Super & Early Retirement

Nah there is lots of competition in the Aussie super market, the issue is the lack of attention and care towards super

In america the 401k is considered more thoughtfully by people because the safety nets for the elderly there are significant lower than in Australia.

In America, someone who lived a comfortably middle class working life but didn't have much in retirement would find themselves living a horribly inferior life in retirement comparatively, in no small part due to the cost of elderly healthcare which pensioners here don't HAVE to generally pay for. Some scary stats:

On average people over 65 spend around usd11k per year on out of pocket medical expenses

34% of Americans over 65 live well under poverty line with income under 22k per year, consider that when trying to reconcile first point above

Nursing homes cost on average USD 90k per year

People over either 75 or 80 can't remember the exact figure now as reqd it a few weeks ago, spend on average 25k per year on healthcare

Basically, in America if you're old you better be able to pay a stupid amount for decent healthcare or accept the fact you'll have to fend for yourself and live many years less due to not having enough in the bank


That's why in general 401k is given more importance than super is in Australia, same with why many in parts of Asia are more financially focused because if they don't do it they're screwed and no one will help
We thankfully have a much better and more humane system as well as one that is so much more efficient than the American one, the supposed poster boys for capitalism. The govt there spends close to double on healthcare per person than the Aussie govt and delivers a much worse outcome

 

Tx. Well there goes the pension

 

So the only way to seek a higher return is to SMSF?

 

Come on. If you try hard you could sell, spend and receive the pension!

 

Wot?

He is talking about distribution (yield) rather than total return. Total return long run across US / Australia markets is very similar. US market has lower payout ratio than Australia and results in a lower yield across the market, with a larger proportion of return in the form of capital gain.

Very cheap domestic and Int’l ETFs and industry funds are available in Oz if one has any inclination to help themselves.

 

Sydney nursing homes aren't far off that or more expensive after paying the $500k-$1.5m bond when you don't get interest on the bond and still pay spiralling care & accommodation costs of $5k/month.

(are you starting to forget things @sanj?)

 

I have neither super nor any investment properties. I retired at age 41 in 2009 (when we migrated to Melbourne). My hubby retired in 2011. Bought our PPOR in 2012. No mortgage. We save a bit over 50% of our current income (from savings).

I have two dependents. One will finish Uni in 2019 and start working in 2020. The younger one will finish VCE in 2020. Plan to use a bulk of our savings to buy them their own PPORs. Plan to then supplement our income from 2020 by investing as follows:

1) This year we plan to build a high quality extension (double glazing, well insulated, renovated bathroom, quality kitchen). It will be a large 1 bed apt/studio by combining the downstairs bedroom with attached bathroom and a proposed extension (will have the kitchen and living room) over the garage attached to the study. Will post ideas and plans in a separate post in the appropriate section. There is nothing over the garage at the moment. We have a budget of around $300k for this investment. It will have its own entrance but also connected to our main home. I hope to rent this out @350 p/w from 2019.

2) In 2020, the oldest plans to start living independently/plan to buy a 3 bed townhouse nearby. We plan to shift into the studio. Younger kid who starts Uni will move into the master bedroom upstairs with ensuite and walk in robe. Will make a share-house and let out the remaining 4 upstairs bedrooms with access only to the large family room and kitchen downstairs but not the formal lounge, fully furnished and all bills included. Expect a gross income of around $1000 a week, which is really low and conservative for what's on offer Also, plan to hire a cleaner two times/4 hours a week (won't depend on the tenants to maintain the property).

Our income after gifting a bulk of our investments to our 2 children will be the same as it is now and we will still save.

For us, it was easy to retire early - live simply, have few needs and enjoy good health, all by the grace of God!

 

I never planned on getting the Aged Pension.

I didn’t want the Government telling me how well/comfortable I could live in retirement .

 

I've been thinking about this. Age pension asset test definitely favours home ownership. Does anyone know if there is any consideration for retiree's choosing to rent?

 

We live off cashflow from property plus share dividends. I have Super but don't need it yet.
I said we could live on less than $50K, quite a bit less I guess but I will never not travel (read my name). We spent $35K on oveseas travel for 2 X 3 months in 2017. Living in the motorhome is very cheap as we mainly freecamp. For 3 months in Tassie we spent $5k.
+ bills of course. We do not buy "stuff".

 

They get a slightly higher asset threshold and may get some rental assistance.

 

My hubby nagged me to retire so i did on the proviso that we travel. I'm not one to sit at home. He would be happy to live in the motorhome but I'm addicted to Europe so we mix both. While in the motorhome we save money then head overseas. We like cruising to so when I find a cheap cruise I book that, then build the trip around that.
Message me if you want a chat. I'm loving it.

 

Why is it up that the Government to spoon feed information to people? To even open a superannuation account you have to fill out a form and sign it. No one should sign anything they don’t understand.

There is plenty of information out there, all anyone needs. The main problem is disinterest and people who don’t bother to make even basic enquires about what may turn out to be one of their major assets.

If your superannuation won’t or can’t supply comprehensive information, find one that can. Most of the big firms offer free seminars on a wide range of topics.
Marg

 

Hi Kassie so inferring from the above,

• you guys own your PPOR outright
• have quite a bit of cash stashed for future renos etc
• live on only half/50% off recurring income that comes from 'savings'...presumably interest from savings in a banks??

 

Yes. Interest and dividend income.

 

Agree, our view is that clients are better off striving to be self-funded retirees even if this means not qualifying for age pension. Age pension is the safety net for those with not enough.

 

Does it include a ski trip? I would sign up in a heart beat

 

Yup, but for my part it ain't about Guvmnt telling me nuffin.

It's my attitude which I guess has an element of personal pride. Don't hold with the I've paid lots of tax all my life brigade and who then put their noses in the public trough despite not actually needing to do so.

Mean of me I guess but people will be people.

Sure I've used the legislatory framework to achieve where I presently am. It is possible I could have got to a somewhat comfortable position without using those avenues.

However to even consider depriving oneself of income producing assets, as some apparently do, to receive or complain they can't get access to a crappy level of income is just bloody stupid and greedy in my view.

Gees, I'm cranky. I'll use not enough sleep as an excuse. I've had plenty actually but I have to seem to have some bulldust excuse for venting.

Carry on. You're all doing very well.

 

Thank you Young Mr Grace: