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

So even though you are the great washed you don't know whether it is taxable income or total income or savings as in, does it include any or all of,

- Government Age Pension
- Superannuation Pension
- Earnt income

How many of retirees younger than 60 or 65 do not receive Super or Pension as yet.

How many are drawing down a part of their savings.

all of which can be very different totals.

 

Mate where there is a will there is a way. Disclaimer that this is not advice...as I am just some yahoo cowboy on the internet...I promise....that I am wearing jeans with my chaps.

Any way here is some way to keep most of your income...well at least for moi....

1. Over the next 7-8 years to 60 move as much into super up to the threshold (expect to be about 1.9m by 2027 assuming a 2% inflation rate...the indexation to happen in 100k increment currently it is $1.6m).

2. Reduce debt and number of properties to say 18 doors with rent of 400k expenses of 140k (rates, land tax, agents fees, etc). Interest expense 30k ..so total net income is 230k. Depreciation of about 100k.

3. Share/ETP portfolio of $1m with 70% full franked.

So on this basis .... here is the income and tax liabilities:

1. Assuming a total of $1.9m in pension mode draw down of 4.5% provide an income of about 85k TAX FREE

2. 230k income minus 100k depreciation...leaves 130k TAX FREE INCOME and 100k exposed to tax.

3. Assuuming 4% draw down on the ETF/share portfolio...you will 40k income...roughly 30k will be tax free and 10k will be taxable.

So in summary tax free income at 60 is....245k (85k from super in pension mode, 130k from deprecation tax free, and 30k due to franking credits).

About 110k will be exposed to tax. Tax rate on first 41k (planned from 2024) will be 5k plus remaining 59k will be about 20k.

So on a total income 345k....the tax will be 25k...so you will be left with about 320k!!! That represents an income equivalent post tax of 540k.

An income of 540k in 2027...assuming a 2.4% inflation rate will be equivalent of a 360k!

 

Is that for a single? i.e. if you're a retired couple you need to be earning $134K to be in the top 3%??

Makes my position look very average. Even the three fully paid off properties in Sydney worth about $4.5M that I own isn't enough. If I live in one and the other two generate $950pw each that's still only $99,000 pa gross. Remove $8K in Land tax and all the local council, PM and other costs I'm probably $80K across two people. Pauper...

Sure there's a little bit of Super too but I don't know how that works. Never really counted it. Only about $500K in there I think.

Just saw Sash's post. Wasn't planning on LOE...

 

Oi! @SatayKing aka Satay Kambing specialist and @Nodrog aka no doggies... care to answer how franking credits optimize taxation on your LIC/ETF funds?

El Turko....also there is a wonderful thing called deprecation for property....see my post above....

Thar is gold in dem hills...you just have to structure correctly early....caballero...adios muchachos...via con dios!.

 

No need for LOE Michael.....but in your case...you have the wonderful curse of too much CGT in 2 properties...

 

You're still a laugh @sash, when you can't answer a question out comes patois, broken dialect etc to try to deflect but I'm still waiting for the education you offered.

 

Hokay ...amigo...'ere I go....I ain't no tax expert mind youse....I learnt this off my dull mate @datto of Druie fame....

Assuming a portfolio of $1.2m in ETFs/LICs in Ozzie shares assuming 100% franking credits......assuming a 4.25% franking credits that would give $51k pretty much tax free now. Why...because franking credits assume tax is paid at company rate of tax 27.5%. Current marginal rate for 51k is 32%. So at most you would pay the difference so abut 2k. Comprendo hombre?

 

Suggest you reread my post and try again, putting it simply for you, what are the sources of income listed in the table you posted, does it include income from some or all of these sources,

- Government Age Pension
- Superannuation Pension
- Earnt income
- Savings
- Other sources
An easy question for you, at bottom of the table is Source-Australian Bureau of Statistics-Census

Would that indicate to you the data is from the ABS census or another source?

 

Mate there are so many ways to cut this...initially you will live off ETF/LICS...rental income. After 60...Super comes into it...I won't get the Gubbermint pension.

Would suggest you look at how to structure this...no one thing will suit everyone.....

I am reliant on what I call the 3 pillars for income:

1. Rental Income pre 60
2. ETF/share income/Cash/Fixed Interest - pre 60
3. Super - post 60

Beejesus.....

 

There are many pillars of income but the question is has the table you posted included all the pillars of income or not, you don't seem to know?

Is the data from the ABS- Census if not where is it from or do you just believe anything you read that suits your bias?

 

Hilarious.....so what is your point other than one up manship?

Clearly...you do not like what I posted....based on what I know this is reflective what incomes retirees on. I have not idea what component is tax free..but most people over 65...rely on the pension and super and maybe some fixed interest. On the pension and super assuming there is no tax. On fixed interest....the first 83k is deemed to earn a small amount....and would fall under the 18.5k threshold.

 

@sash, you can try and make it personal as you tend to do when your posts are challenged but I'm very comfortably self funded in retirement, I'll leave all the patois, broken dialects and snide comments to yourself.

It is obvious that you don't know how the figures were calculated or where the data came from or you would have produced the raw data source.

To paraphrase you

Clearly...you do not like what I posted....based on what I know this is reflective what incomes investors are on.

 

Nope that is quite true.

Superannuation in Australia has actually been around since before the turn of the 20th century. During the mid 1800s, a number of public service employees, as well as white collar businessmen, were provided retirement savings or pensions as part of their employee benefits.

I have been in Super ever since I started work in 1977 (over 42 years ago).

Compulsory Super or SGC started in 1992 (over 27 years ago).

Surely in the investment world, having an investment vehicle available for 27 years (or in my case, 42 years) means it is NOT new.

What I believe is true is that most people did not utilise the Super system to their best advantage prior to them reaching retirement (by then it is TOO late).

Yep, I am one of the 80% and my pension is self-funded .

 

Semantics.....the Super system only started for the masses in the 90s.

I did not realise that you are reliant on the gubbermint pension? Then you would be on of the 80% who rely on it partially or fully?

 

As I stated, that is 27 years ago.

How long do people need to build an investment that will provide them a (very) comfortable retirement?

 

How long is a piece of string...some people 10 years...some people never.....

 

I actually thought 27 was more than enough.

Hence SGC is not new.

 

Why, if you have the opportunity, not keep contributing to your super accumulation account with the taxable components of your income post-60 (provided you meet some work test possibly)? Continue to draw down tax free from the pension account.

 

Correct that is possible. Work test not required till 65 based on changes govt made. Limit is 25k.