less. To try less and discipline ourselves less. These are the choices that lead to an empty life. These are the choices that, once made, lead to a life of constant apprehension instead of a life of wondrous anticipation And the second choice? To do it all! To become all that we can possibly be. To read every book that we possibly can. To earn as much as we possibly can. To give and share as much as we possibly can. To strive and produce and accomplish as much as we possibly can.
- If you are not willing to risk the unusual, you will have to settle for the ordinary.
- Learn how to separate the majors and the minors. A lot of people don’t do well simply because they major in minor things.
- The worst thing one can do is not to try, to be aware of what one wants and not give in to it, to spend years in silent hurt wondering if something could have materialized – never knowing.

 

I agree 100% with most of what you have said except this paragraph. I'm right on the tail end of being a BB & I know many my age that are still not skilled in the basics of using a computer. Those older than myself are much worse.

I would say that Gen X knew what to do & had the skills to work out how to do it. Gen X were born into the information age, with the internet at their fingertips. Anything you want to know bout, you can find online. I never woke up to the fact that there was a reason to create my own income until after I had started investing. I never started to become rich or to fund my later years. In fact I was as poor as a church mouse & fell into it by accident. Only 'rich' people had more than one home & it wasn't something that I had even thought about until I had a 'mortgage reduction' company give me a talk. Needing a computer for our many business attempts, we were reasonably early to having a home computer, so did some rudimentary research into how to do it, and where I could afford to purchase. After that, I was super motivated & pulled out all stops to get the first IP. I truly thought I had 'made it' at that point & didn't pursue it for quite a few years after that.

I think it is convenient to put all the blame on the BBs as they age. Not because we're all savvy investors, because in reality there aren't that many of us that have created an income stream, but because being older, we have more wealth simply because we've been on the planet for longer, we've worked harder and in general are more frugal than the later generations. We didn't grow up with easy credit & there was no afterpay. There were much less options for eating out, so we didn't do it with reckless abandon like many of the youth of today.

There was also a smaller population, meaning that you could purchase much closer to today's cities at a cheaper price, because, back then, those areas were on the outskirts, like the new estates are today. We were often realistic to the fact, that this was a fact of life. If you want to buy a home, you buy where you can afford. I bought a crappy miners cottage in a crappy suburb in Wollongong. Would I have liked to buy something closer to the city, maybe, but that's not where I could afford.

This too, and then it's often too little, too late.

 

@skater sounds like your 'AHA' moment.

 

In my books, the only good cane toad is a bbq’d cane toad .

... even better with a nice bottle of Shiraz .

 

Certainly was.....even then it took a long time & near bankruptcy to buy the next ones.

 

I feel seek already.... ......the banana benders up there must have cast iron stomachs.

 

I am trialing retirement (from real formal work in my profession). I can say that I have spent a lot of thinking on structuring....and how I will sustain income for the next 30-40 years. My assets are mostly in property and I am in the process of moving this to ETFs/LICs and Super. Whilst property is wonderful...it does require a fair but of maintenance and effort to manage. As you get older you do not want these headaches.

Here is what I am doing:

1. The next 3-5 years sell 2 properties per year....timing the market in areas where growth has peaked for the moment. In 5 years I should technically have an LVR of less than 10-15%. It would be zero but I will be moving some money into ETF/Shares and Super. After 5 years...due to the income generated by properties I be down to selling 1 property per year. This would take another 20-35 years to divest of all my portfolio...depending on how many I buy in parallel to sell.

2. Continue to Dollar Cost Average into ETFs/LICs to develop a Clayton's Super Fund

3. Contribute to Super to a view to max out my Super

4. Continue to buy more Property assets but a much better class..and newer.

 

In today's world, I don't believe there is really any excuse.

My mother was born in 1929 (passed two years ago). She learnt how to use a computer by attending a number of courses at U3A for older people. There are other organisations that run similar courses. In her early days of computer use, she was typing up the family history and printing out her work at the end of each session. One day I was with her, saw her do this - she was about to exit Word when I had to yell. I had to show her where the "Save/Save As" option was. None of her previous work had been saved; she was using the computer like a typewriter

My father-in-law was born in 1934 (currently 85). For his age, he is very computer literate. He uses email, Internet Explorer (keeping him away from porn sites is an ongoing challenge ), PageMaker to produce magazines, ... In his early days of computer use, someone told him to go in Window Explorer and delete all files with today's date that he didn't want to keep (a bit of housekeeping). So he did, including the deletion of system files . Today, he has a smartphone and is an avid user.

I know these are two anecdotes ... and don't count at all . My background is IT and I have 40 years of experience understanding the benefits of IT. I would harp on to my parents and my in-laws about the benefits, how IT was here to stay, how the sooner they came on board the better, ... Maybe more kids should being doing the same thing, it is never too late.

Our life stories are similar. I left home in 1977 (aged 20) with $50 in my wallet; money from Mum and Dad to buy myself a 21st Birthday present. At that time, my dream was to buy a home and spend a lifetime to pay it off (just like my parents).

I bought my first PPOR in Melbourne (1979), selling it and buying the next in Brisbane (1981), due to work relocation. We thought our dream was well and truly underway.

We didn't buy our first IP until 1992 (aged 36). For the next 13 years, we did nothing in the property sector. We were paying off our PPOR and we had bought an IP. We had exceeded our wildest dreams.

In reality, we had no idea, no idea what we were doing, we didn't have a strategy nor a plan, ...

That all changed in December 2003 when we developed our Financial Independence Plan.

That gave us laser-like focus, that gave us a path to go forward, that gave us motivation, that gave us something to measure our progress against, ...

Less than 7 years later, in 2010, we retired and are well into the Top 3% Club.

Totally agree.

 

Was having a chat to my companies former owner last night. He is ridiculous kind of rich (sold the company for a lazy 50mil).
Yet he is cut from the Steve McKnight strategy.
He used business and developments to create large equity base and is now heavily invested in commercial.
Just purchased 6 factories with something ridiculous like 40 year leases earning 6% net return and a guaranteed 3.5% increase each year.

Is now selling down the rest of his resi portfolio to invest all into commercial.
Would hate to think his net income from passive income!

 

Hokay...I am now culious.....what assets/vehicles did you use to get there?

Noicely done.......

 

Our Net Worth is 40% shares (in our SMSF) and 40% property (in personal names and trusts). I wasn't smart enough to work which was better, so we went with both. In retirement, we use shares for income; always bought property for growth.

I am a big fan of owning one's own business. During our working life, we owned four. Two were existing, two we started from scratch. IMHO, a well-run, successful business is the greatest cash cow on earth BUT it is not for everyone. To get ahead, one needs a juicy cash cow.

If one is going to rely of a single wage/salary, one better have a long, long time on their side (or lower your retirement income expectations). I tell people you have to work out how you are going to turbo-charge your cashflow, especially in accumulation phase.

The other 20% is in cash, in our SMSF and in Offset accounts, to maximise our after-tax returns.

 

I'm 50 this month. We have 20 rentals and a bit in super. Very simple plan to sell one resi every couple of years and live off the lump sum (putting it in offsets and back into super). The plan may change over time as I research more. I've found I have less time when I'm not working in a job to plan anything. No clocking off at 4.30. I was painting woodwork and enjoying it until 8.30pm last night. Chinese takeaway at 9pm and asleep by 10.

 

Thank you for sharing. I really enjoyed reading this.

 

This is exactly where I am at..... you can sell at least one year and gain one every two years and still have places by 80....

 

OK ta.....

I am 20% in cash via offsets...73% in property...and 7% in Super/ETFs

Want to get the later to be about 30-40% over the next few years.

 

I gave up on the fruit trees ...only own the land and rent to the orchard owner

 

I would love to hear what his net income is !

 

As I posted, “there are many approaches ...” .