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How much do I need to retire at 60?

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Dec
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Theoretically, how much money you need in retirement depends on how long you live. Although there is no such crystal ball for this, we know that improved healthcare and economy has resulted in people living longer than their parents’ generation.

When budgeting for retirement, try to go for the maximum life expectancy. Men can expect to live up to 86, women to age 90. This means if you retire at 60, you need to fund your living expenses for at least 26 to 30 years, if not more. Also, look at your lifestyle and medical history as well as your family’s life expectancy and medical history.

It’s never too early to start thinking about how to maximise your income in retirement. By acting earlier, you have a better chance at achieving and funding the lifestyle you want.

The Theory

A common rule of thumb is that if you want to retire at 60, you will need about 15 times the amount you have calculated for your annual after-tax retirement expenses. So if you estimate $60,000 per year then you will need $900,000.

If you can wait until 65, you may only need 13 times expenses, which will be $$780,000. Remember, if you plan to leave a legacy to your children or have a holiday home, then you need to add the cost to this estimate.

Another traditional way of working out how much you might need in retirement is to plump for 70 per cent of your net income in the last year before retirement (not too useful if you are 10-15 years away from that date).

This approximation, or guestimate, was a standard for many years. However, it may be too general, and you may be better served by having a more detailed understanding of your actual needs.

This is where a regular quarterly survey of current retirees comes in handy.

The Facts: Budgets for actual living expenses in retirement

The ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.

According to the latest data for September 2012, in general, a couple looking to achieve a comfortable retirement needs to spend $56,236 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $32,511 a year.

Modest lifestyle
– single

Modest lifestyle
– couple

Comfortable lifestyle
– single

Comfortable lifestyle
– couple

Housing – ongoing only $60.65 $58.22 $70.30 $81.49
Energy $40.48 $53.77 $41.08 $55.72
Food $74.90 $155.15 $107.00 $192.60
Clothing $18.05 $29.30 $39.06 $58.60
Household goods and services $26.44 $35.85 $74.38 $87.14
Health $37.28 $71.95 $73.97 $130.55
Transport $93.36 $96.01 $139.13 $141.77
Leisure $71.76 $106.91 $217.46 $298.00
Communications $9.33 $16.33 $25.64 $32.64
Total per week $432.26 $623.49 $788.02 $1,078.50
Total per year $22,539 $32,511 $41,090 $56,236

Source:  ASFA Retirement Standard

The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a draw down on capital over the period of retirement. Single calculations are based on female figures. All calculations are weekly, unless otherwise stated.

Spending too much in retirement?

Many people spend a lot more in the early years of retirement as they travel and enjoy the fruits of their labour. While this cash outflow may be scary initially, it tends to even itself out in later years.

I like to use the example of my dear Mother-In-Law, who is 92 and lives “on the smell of an oily rag”, enjoys her books and TV, her penchant for peaches and custard as her main luxury. The seniors’ healthcare card ensures that the cost of the drugs she uses don’t eat up her remaining savings. (Our refrigerator does look like a pharmacy.)

Whatever method you use to estimate the amount of money you need to achieve the lifestyle you want in retirement, it’s still important to remember that most of these work on the average life expectancy. If your family has a history of longevity or early death, then you need to make allowances accordingly.

The bottom line: It’s never too early to start planning, so if you want to see where you stand at present based on your current savings and contributions to super, then use the Retirement Calculator on the government’s free Money Smart site.

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What others are saying

  1. Author

    Swinging Voter

    December 20, 2012 at 11:19 am

    One of the realities you face growing old is that as a completely self-funded retiree you’re eligible for very few of the major benefits pensioners receive. There’s no real drama being denied a pension, but the high costs of pharmaceuticals and medical care without that Pensioners’ Healthcare Card (wrongly termed a Seniors’ Healthcare Card) drains retirees’ financial resources like a ten-centimetre siphon. The figure provided for health in the table above is laughable. To be relevant, this article needed two tables… one for pensioners and another for self-funded retirees. To be even more useful, it might add tables delineating differences between elderly folk in cities vs rural areas… where transport services/costs are immensely different… especially in regards to free public transport and ‘Fuel Cards’ (which also need renaming as ‘Pensioners’ Fuel Cards’, rather than Seniors’ Fuel Cards). Bottom line? Theorising about retirement costs is just that. Living the reality is a very useful adventure we’ll all face, sooner or later… . :)

    • Aishah Mustapha

      Author

      Aishah Mustapha Blog Content Editor

      December 20, 2012 at 1:14 pm

      Hi Swinging voter,

      Great feedback. I’m sure Liam has more tricks up his sleeves on this subject in later posts, since we prefer our blog posts to be short and sweet. Definitely worth doing a series of posts on retirement planning.

      Have a good day!
      Cheers,
      Aishah
      MYOB

      • Author

        Swinging Voter

        December 20, 2012 at 2:45 pm

        Thanks, Aishah. When it comes to retirement planning, the issues are much more complex than any short article could ever hope to address. Like many older Australians, we focussed on retirement planning for several decades. Our best results occurred after the new disclosure laws enabled us to see just how much of our money was disappearing due to fees and trailing commissions(!)

        Liam’s comments about the necessity to provide ‘a safety net’ and ‘costs borne by taxpayers’ are highly appropriate, but other resource-based economies somehow find it possible to provide far better medical and pharmaceutical benefits to their elderly, without discrimination. Canada is an excellent example.

        My comments may appear to be a little negative. They’re not intended to be. We’ve made our bed… and it is comfortable. It’s possible a _really_ wise FA might offer this advice:

        * Sell off most rentals * Book back-to-back cruises around the world for a decade or two * Keep just enough capital or rentals to…. * ….both get a pension and ALL those medical/pharmaceutical benefits… with NO limits whatsoever on taxpayers’ generosity… ! ;)

    • Author

      Liam Shorte Principal of Verante Financial Planning

      December 20, 2012 at 1:42 pm

      Swinging Voter, I can understand your frustration but I would have to argue that the Senior’s Healthcare card is availbale to any retiree earning less $50K or $80K for a couple. When you account for the fact that retirees can pay little or no tax then that is practiclaly $80K tax free or considerably more than $100K pre-tax for a workig couple. The healthcare subsidies are there as a safety net and the cost must be carried by the tax payers so some limits have to be applied to ensure it is manageable.

      I agree 100% with you comments about the additonal costs for rural people and the lack of available medical servcies in the bush is a major concern. I do hope that the NBN can offer some partial solution with online consultations reducing the need to travel huge distances for treatment. Some of the advances in this sector are truely amazing.

      • Author

        Swinging Voter

        December 20, 2012 at 2:30 pm

        “…the Senior’s Healthcare card is availbale to any retiree earning less $50K or $80K for a couple.”

        Interesting, Liam. So, in assessing our situation, the government will overlook the value of our rentals?

        Like you, we have high hopes for the NBN, but like many truly great initiatives, I doubt we will get it*.

        * I sincerely doubt that any non-SFR really gets it!~ :D

      • Author

        joan

        December 26, 2012 at 7:15 am

        Last time I checked with Centrelink I was told that the $50K taxable income limit also included imputation/franking credits. Only need a couple of fully franked dividends to bring that amount over the limit – money which you do not actually receive but reduce your tax bill. Has that changed

    • Author

      Ducksworthy

      December 26, 2012 at 7:01 am

      Swinging Voter makes some good points. The difference between city and rural living for one. Rural living is far more expensive than city living in the areas of food, healthcare, transportation and energy to name a few. Rates and housing are disproportionately higher in the Rural areas. It is good to see that the table in the article seems to have examined the multiplier used to calculate the ‘single’ costs versus the ‘couple’ cost a lot more closely than Centrelink . Centrelink holds to the premise that the relationship is “couples = one and half singles”. Consequently Pensioner couples can only afford to have three bunions not four can only buy three shoes not four and one and a half pair of trousers and share tea bags…etc. As for the leisure category it is non existent for most pensioners and for whom ‘home incarceration’ is their only leisure. It is worth remembering that not all pensioners are in that position because they lacked thrift or responsibility; many simply didn’t have access to superannuation until very late in their working lives. Those that worked offshore, suffered one of life’s many setbacks or who were cleaned out by corporate collapses are, I suspect, more numerous than generally thought. Ten years ago the average amount held on super at retirement (65) was $62,000. That didn’t go far. The National Seniors Association was supposed to address these issues on behalf of all; Pensioners and Self Funded Retirees. but regrettably, seems to have lost sight of its initial mandate. One thing is for sure; the longer we stand as two distinctly categorised groups the easier targets we are for the bean counters.

    • Author

      Phil Manderson

      December 26, 2012 at 11:20 pm

      Part of this issue starts with sloppy Language leading to confusion. As a Self Funded Retiree , study a “Low Income Health Care Card”. (This LIHCC is NOT to be confused with a Commonwealth Seniors Healthcare card- its similar but different)- LIHCC is available from CentreLink/ Human Services on retirement after 60 AND you need to have an Income of less than $84000 per Couple . NOTE also your definition of “income ” as a SFR is likely to be completely wrong. The only definition that matters is Centerlinks- (e.g. some of your SFR Super Pension will be recognised as your own savings being returned to you- NOT all as income. So only part of your “Super Pension Payment” is deemed as income.) Book a meeting with a Financial Information Officer based at Centerlink (FISO) – specifically about LIHCC vs CSHCC, you’ll be glad you did.

    • Author

      Cecilia Dias

      January 2, 2013 at 6:19 pm

      I could not agree with you more. In the U.K. and New Zealand, the old age pension is universal and anyone over the age of 65 years is entitled to a pension regardless. This is not the case in Australia and the least the government could do is to help self-funded retirees by providing a healthcare card (not just a senior’s healthcare card) with full entitlements for every self-funded retiree in recognition of the fact that they have worked hard and saved their money in order to be independent in retirement. Furthermore self-funded retirees are living on a fixed income, unlike wage-earners who receive regular pay increases, against a backdrop of inflation, low interest rates, share market volatility and increasing government taxes and charges. I note that the government did not give self-funded retirees one-cent in compensation for the carbon tax yet they can afford to pay school kids bonuses, household assistance packages, baby bonuses, maternity and paternity leave, childcare rebates and provide generous tax concessions to working families earning an income of up to $250,000 per annum. It would appear that one demographic receives government handouts at the expense of everyone else in exchange for their precious vote. Never mind, our numbers our growing and so is our resentment about the shabby treatment that we are receiving. It is hardly surprising that many people are re-arranging their financial affairs in such a manner as to qualify for a part-pension by gifting large sums of money to their children and blowing-up the rest. If the government wants to avoid a massive pension bill they should start treating us fairly.

      • Author

        Teri

        January 10, 2013 at 8:53 pm

        Cecilia I fully agree with every word you said about self funded retirees. Not a cent we have seen to off set the carbon tax.

      • Author

        Gaz

        January 14, 2013 at 7:04 pm

        Dear Cecilia

        Totally agree. As a self funded retiree trying to live on $100,000 a year I think the government should give me as much as anyonse else ever gets for anything

      • Author

        RoxyR

        January 25, 2013 at 10:45 pm

        Mind you tax free income is not to be sneezed at!

      • Author

        Lee

        January 30, 2013 at 6:48 am

        Cecilia I agree, I am a long way off retirement but i think it stinks that people who have done the right thing and put away money for their retirement don’t get the discounts that pensioners get. Most self funded retirees have worked and paid taxes their entire life so why shouldn’t they get the same concessions. It would make the super last longer, reduce the amount of people running out of super and needing the pension later and stop people juggling assets and income so they can get the pension and all the benefits. My dad saves heaps just by having a pension of only a couple of dollars because of the concessions. Many of the Baby boomers shouldn’t have to rely only on the pension. My mum had to start her super from scratch when she left my dad at 45 and managed to get a comfortable self funded pension by working hard and investing as much as possible. I know a lot of baby boomers who are now worried about existing on the pension when they have been taking yearly overseas holidays, gambling and eating out/drinking a couple of times a week for years. Did they think the money was suddenly going to appear or the pension was going to increase dramatically, I knew even 20 years ago the amount you got on a full pension sucked. I also don’t know why you have to get paid a minimum percentage of your super, shouldn’t that be up to the individual????

      • Author

        Tracey

        February 19, 2013 at 2:13 pm

        Cecelia,
        “unlike wages earners who receive regular pay increases” – REALLY?????
        I haven’t had a pay rise in 3 years but my rent (I guess Cecilia you own your own home?) has gone up significantly and will continue to rise (now that is a certainty!). Stop whingeing and be thankful for what you have. When you have less, you will be able to go on the pension and struggle like the majority of retirees.

      • Author

        Anthony Sanderson

        November 2, 2013 at 7:15 am

        Cecillia,
        Totally agree with your comments, my circle of friends is also recognizing that the Commonwealth Govt. seems committed to penalizing the ‘planners’ and ‘thrifty’ among us, so therefore we have changed our ‘plans’ We will tweak, and indeed have, already altered our plans, so as not be SFR’s. As you say, it will go to our children, or simply live the ‘high life’ , ‘blow it up’ as you say, until we are at a level where we qualify for the pension entitlements.

      • Author

        Anthony Sanderson

        November 2, 2013 at 7:15 am

        Cecillia,
        Totally agree with your comments, my circle of friends is also recognizing that the Commonwealth Govt. seems committed to penalizing the ‘planners’ and ‘thrifty’ among us, so therefore we have changed our ‘plans’ We will tweak, and indeed have, already altered our plans, so as not be SFR’s. As you say, it will go to our children, or simply live the ‘high life’ , ‘blow it up’ as you say, until we are at a level where we qualify for the pension entitlements.

    • Author

      David

      January 18, 2013 at 10:58 pm

      Also, the authors’ arithmetic is, sadly, wrong. In the first and second paragraphs under the sub-heading “The Theory” there is mention of both 15 and 13 times $60,000. The writer correctly states that 15 times 60,000 is 900,000, but then states that 13 x 60,000 is 680,000. It is in fact 780,000 – an error of 100,000!!!

    • Author

      Psychologist

      January 20, 2013 at 6:58 am

      Swinging voter you are just boasting about how much money you have got.

      • Author

        daniel

        January 28, 2013 at 9:38 am

        Psychologist , you are only half right. He is also complaining how hard done by he is. He worries he might have to sell “some of his rentals .” Imagine ! The horror ! I know several young couples my children’s age (20 somethings) whose rent is so high there is no forseeable chance of them ever saving enough for a deposit. Maybe it’s people like them paying off Swinging Voter’s rentals for him. I am almost 64 , still working a physically demanding manual job and expect to survive on the pension when i qualify for it. I lost property in my divorce (the ex did not contribute to the purchase , just lived in it ) and helped my children with deposits for their houses , which i was happy to do . I will be living frugally and not complaining about it. . What i will complain about is wealthy people’s self-pitying whingeing – it raises my blood pressure. Shut up , you self-entitled snobs and think of others much much worse off than you are .

      • Author

        Swingin Voter

        June 22, 2013 at 3:55 pm

        No, Psych, I feel some empathy for the unprepared, little for the ‘voluntary homeless’. There will be more and more of these voluntary tenants as time passes. These are the hopefuls who believe(d) that by putting off home ownership, they’d pick up half-price homes, as some misguided economists and academics advised them would be the case.

        Daniel, we have no fears about selling “some of our rentals”. Reread the tongue-in-cheek comment I wrote regarding ‘the wise FA’. My point is that had we sought to beat the (welfare) system, we’d have blown large sums to benefit from both assets AND old-age pensions. We didn’t. We won’t. We’ll never have to touch principal. But, as other independent retirees here have noted, the system does help the careless and unprepared, as well as supporting the genuinely needy… .

    • Author

      Tc

      February 8, 2013 at 9:05 am

      As a SFR I totally agree with you. My (and wife) medical insurance is some $50.00 per week, plus $500.00 hospital excess each time we go in, plus the gap is getting larger.

      • Author

        Indianna

        February 19, 2013 at 4:03 pm

        Daniel – you are SO right! There are thousands of us who will choose or have to live on a meagre $30-40,000 a year….. Happily! And gratefully! Imagine struggling on $100,000 in retirement!? And having to sell their rental incomes!! I’ve never earned that much in 40 years of full time nursing. Again it shows the richest people are the biggest whingers AND never happy! “Simplify your life” is my motto.

    • Author

      Steve

      February 15, 2013 at 4:57 pm

      Hello Swinging Voter

      That was a great post, very well written, very well thought out and spot on as far as the content went. I’m 60, not retired yet but hope to be so in a few years from now. Unfortunately, my superannuation balance took a huge hit during the financial downturn several years ago, it went into negative for two or three consecutive years. Next came the GFC. The bottom line is I do not have sufficient savings to retire and that scares the hell out of me. The next scariest thing is when I hear rumblings that the Australian Government is again thinking about changes to superannuation taxation arrangements.

      • Author

        Steve Paine

        March 18, 2013 at 2:48 pm

        I have been retired now for three years from 55, the best part of life. The Global Financial Crisis hit but was bullshit, affected excessive arseholes only. I was little affected, couldn’t care less.

        Steve

      • Author

        Swingin Voter

        June 22, 2013 at 4:09 pm

        G’day Steve. I’m 66 and give some credit to plain-old-fashioned luck, as well as nearly four decades of planning for retirement. Months before the GFC hit, we moved all our Super from 100% ASX to cash. That not only protected our Super, but once the market bottomed, we then moved it all back to ASX. Sadly, many of our friends and colleagues took up to a 50% hit on their Super when the GFC hit… . Comments I’ve made regarding the lack of any support for SFRs will mostly anger those who believe that it’s ALL about luck… or greed… or that life has conspired against them. We’ve gone without for decades to achieve our dream of an independent retirement. All of our tenants drive late-model, very expensive cars! Despite that, all who have really respected our rental homes have enjoyed no rental increase at all during their long tenancies… .

    • Author

      Theo Pengly

      March 18, 2013 at 4:00 pm

      wake up aussies; socialist govts will always make sure you are dependant on welfare and meagre pensions. Control is the name of the game.

    • Author

      Marie N

      August 29, 2013 at 5:27 pm

      Swinging Voter… don’t let the haters get you down. I am 31 this year – a fair way off from retiring but I am planning to be a SFR. In order to do so I am taking responsibility for saving and investing my money wisely rather than blowing it all on clothes, expensive dinners and fast cars. Sure a lot of people say there are a lot of factors are out of their control and things happen like the GFC, divorce or other unforeseeable events but everyone should learn from history. “Don’t put all your eggs in one basket”, prenuptial agreements, and insurance sorts out a lot of those issues.

      My income is not incredibly high but its enough to pay my bills and some to put away for a rainy day. Being a SFR isn’t just for well to do people. I just don’t want to put any burden on our kids to pay for my retirement.

  2. Author

    Liam Shorte Principal of Verante Financial Planning

    December 20, 2012 at 3:28 pm

    Swinging Voter, alas I should have said Adjusted Taxable Income of $50K for a single or $80K for a couple.

    This income test is based on the applicant’s Adjusted Taxable income (ATI) for the reference tax year, usually evidenced by their Notice of Assement. But rom 1 July 2009 the income test was further adjusted and now includes the applicant’s:
    taxable income,
    total net investment loss for the applicable tax year,
    target foreign income (section 10A(2)-’target foreign income’) for the applicable tax year,
    employer provided fringe benefits for the applicable tax year, and
    reportable superannuation contributions, including income that is salary sacrificed to superannuation.

    Your “rentals” would need to be included and offset to some extent by your property expenses.

    As to your reference to the Canadian model, I do admire them greatly as they have managed to develop a system with services provided primarily by the private sector, paid by the tax payer with minimal government interference except in oversight.

    Unfortunately even Canada is not a Utopia and I recently read a review of Chronic Condition: Why Canada’s Health Care System Needs to Be Dragged into the 21st Century by Jeffrey Simpson. From this it is clear that they aren’t getting it all right either!

    Best wishes and have a lovely Christmas.

    Liam

    • Author

      ArghONaught

      April 26, 2013 at 2:25 pm

      This is not a whinge, it is a statement of Australia retirement issues. The point made by others is that people who have been successful in Australia uniquely get nothing for their life long efforts except the privilege to continue to pay taxes. In countries cited plus the USA, you contribute throughout your working life and get something back for your effort that is not means tested – although beyond a certain level of retirement income you are taxed and that is fair. To get my $60K net for a “comfortable” retirement will require me to “earn” about $90K from pensions and investments, etc, and that will be well over the thresholds for any support card. Reality is the government policies wind down SFR assets that wind down SFR income and put us into the pension range sooner than later. Fairer policies for those taking care of themselves should prolong rather than shorten that time when they can be SFR.

      Migrants with foreign pensions and income get hit harder than life long Aussies as the two (or more) countries we worked in often take tax on the pensions and income, and it is more than either would take individually. There are no offsets for us, only taxes.

  3. Author

    Swinging Voter

    December 20, 2012 at 3:54 pm

    Liam: “Your “rentals” would need to be included and offset to some extent by your property expenses…”

    Correct. But I’ll still maintain that the _value of those rental homes_ prohibits us from receiving any of those benefits, Liam. So it really isn’t just the income we derive from those assets which denies us access to medical, pharmaceutical, travel, etc, etc, benefits…

    As I’ve stated, above, it’s far more complex than the limited space permitted by this medium.

    Best wishes for 2013.

    SV

  4. Author

    Liam Shorte Principal of Verante Financial Planning

    December 20, 2012 at 4:02 pm

    SV, I am sorry to labour the point but to obtain the Commonwealth Seniors Healthcare Card you must satisfy an income test but you do not have to satisfy an assets test to be eligible. The value of the rental properties is therefore irrelevant. I would just suggest you go an see a Centrelink Financial Information Officer (FIS) to just double check your circumstances as I would hate to think you are entitled and not benefiting from this handy benefit.

    Liam

    • Author

      Swinging Voter

      December 20, 2012 at 6:16 pm

      Thanks for your comments, Liam. I’ve made extensive enquiries to ascertain my eligibility. Our accountant, an outstanding source of tax and investment information, has explained that the ‘losses’ I carry forward each year are not recognised… that income from our eight rentals is deemed assessable, regardless of the costs incurred.

      I’ll recheck. Much of what I ‘do’ these days is rechecking. Yesterday I was advised by a well-meaning volunteer from The Seniors’ Centre, that I was eligible for the $500 Royalties-for-Regions ‘Seniors’ ‘ Fuel Discount. Later the advisor from that department virtually laughed out loud when I phoned the R4R centre, to recheck our status.

      I’m not suggesting you’re incorrect, but so much information we get these days IS wrong. Enquiring about our eligibility often results in incredulous laughter… and very, very rarely, in apology.

      If you’re correct, you can count on both an apology… and our sincere thanks!!~

      SV

      • Author

        steve

        January 24, 2013 at 8:39 pm

        8 rentals?? at a min of 250 pw rent that is 2k per week income @ 100k per year…. not a bad income….

      • Author

        Rahul

        January 25, 2013 at 10:19 pm

        Hi Swinging Voter,
        Refer to a reference from the horse’s mouth.
        Google net rental property loss 3.9.3.38
        As Liam said, CSHC is based on Adjusted Taxable Income. So the income position of each property is looked. If the property produces positive income, then the net income as per the tax return is your “assessable income” from that property.
        If however, the property produces a loss, then through loss will be grossed up on your final taxable income figure.
        For example
        Property A
        Gross income $35, 000
        Expenses $$10, 000

        Property B
        Gross income $20, 000
        Expenses $30, 000

        ATI
        Taxable income + net investment loss
        15, 000 + 10, 000

        You could do a similar exercise for all your eight properties. I dare say if properties are positively geared, you would have significant income which may not help with tax or CSHC.

        This is the benefit of financial planning. With a bit of forward planning, it is possible that most of your investments could have been in a zero tax environment of super assisting you with minimising tax but also easily obtaining CSHC.

      • Author

        Ralph

        January 28, 2013 at 10:02 am

        With that kind f asset base you don’t need to slurp at the taxpayer trough, stop your whining.

      • Author

        Gavin

        January 29, 2013 at 10:29 pm

        If your accountant was that good he’d have advised you to move your assets into a trust so they no longer count as income/assets against you personally – then you’d be able to claim the aged pension as well as get your health care card. But seriously, the people who do have a health care card aren’t living the good life that you are. Even after paying $35 for a prescription compared against their $2, you’re still getting a far better deal.

  5. Author

    Swinging Voter

    December 20, 2012 at 8:54 pm

    “Total net investment losses are the sum of net losses from rental-property income plus net losses from financial investment income. The losses will be ADDED BACK ON to adjusted taxable income.”(My caps.)

    It’s worth re-reading that last sentence, Liam. As I said earlier, the situation is very, very complex.
    No financial advisor or accountant ever told us this until _after_ we retired.

    Now a non-SFR might state: “Well SV, you’ve benefitted for a couple of decades from negative gearing.”
    True, but we’ve also paid millions in tax over the last four-and-a-half decades. We won’t see any of that back in the form of old age pensions… OR… health care card benefits… OR a handful of other perks enjoyed by pensioners. Try to make some sense of that direct quote, above. It’s a humdinger! :D

    Source: http://www.humanservices.gov.au/customer/enablers/centrelink/commonwealth-seniors-health-card/adjustable-taxable-income

    • Author

      Ian

      January 3, 2013 at 1:57 am

      Very interesting SW. Looks like you know your situation well and I understand your frustration. Perhaps Liam learnt something new or had forgotten when responding to you. It all sounded so simple the way he put it and as you say nothing much is as it first seems when it comes to SFR entitlements.

    • Author

      Non-Baby Boomer

      January 5, 2013 at 9:34 pm

      Wow, swing voter. You have eight rental properties and are whingeing about not getting health care card benefits. You my friend are what is wrong with your generation. You have taken advantage of ridiculous negative gearing that in nearly every other advanced democracy is not allowed, ridden the property boom and becoming inordinately wealthy compared to your contribution to society AND YOU STILL want more. So you want your healthcare subsidised by the next generations who will hope to pay off ONE mortgage throughout their lifetime due to sky high property prices pumped up by avaricious middle classers such as yourself. Well done buddy, i hope you sleep well at night.

      • Author

        Natasha Schroder

        January 10, 2013 at 6:51 pm

        I would say that your above comments are prejudicial. Just because swingingvoter has money smarts and utilised his finances wisely doesn’t mean he shouldn’t be entitled to the same benefits that others acquire and use every day.
        An appropriate analogy of this for me would be :

        Parent watches child one work, and save and grow….eventually buying their own house. Child two didn’t follow the same path and ended up less fortunate so the parent buys them a house. How is this fair to child one? It doesn’t matter what you did right to get where you are, we’ll reward others to bring them up to your level?
        Everyone has choices. For some they were taught by their peers to be concientious and save, whilst others spent their youth doing more fun filled things and not protecting themselves for the future. They should be rewarded for that with free subsidies by the government that the hard worker paid his taxes to?

        Yes I am miffed! It’s like finding an excuse for people to be on unemployment and breed for more money. Little do they realise that what they get barely supports a growing family and can lead to family break downs and an even more corrupt society than we already live in. The never ending cycle of cotton wool protection.

      • Author

        pointing it out

        January 14, 2013 at 5:34 pm

        Where did SV say that the eight rentals are paid off !!!

      • Author

        Retired 10 years

        January 16, 2013 at 10:18 pm

        I thought I was missing something here tilI read Non-Baby Boomers comment. Anyone who has so many assets or income that they are not entitled to a part pension thereby being able to get a Healthcare Card is obviously living in a dream world. We own our own home and have about $600,000.00 in super.
        Swing Voter never live in the world where you believe you are born to rule and everyone else is out of step.
        I doubt very much that you are a swing voter.
        You obviously have more money and assets than you could possible spend in the years remaining to you.
        You obviously feel some perverse pleasure that you will be the richest corpse in the cemetery and, then turn in your grave when people you leave your estate to blow it on things you don’t even know exist.
        What a poor pathetic self serving existence you must dwell in. Bottom line is that the OAP was created for those through no fault of their own have nothing to exist on in their latter years. Not people like myself and definitely not for people like you. It is not a personal super plan you have been contributing to. I’ll bet you have used every loophole to pay the minimum tax you possibly could over the years. Personally I don’t even believe that we (my wife and I ) should receive any benefits until we exhaust our assets however that is not the case. Don’t die from nervous exhaustion worrying about your rental properties etc – no one will really care.

      • Author

        daniel

        January 28, 2013 at 10:03 am

        You are SO right , Non-Baby Boomer ! I AM a baby boomer , b.1949 , and am ashamed , embarrassed and annoyed at the greed and selfishness displayed by so many of my cohort. We are the luckiest generation that ever lived , benefitting from better diets , medical advances , booming economies , better wages , increased leisure time ,and possibly more. More fortunate than any generation before or since . What do these wealthy EARLY -retirees want , apart from everything ? I would sympathise with people like SV if i thought he was going to leave his considerable wealth to charities for the disadvantaged , but i doubt that will be the case. Glad to see others seem to think along the same lines , e,g. Retired 10 years. The pension and welfare benefits are for people who NEED it , not those who WANT it .

      • Author

        Try to be fair

        January 29, 2013 at 12:30 am

        Non-Baby Boomer! Swing Voter obviously has worked hard to get where he is, paid taxes all his life, so he should get the same pension and benefits if not more than all those people who either never worked or hardly worked and not saved their money. When I was young I worked 4 jobs to be able to save and get where I am today, which is comfortable. I wasn’t a shamed to work as a factoryhand, as a cleaner or anything else I could find. I have paid the taxes that paid for all those single mum’s who won’t work just wait for handouts and don’t start me on the unemployed! Also I was a single mum of three children and my alcoholic abusive ex-husband never contributed towards childsupport, but I worked hard and I supported them myself. Unfortunately, if you saved all your life and got somewhere then there is going to be someone who is to jealous, because they blow their money and on top of it, the government penalise you, by not giving you the same assistance as to all those people who hasn’t contributed as much. We had it just as hard as the young people of today’s, but we worked and saved! If we wanted to buy something, we saved up for it! Swing Voter you are absolutely right, pension should be for everybody who paid taxes all their lives, just like it is in most other countries. You and I, and a lot of people in our generations worked hard, saved, so now we can be criticised by “Non-baby boomer”s because we looked after ourselves and have a bit of a nest egg. Non-Baby Boomer, jealousy is a curse, start saving and stop criticising us for doing it!

      • Author

        Non Baby Boomer

        January 29, 2013 at 12:51 pm

        Natasha, I think your analogy is ridiculous. So what you are saying is… If you are not independently wealthy, to the extent that you do not qualify for a health care card then you must be a bludger who has not contributed their fair share? You are also implying that anyone who is less fortunate has somehow not “followed the path” to being wealthy, it must be wonderful to live in a world that the outcomes in ones life are dependent on the adherence to formulaic approaches to wealth accumulation in a constantly growing economy.

        And to clarify things for you because it appears that you are a little confused.. There was no mention of people on unemployment or people who “breed for more money” as you term it, because those people are sub-human right?, well at least thats how the contempt in your post seems to portray you feel about them.

        The critique was about how an individual, which in my experience is rather representative of their generation , has become inordinately wealthy and still wants government health care benefits! How do equate this with comparing a hard working saver with a frivolous sprendthrift?? A more apt analogy would be:

        Two people pay into an insurance policy their whole lives, At 60 one is injured in a severe accident and gets a weekly support cheque to pay their medical expenses whilst the other still healthy individual receives no support because they are not injured. HOWEVER, the non injured person turns around and says i want to be paid like the injured party because I paid the same premiums as they. You are missing the point that in Australia there is a social contract that we are all a party to which has the basic principles of human equality and regard underpinning it. The elephant in the room is that negative gearing has given swing voter the opportunity to SHIRK their tax burden for decades and now they want a health care card to go with their huge assets. It is utter greed pure and simple.

        To address the other comments about me being jealous and i should just work hard to get the same, To tell you a little bit about myself I am degree qualified ($30,000 no free uni like 25 years ago!) post graduate qualified ($25,000 again no free uni) I have worked full time more or less, at times up to 50 hrs a week throughout my study, I am employed full time and run a business on he side and earn in excess of $100,000 per year.. so when I hear you tell me to work hard it makes me laugh, Im comfortable and am optimistic about my future situation but not a greedy person with no regard for other humans as some of you seem to be,

      • Author

        frank

        February 15, 2013 at 10:05 am

        many of the comments seem to assume that SV is a multi-millionaire with 8 rental properties.

        yet he may be asset rich, cash poor.

        The cover of a current property investment magazine shows a young investor with maybe 25 properties, assets valued at multi-millions but a net worth of maybe $1M (I forget, but something of that order) – point being – highly-geared investments may give major tax deductions (as he mentioned losses) – but risk disaster in a downturn.

        I know of at least one guy who used round-robin refinancing to build a multi-property portfolio, only to be wiped out in the next downturn.

        I also remember a share boom in the 1990′s – a colleague borrowed heavily to invest, saw initial huge gains, starting walking around in a new suit and tie like the hero superstar he felt – a couple of months later shares fell and margin calls wiped him out into disastrous debt – next time I saw him he was unshaven, haggard, stooped with worry and looked like a derelict – so much for the fast road to wealth !

        My point – when I see 8 rentals I wonder – how heavily are they geared. That may be why he’s carrying on about tax losses.

      • Author

        Indianna

        February 19, 2013 at 4:08 pm

        Beautifully put! Thank you!

    • Author

      JohnSmith

      January 8, 2013 at 8:16 pm

      This is the same for almost all means tested benefits that I can think of from Centrelink. It’s not the value of the assets, but the income ONLY, any expenses are irrelevant. For example, if you earn $30k a year in rent, but pay $25k in interest etc. Your ‘assessable income’ is increased by $30k, not $5k. We have the same problem for things like the Baby Bonus, or Family Benefit payments.

      • Author

        Indianna

        February 19, 2013 at 4:11 pm

        I was referring to Non Baby Boomer!

    • Author

      Rahul

      January 25, 2013 at 10:52 pm

      Okay you might not get anything from through Federal Government but at least though State Government will entertain you by offering the state based “Seniors Card”

      Look up the benefits of holding the State based Seniors Card. Yes, not much. But something to give you some from concessions.

  6. Author

    Barry Lizmore

    December 21, 2012 at 1:41 pm

    The problem with these “rule of thumbs” for the lump sum you need in retirement is that they do not take into account your age pension entitlements. For people who require a modest retirement income their age pension entitlement significantly reduces this lump sum amount amd makes a calcuation based on a multiple of income meaningless.

    Barry Lizmore
    Lecturer in Financial Planning
    Deakin University

    • Author

      Terry

      January 3, 2013 at 10:51 pm

      Great attempt at getting people to delve deeper. Agree rules of thumb have only limited value. Suggest a look at a website like Suncorp or MLC which has a calculator that adds in part aged Pension and therefore gets closer to the real position.

  7. Author

    April

    December 23, 2012 at 7:30 pm

    Gee SV. I have to say you sound quite greedy; and bitter. You want rental properties, round the world cruises, your “tax back”; AND free medical. Not to mention the NBN and all the other things I am guessing you “want”. I suggest you might like to give thanks for being amongst the most comfortable people on the planet; and to forgive yourself for whatever is troubling your soul. The sun the stars the wind the rain and the moon are free. Chillax and have a safe season.

    • Author

      AdamAnt

      December 28, 2012 at 12:43 am

      I agree with you April. Poor Swinging Voter with his 8 rental properties that could no doubt be converted into several million dollars. And he has the cheek to complain he doesn’t get the benefits that “pensioners” do ! He needs to take a long hard look at his situation and realize just how lucky he isto be in his position compared to some who are actually doing it tough.

    • Author

      player1

      January 1, 2013 at 7:33 pm

      Gee April. I have to say that you seem to have missed the bit where SV states that he has paid millions of dollars in tax over the past few decades.

      Unlike many pensioners who will have lived their whole lives receiving handouts from the government, or at least paid very little in tax, he will have funded the free medical care, education, housing etc of many, many other people. But he will have received no recognition for this, and likely almost no benefits at all himself. Instead he has received your ungrateful assessment of him as not a huge asset to the community but instead “greedy and bitter”.

      You state that he wants rental properties. He doesn’t want rental properties: he already owns rental properties as a result of working hard and saving his after tax money, instead of blowing it like many other people do. As for for wanting world cruises, fair enough! He earned and saved his after tax money. Why shouldn’t he spend it as he sees fit? That’s not greed! That’s a fully paid for lifestyle choice and none of your business whatsoever. (Or is envy a problem for you? If so, maybe you could try working a bit harder or smarter and paying a bit more tax yourself.)

      I would suggest that YOU might give thanks for being amongst the most comfortable people on the planet as a result of the huge amount of tax paid by hard-working high achievers like SV. He, on the other hand, will have little to thank you or anybody else for. He is self funded, probably has been for close to his entire life, and will probably continue to be so until the day he dies.

      • Author

        Andy

        January 7, 2013 at 7:13 pm

        Player1,

        Very well said.

        I couldn’t agree more

      • Author

        BuilderBob

        January 13, 2013 at 5:56 pm

        Gee player1…SV was turning his pretax income into personal savings.
        Id say he paid less than his far share of tax and probably not much Capital gains either.
        Anyway thats what I do, but I’d say he would have probably saved at least several 1000% of his medical expenses during retirement against the income tax reductions his negative gearing netted him.

      • Author

        Bill Evans

        January 28, 2013 at 7:36 am

        No player1, you have missed the point. Anyone who is a multi millionaire such as SV should never be entitled to get even more money that really should be going to the disadvantaged. Regardless of how much tax SV has paid he has more than enough to take care of himself so why should he get anything from the public purse? Unbelievable, you really think multi millionaires should get free healthcare cards? That is just so wrong, selfish and greedy.

      • Author

        Lee

        January 30, 2013 at 6:53 am

        At least he didn’t p*ss it up against a wall like many baby boomers I know

      • Author

        Colene

        February 5, 2013 at 11:46 pm

        Glad to see someone being fair and understand SV’s point. Why does the government body continue to increase tax rates and blow what they collect without much thought (by way of handouts, massive lump sums etc)? If only a few more people studied economics within the government body…

    • Author

      Denise

      January 2, 2013 at 2:04 am

      Here here. I totally agree SV is greedy. You don’t pay taxes in your working life just to get it all back when you retire. Taxes are there to keep the country you are living in a wonderful, fruitful and safe place to be and if you need help you will get it. If I have 8 rentals when I retire I would be ashamed of myself coming on a site like this and complaining. Just be happy SV of your lucky situation and stop trying to be an example of what is wrong with the western world and its me,me,me generation of people.

      • Author

        GrahamB

        February 5, 2013 at 2:35 am

        Don’t you just love it when losers say your lucky for being successful in accumulating some wealth in your working life.. They never once give credit where credit is due to your hard work and intelligent investing over the years,these losers will never be successful as they are angry and jealous.of your success. .

      • Author

        Swingin Voter

        June 22, 2013 at 4:22 pm

        Yes, I’m happy, Denise. Your comment “If I have 8 rentals when I retire…” infers that this may suddenly happen. Unless you win Lotto, it’s quite unlikely, in fact. You’d need to make independence-in-retirement a primary goal. Unfortunately more and more Aussies believe paying off one home by retirement is unimportant. Many believe(d) that the housing market will crash… and they’d snap up a half-price-home. Again, it’s a Lotto paradigm.

    • Author

      Roden

      January 2, 2013 at 7:42 am

      April, you are kidding right? Like a lot of Self Funded Retirees, Swinging Voter no longer costs the government a cent after busting his gut to look after himself. The Self Funded Retirees ask for very little, and get nothing. Some ask for nothing more than the Health Card, but will never see it. Swinging Voters ideal situation is to sell everything, have a massive world trip, come back and live on the pension. To suggest that SV is greedy adn bitter is just stupid. Take another case, a self funded retiree relies on interest from the bank. While the banks keep on dropping their interest rates, the self funded retiree receives less income, yet still nothing from the Government. SW may be able to survive by collecting rain water, but I’m not sure what the hell the sun, the stars and the moon are going to do for the rest of the self funded retirees that once again – cost the government nothing. I can only guess when you retire, you will be happy with the pittence you get on the pension.

    • Author

      devank

      January 2, 2013 at 11:29 pm

      I don’t think SV wanted all the things you listed. I’m sure SV worked hard to get where he/she is. If a hard worker and a lazy fellow end up in similar position at the end then why would anyone work hard?

    • Author

      Ian

      January 3, 2013 at 2:17 am

      My in laws did pretty much the , “spend it while you can”, as 40-50 yr olds. OS trips etc. Now full pensioners they manage fairly comfortably but still whine about friends who had super through work or through smart investing. What gets them annoyed is the idea those friends are getting the same seniors card benefits as pensioners like them. SW’s insight tells me at least one of their friends who has always said they get no gov benefits and has a couple of investment properties is probably in the same boat as SW.

  8. Author

    Daryl Taylor

    December 23, 2012 at 10:51 pm

    Hello people, I linked in here via an article on from the Sydney Morning Herald. As a 50 year old thinking ahead, my partner and we expect to retire at 60 with 1 million (1/2 million cash and 1/2 million in shares – hopefully a thousand a week income), no investment property for us (so no tax issues either). Knowing the Government tinkers all the time, we will make the best we can at the time leading up to and post retirement. Unlike swinging voter, we do not expect Government help or hand outs, I would rather my taxes went to those in need, and with ongoing health expenses even now, as out own income level falls, the safety net will kick in. Older Australians can and do have a strong voice that both major parties are wary of. I wanted to thank you for your interesting articles and what appears to be active feedback from within your office!

    • Author

      Chris

      December 26, 2012 at 11:32 pm

      Daryl – I wonder at your views in terms of the long haul – If you retire at 60 you will have say 30 years “out there” and by any caculation your 1000/week will be down to say 100/week in real income present day purchasing power by that time – If you believe the Government will be around to supporting you and make up the balance you are surely mistaken – With the view of businesses in Australia at present especially the resource companies they will long gone to safer tax and cost advantagous locations and the anticipated tax income projected by Swan will be piie in the sky just as is evident right now. China will have developed their own resources and Australia will be little more than a lot of holes in the ground !! – Good luck and – enjoy your retirement

      • Author

        Frank

        July 9, 2013 at 6:01 pm

        ‘by any caculation’ (undefined – so a pretty random unsupported statement showing the depth of thought and evidence behind it) – not by my calculations does 1000pw become 100pw – or a tenth over 30 years – unless you assume 8% inflation – Au gov target range is tracking 3% – so sorry I’m won’t assume that.

        I also saw an article yesterday about how people like to whinge about rising cost of living – but that average wages have grown several %pa above cost of living increases – so people’s living standard has risen substantially over recent decades

        but hey – I know people like to whinge – I was discussing the other day about how I used to chop wood in the morning to light the wood stove so we could cook breakfast – kids today wouldn’t even know what I was talking about …

        thanks to the internet we have a world of self-confident people ready to complain about whatever crosses their minds – feeling impunity in the comfort of their armchair – if the average online whinge was brought up in a normal peer-group face-to-face conversation it would typically very quickly get short shrift – shuddappa yoface !

        so enjoy ranting – no-body cares – whatever works for you …

      • Author

        Frank

        July 9, 2013 at 7:21 pm

        here you go – found the article – see the graph – in the last 10 years mean (50% of the people get more, 50% get less) household income has gone up 54%, mean actual cost of living has gone up 42% – so mean folk are 12% better off than 10 years ago.

        some quotes –
        “Australian households are really doing exceptionally well”

        “What we found over the past decade, is that Australian households are ahead of their cost of living on an average by about $225 per week, so this is a substantially strong result for Australian households.

        “And we find this result holds for both high-income households and also low-income households, so they’ve all had very strong increases in their incomes relative to their cost of living or prices.”

        http://www.abc.net.au/news/2013-07-08/cost-of-living-weighs-on-minds-of-australians/4804728

    • Author

      John

      December 29, 2012 at 6:46 pm

      I agree with your sentiments and applaud you but it would be foolish not to arrange your affairs so that you qualify for the health care card. My interpretation of the intention of the rules is to provide concessions for all but the very rich in recognition that health costs in later life can be a fast track to poverty and that is a trap that self funded retirees should avoid if they can. That’s why it is possible at your amounts to arrange things that way – you are comfortable but the arrangements are meant to be generous up to a point. I’m in a similar position to you and will arrange my affairs with the help of an advisor to gain a token pension in order to get the health concessions.

  9. Author

    Harshad

    December 25, 2012 at 5:29 pm

    Just want to bring attention to a calculation error, where it says that If you can wait until 65, you may only need 13 times expenses, which will be $$680,000, as per my calculations, it should be $780,000 not $680,000.

    Thanks

  10. Author

    CRN llll0llllZ

    December 25, 2012 at 10:59 pm

    You can’t retire at 60.
    My wife and I both in our 60′s recently were made redundant and now we are forced to report to Centerlink for Newstart who sends us off to some human resources mob who wants to know our 5 year plan. In all our life we have only received one payment from Centerlink and made to feel like bludgers, but the Government took our Tax for 90 years combined. You are permitted to die but not retire in Australia.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      January 7, 2013 at 12:59 pm

      I agree that one of the major problems is a system that now expects you to work until 65-67 but few businesses willing to employ older workers

    • Author

      Chris

      January 9, 2013 at 7:03 pm

      CRN llll0llllZ you can retire any time you like. If you want some government handouts, well that is a different story and you have to jump through Centrelink hoops.

      • Author

        daniel

        January 28, 2013 at 10:21 am

        Chris , CRNetc. didn’t “retire” as you put it . He said he and his wife were made redundant. I call that sacked . From what i can gather of Centrelink’s “culture” it seems they want to make people fill out as many forms as possible to make ” work” for themselves to “justify” their jobs , while at the same time trying as hard as poss. to deny people like CRNetc. benefits they’re entitled to. Stinks . Especially when older workers can’t get jobs. I lost my job at 55 when my employer sold the (small) business and the new owners fired me to employ a family member. I have a degree and 3 Diplomas but could not get work i am qualified for . For 9 years i have done lawn-mowing and gardening . That’s life.

  11. Author

    Gees

    December 26, 2012 at 7:41 am

    SV has 8 rentals???? I assume he also owns his own home… what is he so worried about? he also wants a Government hand out I suppose….

    • Author

      Drew

      July 24, 2013 at 12:04 am

      SV, is probably misstating his true position. With that sort of asset base how could he not vote liberal.

  12. Author

    Cove

    December 26, 2012 at 9:54 am

    One of the problems I see is when one of you goes into a steep health decline and cannot continue to live independently and becomes too much of a burden to be cared for at the family home.
    This may be caused by a stroke or Alzheimer’s but it could be anything.
    The cost now ranges from $600,000 to $900,000 to move into a high care facility in my city of Perth and the idea that the partner who is still ok having to sell the family home to accommodate their life long partner can be quite a jolt to become homeless.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      January 7, 2013 at 1:16 pm

      Cove

      I have found that there are good high care facilities available in any cities including Sydney for far less than that amount or based on an Accommodation charge rather than a bond for high care.p. There are limitations to what can be charged and the family home is not counted as an asset as long as one Spouse is living there. But you are right that the health costs are scary for many people. There are some major changes coming to aged care funding costs in 2014 as well!

  13. Author

    A

    December 28, 2012 at 10:27 pm

    >>> So if you estimate $60,000 per year then you will need $900,000.

    >>> If you can wait until 65, you may only need 13 times expenses, which will be $$680,000.

    Comment: One would assume $60’000 multiplied by 13 equals $780’000. Yeah, with this sort of arithmetic, no wonder that many Australians have underfunded retirement savings.

  14. Author

    Michael

    December 28, 2012 at 10:50 pm

    The ASFA cost of living figures always seem to be on the high side ( I’ve been watching them for the past 5 years or so).
    $192 a week for food and groceries for a ‘comfortable’ couple?
    $33 a week for phone, broadband, and mobile ?
    $59 for clothing
    $39 on alcohol !!!

    • Author

      Try to be fair

      January 29, 2013 at 12:34 am

      Yes Michael, you are right. There is no way I could spend that much money either on food or on alcohol or either of the other things. To live “comfortably” would cost much less.

  15. Author

    Michael

    December 28, 2012 at 11:00 pm

    There nevefr seems to be any recognition that over the next 30 years, most
    people now aged (say) 30 are going to have parents who pre-decease them. And those parents are ( in most cases) going to leave assets … at average of ? Well, thats going to vary enormously. But for a ‘comfortable’ couple living in , say, ASFA’s favourite South Sydney, it could be $1000,000 minimum. Just for the home. OK, that might be shared between several siblings. But then a married couple aged 30 years will have 2 sets of parents. And thus 2 million dollar homes to inherit.

    Even allowing for two very modest homes of $300,000 each shared amongst 6 children, that means $100,000 for each child. And thats assuming the parents die without any other assets.

    I’d suggest that many people might be putting TOO much into superannuation.

    • Author

      Lee

      January 30, 2013 at 6:58 am

      Better hope the parents are not baby boomers ‘spending the kids inheritance’ Iexpect nothing from my MIL and since my dad is going overseas every year I don’t expect much left in his bank account either

    • Author

      Lee

      January 30, 2013 at 7:00 am

      Better hope the parents are not baby boomers ‘spending the kids inheritance’ I expect nothing from my MIL and since my dad is going overseas every year I don’t expect much left in his bank account either

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 20, 2013 at 9:17 am

      Hi Michael

      While I agree that many may recieve an inheritance the problem now is that they may be well in to their 70′s as with an average life expectanxcy of 87 for women and over 70% chnace one parent will live to 90+ people may find that there is not much left to them.

      Please remember that the Aged Care system changes in 2014 and will be more of a User Pays system meaning that many older australians will be using up their assets to fund their care in later years. Now if you agree to take care of your parents in your home or theirs then you may benefit by retaining their assets but at the cost of your time and energy looking after them and believe me you will earn every cent of that!

      Liam
      @smsfcoach on twitter
      http://www.thesmsfcoach.com.au for SMSF education
      http://www.nextgenwealth.com.au for Strategies for lifes events!

  16. Author

    Samsung

    December 30, 2012 at 7:14 pm

    Govt. need to review all social welfare payments and pay more to all those whe deserve, i.e. retirees, who have worked all their lives and contributed so much by way of paying tax etc. than non genuine bluggers, who should be working.

  17. Author

    Just doing time

    January 1, 2013 at 1:31 am

    Just as well I preserved my benefit in the old government super scheme when I was made redundant almost a decade ago. Indexed pension for life is good for me. Plus I was able to use the 50k a year limit for tax deductible contributions for <50's for a nember of years to top up the lump sum before the current government cut it to 25k. Roll on retirement; I would retire now except I can't collect my super pension yet.

  18. Author

    Garry

    January 1, 2013 at 9:27 pm

    When my father retired, he bought an annuity that pays him 20k per anum. When he passes on, this annuity vanishes and does not become part of his estate. This allowed him to receive a higher benefit and is far easier to manage. In other words, get good advice.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 20, 2013 at 9:22 am

      Garry

      An annuity is a great way of ensuring that no matter what happens the basic cost of living are covered. The downside is most people hate locking way access to their money. However I think it is a great to have the security that you know the worst case sceanario is taken care of. Remember that Annuities are very strongly regulated in terms of investments and reserving so they should be a safer option than most others investments. The resulting lower returns are the trade-off.

      Very good for protecting the income for a spouse who is not sure of handling money or a spendthrift or someone with a gambling problem.

      Liam
      @smsfcoach on twitter
      http://www.thesmsfcoach.com.au for SMSF education
      http://www.nextgenwealth.com.au for Strategies for life’s events!

  19. Author

    Roger Erbett

    January 4, 2013 at 8:05 am

    These calculators never seem to account for inflation.
    You end up with a retirement figure in today’s dollars, which when we are talking outcomes in 20-40 years seems bordering useless.
    Just one more reason why I don’t trust ANYONE in this entire sector.

    • Author

      kevin

      January 9, 2013 at 10:26 pm

      Hi Rog,
      if you allow for inflation on income you have to allow for it on purchases (costs). So they ignore it as they roughly cancel each other out. Keeping costs in real terms means you can compare easier. Its less messy. Plus no-one can guarantee what the inflation figure will be.

    • Author

      Ricky

      February 7, 2013 at 10:56 am

      Roger, think about it a little before making stupid comments.
      Unless you are putting your lump sum under the mattress, it will still be invested in some what shape or form. Given the cash rate is close to lowest you’ll see it for your life time, it will still match and slightly out preform inflation and the firgures are fine. There are assumptions normal people would figure out but hey!

      • Author

        Mark Tomarket

        July 14, 2013 at 10:15 am

        Perhaps you guys are the ones with your head in the sand? Roger makes a good point. If you believe in ABS derived inflation data you must believe in the tooth fairy. Checked your utilities bill growth YOY over the last few years? Mine was +26% over the last FY, with nil change to consumption! To think that a conservative retirement investment strategy yielding at best 4-5% before tax is keeping your head above inflation is dangerous. Living standards for the middle class are dropping for this exact reason.

        Inflation data has over the years been politically cooked by both sides of politics to keep a lid on wage pressures and interest rates. The true test of this hypocrisy is the ongoing endless Government rhetoric about working families and rising cost of living pressures, yet at the same time their own ABS tells us we have the lowest inflation in decades, whilst the RBA runs the lowest cash rate in modern history!

      • Author

        Andrew

        October 22, 2013 at 12:18 pm

        Roger is right, and it’s easy enough to demonstrate in a spreadsheet. So, let’s say you start with $900,000, earn you earn 5% by investing it. You want to spend 60,000 the first year. Your spending will need to rise by the rate of inflation, let’s say 3%.

        Run this down the columns, and you’ll see that you run out of cash in your 20th year after retirement.

        I also second Roger’s assessment of financial planners – I never encountered one who took inflation into account, and yet it’s as plain as the nose on your face.

  20. Author

    Eva

    January 6, 2013 at 8:16 pm

    Maybe someone could enlighten me but all of the above does not help migrants. Australia, being an immigration country, does not consider employees who have not lived here all their lives when it comes to old age financial security. I immigrated here in 1995, and worked my butt off to make a living (as a single parent, never asked for Government hand outs). I am a full time permanent employee, and at 56 have no assets to show, albeit no debt. I do salary sacrifice and try not to live beyond my means. Of course the amount I am able to save with superannuation is a joke. I have looked into my future and I will be as well off as someone who has been on Centrelink payments all their lives, even though I have worked all the time. I consider myself very fortunate to have the job I have, however, I feel kind of despondent when I think about my old age. My work is very demanding and most retire in their late 50s but this would mean to be poor (again). Anyone any ideas?

    • Author

      Glen

      January 8, 2013 at 8:38 am

      My wife and I were in a similar position but lived frugally (but happily, I’m certainly not complaining) as well as developing a small online business in the evenings. We now have a very enviable retirement.

      You have 27 years from coming to Australia to retiring at 65, that’s quite a long time.

    • Author

      kevin

      January 9, 2013 at 10:29 pm

      Live in a low cost country on your Oz pension. Similar situation and we plan to do that. Eg thailand.

      • Author

        Trixie

        January 14, 2013 at 7:28 pm

        Check with Centrelink before you rely on this. You are only able to be paid pension when you are out of Australia, for a limited number of weeks.

      • Author

        Liam Shorte Principal of Verante Financial Planning

        January 15, 2013 at 8:01 am

        Be careful about losing Medicare entitlements while abroad and restrictions on regaining them on your return. Very important as you get older.

  21. Author

    Captn K

    January 7, 2013 at 5:46 pm

    Why on earth would u need $93 a week for transport when u are retired.
    Surely u dont go out everyday?

    • Author

      Z_Man

      February 1, 2013 at 9:42 pm

      Captn K – Do you intend to have a car when you retire ?

      My parents are lucky enough to be able to drive in their retirement when my father has to see the multitude of doctors for his cancer, dementia, lymphoma, hearing loss and failing eye site. Otherwise, taxis would cost a fortune

  22. Author

    Lawrie

    January 7, 2013 at 11:20 pm

    I have some concern about the sense of entitlement that is reflected in some of the comments above. A superficial and sefl deceptive analysis might allow a wealthy retiree who has paid a lot of tax over the years to resentfully make a case against those who have paid very little and spent long periods receiving government handouts. However, Joseph Stiglitz makes a number of salient points in his latest book “The Price Of Inequality”, Firstly, the wealthy (especially the very wealthy) may have inherited much of their wealth and contributed little to society. Secondly, those that have earned their wealth have done so in a society structured to allow them to do so (Infastructure services, negative gearing and other helpful finanancial regulations/policies etc) Thirdly, not everyone has the emotional or intellectual strengths, or the education, or the supportive family background to make the most of what opportunities are available.

    Stiglitz points out that the middle class in the USA has been ‘hollowed out’ – largely as a consequence of neo-conservative ideology driving the politics of the right, with many pieces of legislation and policies holding wages down, disempowering large segments of the population, whilst further empowering the elites. (How many of us suffered financial losses in the GFC due to increasingly lax financial oversight in the USA?) This increasingly threatens the social contract, with the possibility of social disintegration. Whilst there are substantial differences between the USA and Australia (We have an excellent universal health care scheme for example) our tragectory seems to be the same. A bit of critical self analysis might help us to reduce our sense of entitlement, and observe that many of us who are self funded retirees are much better off than most of our neighbours, let alone the billions of disadvantaged in other countires.

    • Author

      David

      January 15, 2013 at 10:57 pm

      “Firstly, the wealthy (especially the very wealthy) may have inherited much of their wealth and contributed little to society.”

      Nope. Not a cent.

      “Secondly, those that have earned their wealth have done so in a society structured to allow them to do so (Infastructure services, negative gearing and other helpful finanancial regulations/policies etc) ”

      Nope. Worked my arse off.

      “Thirdly, not everyone has the emotional or intellectual strengths, or the education, or the supportive family background to make the most of what opportunities are available.”

      Suffered from mental health issues all my life, only went to Year 8 at high school.

      So I suppose I am just collateral damage for the benefit of the majority? I agree with you that there are many unfortunate people in society but only someone who has never been one of them would hold this view. A very high an mighty analysis of the inherent weakness of the working class that only serves to keep them in their current position.

      Welfare will never change this situation. Only education and subsequent motivation will work.

    • Author

      daniel

      January 28, 2013 at 10:33 am

      Thank you , Lawrie . Good to see there are some unselfish realists with a social conscience around still. There are too many people who want us all to live in an economy rather than a community. Such a pity so many “self-funded” are so self-entitled. I’d like a good psychologist to explain why so many people who already have more than they need still want more .

      • Author

        Joseph blow

        April 8, 2013 at 4:07 pm

        Self funded means they worked hard to get where they are at. The problem is not the self funded retiree, but those who were too lazy to get job skills, work hard, and save and have a sense of entitlement. Those are the ones who are dependent on government handouts are the ones who are bludging off the taxpayer.

    • Author

      Joseph blow

      April 8, 2013 at 4:05 pm

      Australia is not the USA with a minimum wage at about $16 per hour and generous social welfare benefits that you don’t get in the USA. Australia has the exact opposite problem is that it is rewarding people who do not get job skills and do not work hard and punish those that do with high marginal tax rates and means testing of most benefits.
      Why work hard if you are an Aussie? the government will take care of you.

      • Author

        Liam Shorte Principal of Verante Financial Planning

        April 8, 2013 at 4:23 pm

        I was interested to see Mission Australia call for the government to be more focused on getting people off the disability pension and back to work. It was in an Article in to-days Australian and also the subject of a discussion on ABC radio here http://www.abc.net.au/am/content/2013/s3731702.htm

  23. Author

    bloke

    January 10, 2013 at 8:05 pm

    about the same it took me to retire at 33 (but, not using government handouts) only compounding interest

  24. Author

    joan

    January 12, 2013 at 9:52 pm

    Don’t just rely on money that loses its value. I favour land in a good area. It is still there when the fires pass or the floods run down!!!

    • Author

      Liam Shorte Principal of Verante Financial Planning

      January 15, 2013 at 8:05 am

      Having just visited Ireland (average property price down 51.5%) and currently leaving Spain where property prices devastated, I would warn that nothing is guaranteed except Death!

      • Author

        GrahamB

        February 5, 2013 at 3:30 am

        Why are you letting your children budge off you when your retired? Kids that are allowed to stay at home until their thirties lack being self reliant and will have no ambition to succeed.

    • Author

      Scott

      January 17, 2013 at 6:44 pm

      Yet it was a housing bubble (and its bursting!) that underpinned the latest economic crisis! The safer bet is actually to remain in the workforce!

      • Author

        Liam Shorte Principal of Verante Financial Planning

        January 24, 2013 at 5:45 am

        Scott expecting to be able to continue working can also be a Risk as many made redundant after 55 and struggling to find a new job have found. While it sounds easy, workforce preferences ademands and health issues often conspire against people in their 60s

  25. Author

    The_Observer

    January 13, 2013 at 1:30 am

    If Swinging Voter above has eight rental properties and he was negatively gearing, unless he was earning a fantastic wage that exceeded all the mortgage payments he wouldn’t have been paying millions in taxes over the years. If he was earning such a fantastic wage in addition to earning rental income, then he would have a huge superannuation fund as well. If that is the case, then he wouldn’t qualify for most government retirement benefits.

    • Author

      Swingin Voter

      June 22, 2013 at 4:38 pm

      Well-reasoned, T.O. We both enjoyed high salaries… worked our ar*es off… and we’ve turned over a lot of properties during the last four decades. Huge Super payout(s)? Large, I suppose, but negligible compared to our property transactions (and CGTs!) Our most successful strategy was to take control of our assets. Set-and-forget caught out a lot of Super members… and I’ll accept that our shifting Super between asset classes might have included some luck… but we have always ‘acted’ rather than just sitting back and hoping for the best. Could we have tweaked it better? Possibly… !~

  26. Author

    Ted Bundy

    January 13, 2013 at 7:29 pm

    $900,000 for a $60,000 income. Who is going achieve that without massive voluntary contributions so that you have to curtail enjoying you lifestyle? And be completely at the mercy of the markets along the way whilst you try to achieve your funding target? Really, why bother? Super and pensions are for the compliant masses. As a comparison I spent 3 months of my life building a very low maintenance additional revenue stream that surpasses $60,000 now. Why would I want suffering and hardship for 40 years to achieve same? Count me out.

    • Author

      Andes

      February 14, 2013 at 12:31 pm

      Ted I am 43 and in that situation right now. I cannot see how I can get to the 1 mill mark for super by the time I am 60/70 unless I live work like a dog and live like a rat for the next 20 years. How did you do it????

  27. Author

    Rick

    January 16, 2013 at 1:07 am

    At age 65 you do not need $650,000 as you are able to supplement super with the age pension.Why do scare mongering commentators always neglect to mention this fact?

    • Author

      Retired 10 Years

      January 18, 2013 at 12:35 am

      Rick, please go up a bit and read my diatribe ( Retired 10 years 16 01-2013) on Swing Voter. I’m sure you may agree. I would love to hear a comment from you and definitely from Swing Voter (possible hypocrite) and some of the his many supporters back there who think that wealth for some reason , dare I say produces this “Born To Rule” syndrome. I would put to them, that the majority would have minimized their tax with schemes that the rest of us can only dream about. They justify this situation by saying that they create jobs etc. A big retailer in Australia wants GST placed on small purchases made on the internet by us underlings – one of the FEW tax dodges available to us. I’m sure that if it was introduced his sales may go up allowing him to purchase a couple more million dollar horses to race and put to stud.. I really feel sorry for such people and their incomphrehensible mindset.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      January 24, 2013 at 5:41 am

      Hi Rick, thank you for your comment. We do not ignore Age Pension benefits and they do form part of the funding for many people’s retirements but you cannot guarantee access to the Age Pension or that it will not be either called back or made more difficult to access. Depending on social a welfare to fund your retirement instead of a safety net is a dangerous plan, just ask the Europeans who have had their government pensions slashed dramatically! Better to set goals for self funding your retirement and benefit from some government assistance.

    • Author

      Amanda

      April 13, 2014 at 9:24 pm

      This is because eventually tax payers will not be able to support the ageing population. We have compulsory super for this exact reason. The baby boomers are the last generation not to necessarily have super. By the time my generation retires there will be no old age pension and this is why at 30 I hand suddenly realised I need to start saving extra now. This is also why I laugh at those who are self funded retires wanting a government funded pension too :) when I retire I hope to support myself as those who can’t do not have much fun. I would hate to see my hard earned tax payers money going to those who don’t really need it!

  28. Author

    steve

    January 16, 2013 at 8:41 pm

    the way im going i will have to work till i die

    • Author

      Scott

      January 17, 2013 at 6:42 pm

      We all are !!!

  29. Author

    Scott

    January 17, 2013 at 6:40 pm

    It is the very TITLE of this article that exposes the lie. If you have to calculate retirement incomes, you CANNOT retire at 60, probably not 65 either. These days, with a rising aged population, greater health care costs, and larger expectations of life at retirement, 70 is probably a safer bet still. Everything recently about increasing debt implies that current retirees and those approaching a hoped-for retirement have been borrowing heavily and not, in fact, saving heavily. Retiring early (I mean at 60) places huge pressures on investments to perform, clawing for greater returns and permitting riskier investments. Housing was supposed to be the safe bet: yet 63 years after the first baby-boomer was born (1945) [ie. 2008] a global investment market exploded as 1st-retirees sought to maintain return on investments rather than shifting to bonds and cash. In 2008, my parents Commonwealth First State Financial Planner kept the retirement portfolio at 90% in risky stocks and not switching to bonds because he claimed, and they believed, that constant growth at about 10% was attainable. Thats the other lie: the only consistent growth over the period of 10% was achieved by Bernie Maddoff in New York City, by ripping off Holocaust victims.
    In short: the very idea that average people in industrialized economies can reasonably expect to retire at 60 is a LIE. Everyone of my generation (the 1970s) should accept for, and prepare for an extra decade of work. I am afraid that my children will be working till they die to pay off their grandparents debts.

    • Author

      Aytee

      January 21, 2013 at 12:16 am

      Scott, “The safer bet is actually to remain in the workforce” is difficult when one is made redundant in their early 60′s, and scorned by employers. I want (no, need) to work for several more years full-time, then scale back to part-time. I’m well qualified, but seems that employers just see us as too risky. With insufficient retirement funds, I see my only option is to ‘buy’ myself an income. I’m certainly interested in how you went about doing this……seems like the beginning of another thread!

      See full article: http://myob.com.au/blog/how-much-do-i-need-to-retire-at-60/#ixzz2IWKFpnW7

    • Author

      Neo

      January 28, 2013 at 11:04 pm

      Really I retired at 50, now you tell me its impossible!! :) I saved and invested wisely , your parents had a financial advisor thats was their 1st mistake…

      Firecalc . google it. Expenses * 25 is the number you need thats a 4% withdrawal rate…

      Also the expense figures are a bit off you will only know what u personally spend it you track it.

  30. Author

    Nina

    January 20, 2013 at 2:46 am

    Am 58, and have worked non-stop since I left uni. Paid for my own education since the age of 15.
    I now own a home, and have virtually no super. There is no incentive for me to keep working and saving – I am better off selling up, being self-indulgent, then living on a pension topped up with some remaining cash.
    To suggest that younger generations are the workers and they are badly off is nonsense.
    All eight 20s/30s people in the next generation of our family are living the good life, but hocked to the eyeballs. Their expectations of the kind of lifestyle that is ‘acceptable’ to them are staggering. Love them to bits, but they simply don’t have a clue about how simply we oldies lived in our teens/twenties compared to their lifestyles.

    • Author

      Neo

      January 29, 2013 at 12:02 pm

      They are renting their lifestyle, its called big hat no cattle, or all show no dough. If only they saved 20% of their good incomes and still lived a good life off the 80% they would be well set up for retirement. Delayed gratification is the key and you don’t have to live a life of penny pinching to do it. You just need to pay yourself first and make saving and debt reduction the priority. The ant and the grasshopper story all over again…

      • Author

        Swingin Voter

        June 22, 2013 at 4:41 pm

        Spot on, Neo. Well said…

  31. Author

    David

    January 22, 2013 at 6:03 pm

    Hi Scott,
    Just skimmed your article but the amounts all seem very high. I don’t know what other peoples energy is but ours in just under $15 a week. We see a movie a fortnight and borrow movies from the library and have the odd hot choc and so our lesiure even if you factor in a couple of trips locally would be way under a $100 a week. Our food bill which currently is for a family of four and includes lots of fresh fruit and vege and plenty of meat is a 160 a week and I think if we were living a modest life style I could get it alot lower. where are you getting your information from? A cynical person might think you were inflating all the figures to encourage others to invest in super. I hope this is the case or else I am going to have to do some serious salary sacrafice over the next twenty years!

  32. Author

    Liam Shorte Principal of Verante Financial Planning

    January 24, 2013 at 5:30 am

    Hi David and banks for the feedback. To answer your question the figures come from the quarterly ASFA Retirement Standard? Your lifestyle would seem to fall under the Modest lifestyle so yes you can manage on less than many.

    The ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.
    Few people know exactly how much money they will need to spend each year to fund a comfortable lifestyle in retirement. The ASFA Retirement Standard has been developed to help with this problem by objectively outlining the annual budget needed by Australians to fund a comfortable standard of living in the post-work years.
    The Standard was first introduced in 2004 and has since been revamped to give Australians a more comprehensive picture of how much they need to spend to support their retirement lifestyle. The revised Standard reflects changes in living standards, new expectations of retirees and their evolving spending patterns. In particular, the budgets for Communications, Health, Energy, Clothing, Household goods and services, Recreation and Transport have been updated. Australians can
    now get a more comprehensive picture of how much they need to spend to support their retirement lifestyle. The revised Standard now incorporates expenditure on:
    Communications – reflecting the increased number of retirees who want a mobile phone and broadband internet connection to keep in touch with friends and relatives. Changes have been made in both the comfortable and modest budgets.
    Private health insurance – the cost of this is now included in the ‘Health’ budget for both lifestyles, reflecting that a majority of retirees hold private health insurance.
    Energy – the allocation for this is now more in-line with contemporary levels of cost in this area.
    Clothing – this budget is now based on more diverse shopping patterns for both modest and comfortable lifestyles. Household goods and services – now includes the costs of computer equipment upgrades as well as services such as hairdressing and personal care items. The ‘comfortable’ standard budget includes air conditioning, home alarm system, and regular pest inspections.
    Recreation – this budget has been substantially amended and now amongst other things includes the costs of membership of social and sporting clubs. There is also allowance for the costs of eating out and other excursions. A ‘comfortable’ budget allows for the purchase of sporting items such as golf clubs or fishing gear.
    Transport – now reflects the increased costs for a retiree to own, maintain and run a car.
    These changes to the ASFA Retirement Standard will ensure that it remains relevant to the needs of both retirees and those planning for retirement. The enhancements made will also make it easier for retirees to adjust for major spending changes such as rapidly increasing energy prices. Focus groups, comprising of retirees, were engaged in developing the revised Standard to ensure that it reflects the real needs of real people.

  33. Author

    Rahul

    January 25, 2013 at 10:44 pm

    Let’s face it. The social security system as we have it now is based on antiquated philosophical ideas of an egalitarian society. No such thing exists anymore given the inequality across different walks of life.

    That being said, what we have now is a system bursting on the seams. Fact is we have a means tested social security system. There are going to be people deemed to be “too rich” to be paid anything from the Government.

    While self funded retirees might feel aggrieved that assets above $1million get them minimal support from the government, similar aggravation is felt at the working younger family level. Is $150, 000 a high enough threshold to disqualify a whole lot of families for family payments? You would find that you will hear similar sentiments from younger families as the SFR in this regard.

    The issue beggars a bigger question – what is the role of an individual in a society? I don’t quite think the answer is to be propped up by the Government for things that are really an individual’s responsibility – a la aged care, health care costs. Yet we do have a responsibility to at least have a safety net for those that can’t work but not for those that don’t want to.

    So in a way, I feel the system is in fact quite generous.

    Tax free income from super once over 60 for most
    Higher tax free thresholds for seniors than younger people
    CSHC for most self funded retirees
    Funded Aged care system
    Age Pension for couples with close to $1million
    No inheritance tax per se
    Net medical expense tax offset

    So in a sense it could be actually even worse. There is a rationale for the Age Pension. If the modern thinking has changed around the provision of Age Pension or for that matter other government benefits maybe its high time that the policy is examined by Government. There is bound to be change in this area.

    Couple of other thoughts.

    I simply cannot agree with peopleeven contemplating gifting to get Age Pension. Have heard this many times and with all respect, this is illogical. Giving away all your assets to get maximum $30K from Government.

    Agree with Liam’s summation. A plan to be self reliant is better than to be disappointed and depend even partially on social security.

  34. Author

    Maree

    January 28, 2013 at 9:08 pm

    One thing that is not considered is the changing age of parents and homeowners. In the ‘good old days’ people’s children had left home and the house was paid before people reached 65. My husband and I are modern parents who have only just gained a mortgage and will still have children living at home when we retire. I am 50 and my retired husband is 63. We will definitely need more to support a house and children in retirement.

  35. Author

    Fastlanedad

    January 29, 2013 at 10:28 pm

    These guys are an inspiration for anyone not content with their current situation. They went it alone at 50 and 55 years of age and are loving it.. Apparently! http://bit.ly/114zVTC

  36. Author

    scott

    February 3, 2013 at 5:06 pm

    yeh right by the time i get to retirement age i will be still working as cant afford to retire and will DIE at work
    you need at least as 5 million nest egg to retire nowa days

  37. Author

    scott

    February 3, 2013 at 5:09 pm

    retirement whats that i will die at work as i wont have enough
    take a lump sum of whats left go on holiday for few weeks then go back to work

  38. Author

    ken

    February 12, 2013 at 1:08 pm

    $900,000 to retire!!!!! what a joke! if youre on a pension you need nothing to retire.

  39. Author

    Mick

    February 13, 2013 at 10:06 am

    The cost of housing above is way to low, if you rent, even if you own/buy
    maintenance costs will rise, ie replacement of kichen/bathroom/ windows/etc
    would average $12k yr one a property reaches 10yrs from construction

    water/gas/electric/service charges/rent/mortgage rates will keep rising

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 20, 2013 at 9:03 am

      I would clarify that these figures assume you have paid off your mortgage and own your own home. If you rent or have a mortgage then you need to allow for more. However bear in mind that these are actual results from year on year tracking of actual spending by retirees so please don’t dismiss out of hand. Experience tells us that we often over estimate costs and that many people especialy in retirement put aside funds regularly to fund future repairs and I see this with my own clients. Unfortunately a lot of people don’t have a reserve and live week to week and that is why I caution those that say they will rely on the Age Pension as it does not cater for those one off expenses.

      • Author

        Harvs

        July 28, 2013 at 3:04 pm

        The age pension does not cater for one off expenses ? So you reckon you need $900,000 for those ?

  40. Author

    Andes

    February 14, 2013 at 12:21 pm

    So what you are saying is that for about 98% of the working population achieving say 900000 in super is pretty much impossible, unless your super grows at say 60% per annum or unless you earn 250000+ per year?
    How can an average wage earner ever get to this amount.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 20, 2013 at 9:00 am

      Andes

      The $900,000 is for someone who wishes to retire at 60 and without Centrelinksupport. For the nromal person they will retire at 65 and have some access to Centrelink benefits if they are still available. I have many clients who have never earned over $80,000 who have comfortably saved well in excess of $500K and did not have the benefit of Superannuation in the early years of their working life.

      People really do underestimate the power of compunding growth and how a savings plan started early such as the 9-12% SGC can amount to a considerablel sum over 30-50 year working life (taking in to account that at 43 my own age pension age is 67).

      I wish that instead of being gloomy about the situation that people would grab the bull by the horns and just try saving a little extra and building their savings. The risk you take with your investments wether in super oroutside is entirely within your hands to dictate and those who use a balanced strategy for the majority of their working life will benefit greatly from market returns.

      Yes after the GFC our collective belief in investing has been dealth a sever blow but I am sure people inthe the 1980s believed that no one could ever afford a home again with 18% mortgage rates, yet the majority have managed to do so.

  41. Author

    Melb

    February 18, 2013 at 12:14 pm

    I have seen alot of these articles around and while quite good I always feel they are aimed at people nearing retirement. I would love to see an article aimed at the 30 ish age group.

    To quote $60,000 per year at a retirement that will not occur until 2040 is crazy, inflation and cost of living will make this about $20,000 in todays dollars.

  42. Author

    JJ

    February 19, 2013 at 2:45 pm

    Not with Julia. by taxing extra super contribution she declared that government will look after all of us without needs to save any money. She will use money for current spending and she will retire in comfort funded by taxpayers. What an idiot government we have.

  43. Author

    Teus Baggerman

    February 20, 2013 at 7:53 am

    The government forces my wife to work until I am 79 yrs of age because she is 12 yrs younger.
    Only half the the pension for me until I am 79 and then I will be too old to join the grey nomads.

    That rule should be capped and any couple should be able to retire with a full pension when the oldest is 70 yrs of age.

    tesba

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 20, 2013 at 5:58 pm

      Sorry Teus but the government cannot make allowances for who you fall in love with!
      If they were to change the rules to allow what you want then surely a single peron should be able to demand the same treatment as you wife and be able to access benefits earlier.

  44. Author

    Barney

    February 20, 2013 at 2:37 pm

    This has not factored in an age pension. You only need to ensure you have enough to keep you going from when you decide to retire till you are eligible for the age pension, then be able to draw off that. I’m 58 now so if I decide to retire tomorrow, living a comfortable lifestyle, based upon your figures, I’d only need around $400K to live quite comfortably. Between now and the aged pension I’d make sure that I am debt free and have household goods, car, etc fairly new.

  45. Author

    Gail Davis

    February 21, 2013 at 2:26 pm

    I would suggest that the so called experts fo the math again,
    Energy is under quoted as is food, they have neglected to include rates,
    and I dont believe that this falls into Housing ongoing, this would be be for minimal maintenance.
    Then lets look at communications, say for a couple a mobile phone each and a landline plus internet,
    try doubling it.
    Then we will move to Health, aq reasonable private level of Health insurancae with extras is around $5000
    per year and if you require surgery those gap fees can be more than your annual private health insurance premiums.
    Lets move to clothing, $3000 a year for 2 people, a decent paig of joggers will set you back about $200 each, a good pair of shoes around $150.00 and to but good quality clothes a pair of ladies pants upwards of $150 and mens trousers are about the same. Dream on experts, its about time both you and the
    Government came into the real world.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 22, 2013 at 9:50 am

      Gail these are not just guestimates, They are based Focus groups, comprising of retirees, who were engaged in developing the Standard to ensure that it reflects the real needs of real people.

      It all comes down to your perception of Modest , comfortbale and indeed Luxury. Your “Decent pair of Joggers” may sound like a luxury to many who would happlily manage with a $20 pair from Target.

      Many people have abandoned fixed line and gone to wifi broadband and manage with one mobile between a couple. Others settle for basic private health cover without the extras.

      If you look through the comments you will see that some people feel, like yourself, that the figures are understated but many others feel that they are overstated tand that they manage comfortably on less.

      My initial figures were for someone to have a decent lifestlye and if possible not depend on a Centrelink Age Pension that may be harder to get in the future or less generous in value.

      The spread of comments only go to show that people should really think about what lifestyle they would settle for in retirrement and ensure that they plan to save for that. Any improvement in their savings over that figure is a bonus.

      • Author

        Grey Area

        February 22, 2013 at 10:52 am

        As a woman who divorced at 42 (no access to his super then) with not much left in the kitty, I worked long hard hours, he however continued drinking and generally p****** it up against the wall. I paid off my house and have reasonable savings. Who deserves the assistance?
        I am now with someone 10 years younger than me, and without sounding too flippant it does solve quite a few retirement schedule problems, perhaps thats the answer to the problem, everyone over 60 gets a younger model to carry them through.

  46. Author

    Disillusioned

    February 23, 2013 at 7:45 am

    Since we’re being robbed with fees I’m going to stop contributing to my super. If I only have $10K in the end I don’t care but I’m not wasting another cent.

    • Author

      Peter Davis

      March 4, 2013 at 2:21 am

      About 7 years ago, I was thinking of putting a pile of money into a super fund.

      I contacted 3 local super funds, told them what I wanted to do. All were very keen to hear from me.

      When I went to talk with the first, I told the guy that I had $400,000. And I wanted him to show me how the money would grow, if we assumed an earnings rate of 8%.

      So, I started to make a table. At the top was $400,000.
      Then he subtracted all of the fees, commissions, taxes levied at the time of deposit into the fund.
      After 1 year, we added 8%.
      Then he subtracted all of the fees, trailing commissions, taxes.
      After one more year, we added 8%.
      Then subtracted all fees and commissions, and taxes.
      It took 7 years before I got back to the starting point of $400,000.

      He was stunned, had never done this before, nor seen it done.

      He knew, and I knew, that superannuation is a big rip off as far as commercial funds are concerned.

      It opened my eyes as to the true nature of the snouts-in-the-trough nature of superannuation.

      So I went and bought a house instead.

      P

      • Author

        Ron D

        March 6, 2013 at 8:50 am

        Did a similar thing at the end of my super days with industry fund LUCRF. I had a casual job for 13 years my employer contributed a total of $18,000 checked against annual statements and set out details on Excel. After 13 years only got back $18,000. Adjust inflation -3% PA how much money did I loose? My wife had small AMP super fund also for 13 years put $4500 into fund at the end only got back her $4500. I believe people should be allowed to use Super money to repay debts like housing loans at least we would be saving around 6%+PA.
        PS I withdrew money in 3 transactions and they charged me $30 per withdrawal, as well as me having to go to a Police Station to have my signature witnessed. I complained to LUCRF Super Fund re police station visit, they said signature authorisation all part of anti terrorist and money laundering legislation. They have now allowed chemists and doctors to witness your signature.

      • Author

        Phillip & Chloe

        March 11, 2013 at 10:33 am

        One super I started had $4,000 in it….forgot all about it thinking that it was like a term deposit…..a dozen years later it had $12.

      • Author

        Liam Shorte Principal of Verante Financial Planning

        March 11, 2013 at 11:22 am

        Peter one fact your are leaving out is that you paid 15% contributions tax on the money going into super rather than your marginal tax rate. So if the funds had not gone into super you would (based on the average male wage of $60K) have lost 32.5% of your money in tax. By pacing in super you were saving 17.5% immediately. So those taxes levied at time of deposit were saving you money. You need to compare apples with apples not distort the facts.

        Also I have not seen in a long time, fees, commissions and charges amounting to more than 8% or any where near it. Standard fees then to be 1% for upfront advice and 1% ongoing advice if needed. A average Balanced fund charges about 0.5%-1.2% depending on the supplier. So by my reckoning you would pay about 2.2% max on your fund while as you say earning 8%. Therefore your fund would be ahead by 5.8% or 5.2% if you had to pay CGT on the gains each year. If you are taking the 15% contributions tax for new contributions off the profit figure you are distorting the returns as that is money you would have paid higher taxes on otherwise.

      • Author

        Michael

        September 17, 2013 at 2:32 pm

        Did you take the tax benefits into consideration? why wouldn’t you start a SMSF and buy the home in that then the income would be tax free at retirement, now you have an assessable asset and income, max tax in super is 15%, I have 700K in a SMSF and pay $1500 in acc and audit fees, you should re-look at this.

  47. Author

    Tracey Mannion

    February 28, 2013 at 1:10 pm

    rubbish figures for weekly expenses…totally under…

  48. Author

    Dennis.

    March 4, 2013 at 6:46 pm

    $22’534. Neede for a modest lifestyle. . The full aged pension hits $20000 per anumn this mont so there is little incentive to diminish this with retirement savings. Own your own home have $30000 savings for emergencies and extras and receive the full pension after paying taxes for 50 years. Denny not?

  49. Author

    Older worker

    March 7, 2013 at 9:32 pm

    And how do you get that money to retire on? My super is nowhere near that much and never will be in my lifetime.
    Approaching 60 after starting with two engineering university degrees and constantly having to find a new job, home, country etc after every time I have been made redundant I still have a major mortgage & other debt.

    Get real here and tell me what I need to do when my take home is $300 per week after tax & mortgage?
    Any advice?

    • Author

      Liam Shorte Principal of Verante Financial Planning

      March 11, 2013 at 11:10 am

      Older worker

      There are small things you can do to improve your position. Get some advice on moving to a Transition to Retirement Pension at Age 60 and look to use the pension to reduce your mortgage. The money you save on interest can be used to boost your retirement savings. Meanwhile the balance in your Super goes into tax free phase and saves you tax on the earnings. There are strategies you can use to improve your position so please take a look at your options..

  50. Author

    johnb

    March 9, 2013 at 10:37 am

    We need around $38,000 to live comfortably. We are prepared to go into credit to fund trips to see our elder son and family in Boston.

    Our only advice?

    DO NOT TRUST the advice of so-called ‘financial advisers’, any more than you would trust used car salesmen or real estate agents. One such has cost us lots of money. He was attached to a highly reputable firm of accountants.

    If in doubt, put your super money into fixed deposit with a bank. You’ll sleep a lot more soundly.

  51. Author

    Phillip & Chloe

    March 11, 2013 at 10:28 am

    My wife and I are both Australians, we worked & paid taxes in OZ for a total of around 50 years. We work overseas now and wish to stay where we are as we find that it provides a better quality and cheaper lifestyle than OZ.

    I will be 60 next year and my wife is a few years younger. All my different Supers schemes in OZ have been eroded by administration fees (my type of work took me to many different employers, all with different obligatory Super Insurances!). My wife has around $90,000 in a OZ super, we have a mortgage in the country we live.

    There are two issues that trouble us in our advancing years:

    First issue is that we cannot access the Medicare system in OZ (we pay 100% medical bills including all pharmaceuticals when there to be treated on top of airfares which is an expensive exercise), in addition we have to pay $1,000 each per year in a local expat fund to cover special air travel emergency to OZ (which can cost around $60,000 for Medivac trip).

    Second issue: we are informed that we cannot collect the pension (when age eligible) as we are not living in the OZ….my 90 year old Mother came to visit me and had to return to OZ before seven weeks were up, otherwise the OZ Social Securities would cut her pension! Personally find this appalling, other countries permit their pensioners to travel whilst receiving their pension…that is the time they can finally do it after working their whole life!

    Anyway, any advice on how we can access any of our OZ social benefits when living overseas would be very appreciated…and if anyone knows how we could access/reactivate our Medicare.

    All the best,
    Phillip

    • Author

      Liam Shorte Principal of Verante Financial Planning

      March 12, 2013 at 10:59 am

      Hi Phillip & Cloe

      Firstly, I suggest your Mum makes an appointment to see a Centrelink Financial Information Officer before she visits you next time as he can advise her exactly what will and won’t be affected while travelling. Often it may only be the Centrelink Payment Supplement that is lost for extended periods overseas. She is best to have them look at her individual situation and the FIS officers are really good at helping. It all depends on how long she has lived and worked in Australia. Here is the link to their service http://www.humanservices.gov.au/customer/services/centrelink/financial-information-service

      On your own situation your will need to contact Centrelink International services and give them details of your working career as the Pensions residency test has requirements that must be met in terms of years worked in Australia during a projected working life. You will most certainly have to visit Australia to make any claim for the age pension. You are correct that it is almost impossible for Australian’s residing overseas to avail of any Medicare support even if they return to Australia as there is a qualifying period on their return before they can access Medicare support.

      International Services

      (Centrelink only) International Services Po Box 7809 Canberra BC, ACT 2610
      Within Australia: 03 6222 2799
      Outside Australia: +61 3 6222 2799

      Hope this helps.

  52. Author

    Pete Shap

    March 14, 2013 at 3:43 pm

    Hi
    I have a laugh when reading the comments.

    Most are reasonable and fair

    example in my case.

    I worked for fifty years with various people and now see them with the full pension and complaining, if they looked back and saw the past they would change and think they are lucky.

    A fellow worker received the same wages as myself, he and family rented a housing commission home which he lived in for fifty years, Drank himself under the table every night, purchased a new car every other year, smoked like a chimney, holiday every year and the government gave him his house which he sold. Now lives in the Central Coast on the full pension.

    In my case I built my own home on my weekly wage, did not drink, smoke or go on holidays and l had a second hand car for forty years, I did invested in superannuation. Now I have been told that my assets are over the limit and I will have to live on my super.

    • Author

      Young Viewer

      March 18, 2013 at 3:45 pm

      I think that the thing people are forgetting in regards to Swinging voter is that

      1. When he dies, his assets will go to his estate and ther will be a change in beneficial ownership and CGT will be payable on the net gains.

      2. Three things are certain in life. Death, taxes, and changes is social security benefits.

      Too bad, So sad

      • Author

        Swingin Voter

        June 22, 2013 at 4:51 pm

        Interested in your comments, YV: “…his assets will go to his estate and ther will be a change in beneficial ownership and CGT will be payable on the net gains…” In fact my (younger) wife will inherit. I figure she’ll enjoy at least three decades… and may even find a younger fella. Not worried she’ll pick the wrong bloke. She has excellent judgement!~ ;)

  53. Author

    Liz

    March 19, 2013 at 5:19 pm

    My grandparents died in their 60′s, my mother in her 40′s and my father in his 60′s. So does that mean I don’t budget for my super? Trouble is if you budget for retirement you could die early, no budget and live to 100. Oh well.

  54. Author

    Bill

    March 19, 2013 at 6:35 pm

    There is virtually not such thing as a ‘self funded retiree’ (it sounds virtuous though). Nearly every person in Australia saves for their retirement through superannuation in one form or another. Contributions into superannuation are concessionally taxed (the Australian taxpayer forgos the tax revenue that would otherwise be paid) and very concessionally taxed on withdrawal (tax free after one turns 60). How nearly anyone can claim to be a ‘self funded retiree’ is beyond me.

    • Author

      Mrs Indignant

      November 17, 2013 at 6:45 am

      Too true!! They are crowd funded retirees. Plus it also get my goat when people say “I’ve paid taxes for years and never got any benefit”. Really? Never went to hospital, never drove on a road, your kids never went to public or heavily subsidised private school??

  55. Author

    Peter Black

    March 20, 2013 at 5:39 pm

    Great article to get people thinking about how much income they will need in retirement – and what their expenditure may look like. The only question I ask is “do people really want to retire?” and this is covered in a blog post I did on this topic in 2012 which is at

    http://peterblackcoaching.blogspot.com.au/2012/07/retirement-is-this-what-you-really-want.html

    • Author

      Alan

      March 24, 2013 at 6:26 am

      All of the above comments are probably quite irrelevant…..as my life’s observations tell me that only about 10% of retirees end up with enough health and energy to go on and enjoy spending money into their twilight years….most are contending with health issues, not to mention the numbers that dont even reach retirement…….or die soon after…….moral of the story is spend it as soon as you can and as quick as you can ….there is an awful lot of rich people in the cemetery……..society has us all brain washed and scared into insecurity and that is why we do what we do…….the reality of life is otherwise……good luck

      • Author

        Gary

        March 28, 2013 at 4:25 pm

        Moral of the story is retire as young as you can and forget the rat race , consumer matrix.

      • Author

        Gary

        March 28, 2013 at 4:28 pm

        http://www.mrmoneymustache.com/

        Retired in 30′s wife and kids lives a full and happy life. It requires a completely different mindset to the consumerist mentality, earn spend it all borrow more, earn more spend more……

    • Author

      Swingin Voter

      June 25, 2013 at 5:15 pm

      I enjoyed the article, Peter. Thanks. You make many excellent points.*

      In fact, retirement can have many benefits. For example, I take on many of the ‘unskilled’ jobs whenever we build a new rental. We figure we save up to $30K+ on each project… and I’m fitter for it.
      I learn from the tradies on-site and nearly all are happy to explain how/why they did such-and-such… .

      While I agree that ‘work-is-good-for-us’ (and you listed the benefits comprehensively) I enjoy our retirement far more than I did managing up to a hundred employees serving innumerable clients, for over 40 years! Working in our home orchards gives us great pleasure… and travel abroad annually likewise.

      How much do you need? It depends not only on how long you’ll live, but what you want to do in your retirement. Visiting a yachting mate in Sydney a decade ago, he shocked me by putting a $100K p. a. figure on it. When I reviewed his lifestyle and recreational activities, I realised that was the right figure for this couple… at the time.

      The danger for many is that it’s all-just-too-hard(!) It cost us a small fortune to get our postgrad qualifications and then maintain discipline to build not only equity, but additional income streams with which to build for the future; going without luxuries others often deem necessities during the process.

      One thing is certain. If you believe you can’t do it, or comfort in retirement is unimportant, or it’s just genes, or inheritance, or plain old-fashioned luck… it won’t happen.

      * Particularly appreciated your comment on TTRs. Along with offset accounts, these certainly made a difference!

  56. Author

    Evan

    March 30, 2013 at 11:32 am

    More than what Im getting now ………..

  57. Author

    anon

    April 2, 2013 at 3:40 pm

    Q: And if I die after age 75?
    A: Too bad, you’re screwed cause you only planned for 15 years post retirement.

    At age 60 i would estimate more like 1.8m, family can have what’s left when you die :)

  58. Author

    steve

    April 13, 2013 at 11:49 pm

    Not sure if anyone has added this yet, but to qualify for the Commonwealth Seniors Health Card your taxable income for a couple needs to be less than $80,000.

    A superannuation pension is not assessable income so if your only income was a $50,000 super pension each ie. $100,000 in total then you would still qualify for the Health Card as your taxable income would be $nil.

    So get your assets into a SMSF and enjoy the benefits of superannuation.

  59. Author

    John Davidson

    April 14, 2013 at 10:30 am

    With those figures u must be living expensily John Davidson

  60. Author

    Scott

    April 15, 2013 at 11:47 am

    You can’t retire at 60. The government have a ravenous appetite for your savings.

  61. Author

    Adarsh

    April 26, 2013 at 1:21 am

    It is a very simple calculation.

    The moment you think of retirement, just check for two things.

    1. Your current annual expenses. This is the amount required by you to live comfortably (or rather luxuriously) in the current year. It is the amount you spend in one year to maintain your current standard of living which includes money required to pay for house rent, food, electricity, water, transport, clothing, insurance, taxes etc.

    2. The number of years you plan to live. For example, if you are 40 years old and you plan to live till the age of 90, then you must take this figure as 50 years. Your current age does not matter. Only how many years you expect to live matters.

    Now multiply the two figures and you get the corpus fund required in your bank account as of today to retire.

    For example, in India if a person’s current annual expense is Rs. 24 Lakh. and if he plans to live for 50 more years from today, then the corpus fund required by him in his bank account today is Rs. 24 Lakh * 50 years = Rs. 12 Crore.

    If he has Rs. 12 Crore in his bank account today, he can retire with immediate effect irrespective of his age. All his expenses including medical expenses incurred in old age can be taken care of with this money.

    This calculation will work globally and can never go wrong irrespective of which currency you use. This is because the bank interest rate on fixed deposit will always be higher than inflation rate of any country at any point of time.

    Here we are assuming that post retirement, the person would do the following.

    a. Continue with same standard of living and not increase the expenditure unnecessarily. For example if a person is currently travelling in economy class of an airline and staying in budget hotels, he must continue doing the same post retirement. If he suddenly starts travelling in business class or accommodating himself in 5 star hotel rooms, the above corpus fund might not be enough.

    b. The corpus fund calculated above is for mere survival without compromising on standard of living. Any other expense such as purchasing a new house or a luxury car, paying for children’s education/marriage or planning a vacation abroad need to a accounted separately. The corpus fund would not be utilized for such expenses.

    c. The corpus fund would be invested in a guaranteed, risk free fixed deposit scheme of a reputed bank yielding minimum 7% quarterly interest. The money would not be invested in equity, debt, gold or any other quick money schemes that cannot guarantee fixed returns or involves a certain amount of risk. Even investing in real estate is not entirely risk free though it yields much higher returns than fixed deposits.

    d. The retired person wants to utilize the entire corpus fund during his/her lifetime and does not intend to leave any inheritance for family members after his death.

    e. The person does not survive beyond the expected number of years. In such a case the person would become bankrupt. It is always safer to assume that the person would live till the age of 90 years or more which doing the calculations.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      April 29, 2013 at 4:50 pm

      Oh we here in Australia dream of a “corpus fund would be invested in a guaranteed, risk free fixed deposit scheme of a reputed bank yielding minimum 7% quarterly interest”

      While this may be achievable in India for a risk free investment, here in Australia you are looking at 4-5% per annum maximum.

      Should rates rise to 7 – 8% then I can see many people taking your advice.

      • Author

        james

        May 2, 2013 at 4:02 pm

        To Steve who retired at 55 3 yrs ago. Yep for you if you’ve saved enough superannuation the GFC was probably b_shit to use your phrase.But for those of us who have been impacted by it, in terms of job loss or loss of employment opportunities I can assure you the GFC has impacted.
        I too had plans to retire at 55, (and was nicely on track)but now at 52, I think it will be 58 or 59 before I retire, provided I can get back in the workforce. I’ve worked 15 mths out of the past 36. Thankfully when I do work I earn a good rate, and that has kept me going. Thankfully too I didn’t always put my excess money all into super, cause once its in super its very hard to touch, and I don’t trust our political friends. But I’ve seen my savings dwindle, despite cutting back on everything.NB Finally my super balance is back above mid-2007 levels, and that’s with minimal contributions over last 3 yrs. In effect at moment I’m “asset rich” but cash poor.But give it another few mths and some assets might be going. Things are tougher than what our experts and political masters think. ps and I mean this nicely, please enjoy you retirement, cause if you can afford to retire at 55 you’ve done well, and your young enough to enjoy it so have a great time.

  62. Author

    Daryl

    June 18, 2013 at 10:50 am

    I retired at 58 which was 6 years ago. Running the ruler over my super and other investments shows that our household assets are now worth measurably more than when I retired. Having solar electricity cuts out expense, as does a wood heater, solar hot water, and we save money in a number of ways that don’t impact on our excellent standard of living. Leaving on yet another long European vacation next month. I can highly recommend self funded retirement if you set it up right.

    • Author

      Jason

      June 20, 2013 at 11:18 am

      The point of the article is that we should be planning for retirement. Social Security, the age pension, health care cards are all of societies safety net and if you’re aiming to be on societies safety net I’m pretty confident you’ll end up there. Saving a lump sum of money to replace your pre retirement income is not rock science, not something that was invented yesterday, yet so many individuals seem to put off. If you don’t know how much you’re spending, how much to put aside each week, how much of a lump sum you’ll need, at what point you want to access the fund, then you’re basically lazy. There’s no magic investment bullet just careful planning.

    • Author

      Martyn50

      June 20, 2013 at 7:45 pm

      There are those who are entitled to the pension after paying 48c in the $ back in the 70′s and 80′s. There are sections of the community who never work and get many hand outs in subsidized housing and have more and more kids to increase their income. We know who they are, but I can’t sat who they are as I will be accused of being racist

      • Author

        Jason

        July 25, 2013 at 3:17 pm

        It amazes me that someone can plan for a $3,000 holiday to xyz in 12 months time, but can’t plan to save $300,000 in say 12 years time to pay for one big holiday. The principles and applications are the same.

        The “I paid taxes therefore i deserve the age pension” is wearing thin. Taxes pay for roads, hospitals etc etc. the age pension started when the average life expectancy post retirement was about 5 years not 20 years of today and is still average to AWOTI. Time will come when the word dole bluggers will be applied to age pensioners and so if you aren’t planning now you’ve got no excuse. the cut off for the age pension is now $1.1 million plus a family home. Why should someone with $1.1 million plus a house be getting Government support. the age pension thresholds should be halved and individuals with the greatest needs have an increase. Greece here we come.

      • Author

        Abel Babel

        August 9, 2013 at 4:35 pm

        Martyn50, back in the 70s and 80s, their kids were getting free university and were not being priced out of the housing market by those who will never inhabit those dwellings they collect like a hobby.

        And if you do single out any race (they all seem to be in the mix) for dole-bludging, then you are racist. From your comment I presume you’re proud of BEING racist, and only mind being ACCUSED of being one. Get over it, it’s just a word.

  63. Author

    Bill

    June 20, 2013 at 12:07 pm

    I was involuntarily retired at 51 in 1992 with a lump sum of $250,000. Paid off house and car ($30,000) and tried for another job – hopeless. Sent wife out to work for 10 years and got myself a disability support pension. Spent about half lump sum on three overseas trips, changed car every 4-5 years, bought some shares. Placed remaining half in an allocated pension of which GFC then removed $50,000, only a few $,000s having been recovered since. So, have $80,000+ in tax free allocated pension which pays $4,000+ per annum, Age Pension for both with all the discounts that go with it, plus share dividends and qualified for 25% UK pension – having worked there for a few years. All up we receive about $35,000 per annum, still manage to go on holiday and change cars when we want. Just think what we could do if the GFC hadn’t interfered!

  64. Author

    Gordon Hickley

    June 23, 2013 at 12:51 pm

    Who is going to retire at 60? I would think a small minority of people. People need to remain active to stay alive and of positive mind, not just because of inadequate Super. I see people taking a phased retirement where they continue to work part-time.

  65. Author

    jAY

    June 24, 2013 at 2:27 pm

    Just blow the lot and go on the aged pension when its all gone!!

  66. Author

    BarelyThere

    July 1, 2013 at 9:07 pm

    Communications costs are unrealistic. With family dispersed in different locations, how could one possibly maintain contact with them (internet, mobile phone, etc) on $9 per month? I’d sacrifice everything else (heating/energy costs, transport, and all leisure activities, even share my cat’s food) to stay in contact with the family, and to maintain contact with the outside world, in general. Internet functionality (banking, paying bills, all types of communication and intellectual stimulation) are a Must Have, otherwise one might as well be dead.

  67. Author

    mandi-mandi

    July 9, 2013 at 9:58 pm

    i wont be getting the old age pension because the goverment will phase it out before i get back to texas as i cant find the cash now ,,,,so what will be like when i get old

  68. Author

    Patrick

    July 10, 2013 at 5:19 pm

    I generally think we should try to save more money for future instead of thinking to rely on government pensions.

    I personally salary sacrifice to my super as well.

    I built an Excel Retirement Calculator Spreadsheet for my personal use however want to share with everyone as well.

    You can find the calculator from this link:

    http://www.investmentpropertycalculator.com.au/free-retirement-calculator-spreadsheet.html

    I hope we can all have enough money to live a good retirement life.

  69. Author

    Barney

    July 15, 2013 at 2:28 pm

    This has been regurgitated before. In reality you only need enough to keep you going from age 60 until you are eligible for an age pension. So based upon the figures above a 60 yo male only needs around $200K till he reaches 65 for a comfortable lifestyle.

    • Author

      The SMSF Coach - Liam Shorte

      July 29, 2013 at 10:20 am

      The single aged pension rate maximum is currently $733.70 per fortnight, that is $19,076.20 per year. If you feel that is a comfortable lifestyle with the ability to save a little for items like repairs or replacement water heaters, fridges, house maintenance etc then you are living frugal and best wishes to you. However the average Aussie would find it hard to manage on this amount.

      Each person has a goal or an idea of their needs. All we were showing in this article is what the average person needs. that means 50% need less and 50% need more!

  70. Author

    Jack

    July 22, 2013 at 5:24 pm

    If I am a chook farmer and I can survive on a diet of eggs, then as long as the chooks keep laying their eggs I will have enough to live on and it will not matter how long I live. Similarly, if I grow apples in my orchid, and I can live on a diet of apples (or I can sell sufficient excess apples to buy other things), I am set for life. The required size of the orchid is set by my income needs; not by the length of time I expect to live (in retirement or otherwise).

    So why does this article suggest that I need more money if I expect to live longer? This assumption only makes sense if I am selling assets to fund my retirement needs – which is, of course, exactly what happens if I am funding my retirement in a retail super fund. In this case they are selling my units in the fund every time a take a pension.

    The length of time it takes to sell all of my units depends on how many units I had to start with, how fast the unit price is growing (because I need to sell fewer units as the price rises and I need to sell more as the price falls) and how many units I am selling with each pension payment (or how quickly I am drawing down on my savings).

    But if I have sufficient capital to generate sufficient income I do not need to sell any capital – ever. If the capital (and associated income) grow at least the same pace as inflation I still do not need to sell any assets – ever. So it does not matter how long I live because I will not run out of money.

    If I have a portfolio of properties generating $60,000pa after maintenance costs and after taxes then it should be able to keep me (and my heirs) in sufficient income in perpetuity. But it would need to be a large portfolio of properties because the after cost, after tax yield on property is quite low.

    I prefer to use Australian shares inside a SMSF because the after costs yield is higher, Australian shares have tax advantages that property does not and a super pension fund has tax advantages on top of that as well. In fact the shares in my SMSF consistently pay 7.5% after-tax yield. Therefore, I need $800,000 to generate enough income and that income increases yearly as company profits increase.

    Most important, because I do not need to sell anything, the volatility (risk) of shares has no impact on me.

    And yet all the “experts” continue to tell me I am going to run out of money!

    • Author

      The SMSF Coach - Liam Shorte

      July 29, 2013 at 10:25 am

      It all depends on if you Chickens keep laying and don’t catch a disease and that you have no bad apples in your store. Likewise for people who had money in mortgage funds, debentures, property trusts in the GFC and in companies like ABC Childcare, Babcock & Brown and Allco Investments.They saw the flow of incoem not slow down but often disappear completely. Just look at the top 50 stocks in 2000 and Top 50 in 2013 and you will see that some very big names have faltered along the way. So risk does affect the sustainability of all portfolios regardless of whether they are shares, property or Chickens!

      • Author

        Neo

        August 9, 2013 at 1:17 pm

        Which is exactly why you use an etf like VAS (fees 0.15%) you own all 300 top stocks some go bust, some go down, some go up, you earn the market average through diversification greatly decreasing your risk. and as 80% of fund managers can’t beat the index anyways its the best way to go.

      • Author

        Jack

        August 13, 2013 at 2:39 pm

        I am not suggesting I never sell a share. I am happy to sell a share in order to buy a better one. But I am suggesting that I do not sell a share in order to eat the capital.

        If I only live off the income, I keep the capital intact for a retirement of indeterminate length. Then it does not matter how long I live!

    • Author

      Michael

      September 17, 2013 at 2:59 pm

      Property also works well in a SMSF, remember rent is linked to inflation, while dividends are fully franked they work well but they can reduce (AMP) or go to no franking, or like BNB evaporate, I like to diversify.

  71. Author

    Ben

    July 28, 2013 at 2:55 pm

    I wish these spruikers would and the pension into their calculations. But of course then you would only need 1/3 of what they say. Does anyone really believe retired people eat as much as much younger working people ? Or do retired people drive 2 hours every day in peak hour traffic ? It cost 1/2 as much to live once you are retired. But these super spruikers want your money.travel an hour and travel

    • Author

      The SMSF Coach - Liam Shorte

      October 4, 2013 at 1:17 pm

      Ben, to balance these savings , you also spend more time at home using more electricity , heating and wear and tear on appliances.

      You don’t travel to work but you may spend many weeks a year travelling by car around Australia possibly pulling a caravan as well or ferrying grandchildren to and from activities.

      You do have more medical issues and to put it in basic terms, sanitary needs, that all add up.

      Don’t fool yourself that you can maintain your lifestyle on an age pension only in retirement. Did you work all your life to be counting the pennies for a pack of biscuits! It’s a safety net and that is all.

      The draw back is that the better lifestyle you save for and make for yourself, the less Age Pension assistance your will receive. So by all means we do sue the Age Pension as a source of income but we set goals for people to be for the most part self funded with any social security seen as a bonus conserving your own capital rather than the nail upon which you hang all your retirement hopes.

  72. Author

    James Molesworth

    August 1, 2013 at 10:06 pm

    Good solid numbers. My own estimates are pretty close to these.

    However most people howl me down saying that number like these are “too high”. No, it’s just that they haven’t considered everything, and often living on credit. In retirement you can’t do that.

    So, bottom line, well done on these estimates.

    Regards, Jim

  73. Author

    Rick O'Shea

    August 5, 2013 at 4:50 pm

    All good information and accurate figures/estimations. The only thing I would add is to consider your real talents and skills that you acquired in your working life, now can any of this ‘stuff’ turn over a supplementary income, perhaps a day or two a week?
    You be surprised with the people who need help with the most mundane aspects of their life, and are willing to pay for it.

    • Author

      Liam Shorte Principal of Verante Financial Planning

      August 6, 2013 at 12:21 pm

      Very true Rick. I have a number of retired ex-managers who do part-time or casual jobs helping companies/tradies/shops with Stock takes and some bookkeeping. the tips they also provide to younger business owners are invaluable.

      People need to think out side the square. don’t worry to much about some casual income reducing your Centrelink benefits as there is a system to allow you to earn more through short periods of employment without paying tax or losing benefits. http://www.fahcsia.gov.au/our-responsibilities/seniors/programs-services/work-bonus

  74. Author

    Jim

    August 28, 2013 at 3:52 pm

    Life expectancy is a variable that increases with your current age – as it includes figures for post natal death, childhood and adolescent deaths etc all of which reduce the overall expectancy. Once you have reached 60 years old, your “re-calculated” life expectancy will be much longer than the generic 86 for men and 90 for women.
    As such, try to plan for much more than is estimated here.

  75. Author

    Jorcina

    September 11, 2013 at 10:24 pm

    These are actually wonderful some ideas in the blog. You have touched good quality points here. In whatever way continue writing.

  76. Author

    F.Hunt

    September 30, 2013 at 11:58 am

    All retirees should be given the Heath card..

    • Author

      The SMSF Coach - Liam Shorte

      October 1, 2013 at 10:27 am

      Our HealthCare card is intended as a support net for those who cannot afford the full costs of healthcare themselves. It is reasonably generous in that you can still have the card if your income is less than $50K as an individual or $80K as a couple. this figure will now be index linked as well as promised by the Coalition during the recent election. As a nation we cannot afford to offer this sort of assistance to everyone without significantly increasing taxes and that would not be acceptable in today’s climate. A safety net is just that and not a universal entitlement.

    • Author

      Geoff Copland and Karin Perisic

      March 6, 2014 at 7:24 am

      there are generally the most expensive but at leave they die off!!

  77. Author

    Lisa

    October 1, 2013 at 6:04 am

    This may not suit everyone, but a good idea for the upwardly mobile self funded retirees is to live abroad for a couple of years of your early retirement. The world retiree index rates every country on costs of living, health care facilities & weather. Australia is way down the list, so if you like adventure & to give your children & grand children an exciting destination to visit, take a look. You can live well in Ecuador for one third of the amount you would need to retire in Australia. Which gives you much more to live on & if you are able to rent your house in Austalia you may not need to touch you super, worth a look. We have been spending the last five years travelling & testing out the countries we could live in for two years & the money really stacks up.

    • Author

      The SMSF Coach - Liam Shorte

      October 1, 2013 at 10:17 am

      Lisa that is a good idea for the more adventurous people out there who want to see some of the world.

      I also have clients who use Homelink or similar offers to swap homes with others around the world to save on accommodation costs and actually live among locals instead of in tourist areas.

      Pays to think outside the box.

  78. Author

    JohnBB

    October 2, 2013 at 8:34 pm

    How confusing. The article says 15 times 60k and then says $56,236 for a couple to live comfortably. Is it that hard to make these things clear? Is the 60k for a couple, or is it for a single?

    • Author

      The SMSF Coach - Liam Shorte

      October 4, 2013 at 1:01 pm

      Hi John, The $56,236 (now $56,406) is based on the ASFA Retirement Standard for a comfortable lifestyle for a couple in retirement and we used $60,000 as out goal to allow a buffer for unexpected expenses or an additional holiday or treat.

      For a single person the Retirement standard is $41,197 for a comfortable lifestyle.

      You can see the latest update on the retirement start here http://www.superannuation.asn.au/resources/retirement-standard

      regards

      Liam

  79. Author

    Jon

    October 17, 2013 at 5:29 pm

    “Months before the GFC hit, we moved all our Super from 100% ASX to cash. That not only protected our Super, but once the market bottomed, we then moved it all back to ASX…”

    Incredible timing, please tell me how to do this!!

  80. Author

    shane dunning

    October 30, 2013 at 11:24 pm

    This article is laughable. It said today’s economy is better than what our parents had.

    I laughed my ass off when i read the first sentence. Morons.

    • Author

      The SMSF Coach - Liam Shorte

      November 1, 2013 at 11:42 am

      A bit harsh Shane so I have to correct you as the article does not say we are better off than our parents. It says we are living longer and therefore need to fund a longer retirement. Were you referring to a different article perhaps?

  81. Author

    Mick

    November 12, 2013 at 8:16 pm

    My wife and I are both receive centrelink full age pensions and have around $100k invested. We own our own home, car. Other bank accounts around $10k. Doesn’t, sound a lot, but we live really well, play golf/bowls weekly, go out for dinner at least once a week and travel on a cruise every 9 months. Have just returned from 5 weeks Italy cruise, Spain and will head off to Bali in May. It is all about budgeting. We used to pay a mortgage of $500 fortnight until I retired, so now we save that each fortnight and go for a holiday when sufficient funds are reached. We have a small car, walk rather than use the car when we can. We are not tight with our cash, just manage it very well thanks to my wife. Anyone can do it. You do not need big numbers in your bank account if you own everything. Don’t be the richest person in the cemetery.

    • Author

      The SMSF Coach - Liam Shorte

      November 13, 2013 at 12:31 pm

      Thank you for the input Mick and I agree that someone who manages their budget and maintains a active but simple lifestyle with planned holidays can manage on the Full Pension and a $100-$200K. Unfortunately many believe they can have the same lifestyle in retirement that they have got used to while both bringing in salaries.

      My mum used to say “you cut your coat according to your cloth” and yes you can have a lovely lifestyle on a modest budget if you allow for the big one off costs like replacing the car or appliances. and make little but regular savings by walking instead of driving etc. It all adds up.

  82. Author

    mick

    November 26, 2013 at 8:11 am

    I semi retired at 55 never liked work took up to much time I reckon. A lot of people say they couldn’t live on the money I have each week but I have a hobby and go community garden. I travel in my car with a tent or swag even use cheap motels at times. had a camper trailer but sold it I regret that now. but nearly retirement age and will use a allocated pension savings and redundancy money to live quiet well but im no clubber pokie gambler. I am single

  83. Author

    John Davidson

    December 15, 2013 at 2:20 pm

    I do no think u need that much in retirement if u live a simple life !!!!!!!!!!!! John

  84. Author

    Margaret C. Malone

    January 6, 2014 at 2:35 am

    The very next time I read a blog, I hope that it won’t fail me just as much as this particular one. After all, Yes, it was my choice to read through, nonetheless I actually believed you’d have something useful to say. All I hear is a bunch of complaining about something you can fix if you weren’t too busy searching for attention.

    • Author

      Gary

      April 5, 2014 at 9:10 pm

      The biggest and most unaffordable tax break in Australia is no tax on super for the over 60′s. I’m 56, and totally expect that this Howard policy will not be available to me when I turn 60!

  85. Author

    swamiji

    February 3, 2014 at 3:08 am

    my god for single retired man you require $ 22,539/- in US. I am leaving with Rs 78,000/- why is it so costly to live in US? i simply can not understand the economy, US population is lees than india and number one in all things but why living is so expensive? well no use raking the brain
    god bless you
    swamiji
    monk and social worker
    india

  86. Author

    CURTIS

    February 22, 2014 at 7:53 am

    I DID NOT SEE ANY EXPENSE FOR TAXES, INSURANCE

    • Author

      Liam Shorte Principal of Verante Financial Planning

      February 24, 2014 at 11:26 am

      Curtis

      This article was designed for Australia

      The comfortable lifestyle includes Private Health Insurance and that is why there is a jump between the Modest and Comfortable Health Costs.

      A couple over 60 with a income of $57K per annum form a combination of Superannuation Pensions and Personal income would not expect to pay any tax. Most Account Based Pensions are tax free over 60 and the Tax Free Threshold for personal income is $18,200 per person and even higher once allowances included. So they would not expect to pay any taxes.

  87. Author

    Geoff Copland and Karin Perisic

    February 27, 2014 at 6:56 am

    WE are a married couple on over(gc) and one under 60. We have established a SMSF with company as trustee and we as directors. The assets of the fund at present are two commercial properties and cash total value of $2.4M. We are saving up for a third commercial property to the value of $1.3M. This will mean the SMSF has an income of around $260,000 pa after expenses including tax,,ATO fee and ASIC fee and accountant fees.
    We wish to make the SMSF section343 compliant.
    Do you have any tips on how to amend the deed to achieve this?
    Thanks
    GC and KP .

  88. Author

    Anjela

    March 8, 2014 at 8:40 am

    Very interesting- as I got up this morning , made my breakfast, hopped in the shower and folded up my overnight aerobed-I was looking at this article before heading off for another 8 hour stint on my feet.
    At 60, it is abysmal.I am the only person I know who still works for no money… and this is a company that I lost to my ex and now work for him in return for his giving me room and board -I have no asserts,no home- not a penny in the bank except one good thing- because I was married for 10 years I get 800@ month bases on my ex husbands social security.That is all I have.I use it to pay off my children’s university loans as I, at the time, was well and had a business and felt I could afford to pay it back.Now I am not well but must work or be absolutely homeless- rather than temporarily homeless-I get so tired of seeing women who were wiser than me in choosing partners or whatever -but most of the time I am just grateful to have a place to curl up at night time.I don’t think I’d survive on the streets.

    I worked so hard to have this business and if I walk away I leave my room and board behind.If I walk away because I have promised to pay off the school loans-I break that promise and anyway I think it would be hard to live on 800 a month. I respect and admire anyone who has made it-and am scared for the future- I raised my babies and I did some editing which was part time and freelance so never paid into the system and now have nothing. My ex was a man who lived his dream and we were on the periphery to his goals. I wish, I wish, I wish I could go home to my country but home no longer exists as it did 30 years ago when I was coming here- My family are, for the most part, ridiculously wealthy but I would never ask them for anything.

    We all had the same opportunities, all went to the same elitist boarding schools and universities or had access to them-I went away as a travel writer- They stayed and studied and went into the Foreign Service- became diplomats or financial beings-I was busy scouring the alleys for that one, perfect little cafe or the B & B as yet, undiscovered.And now, thinking one needs a million to retire at 60-I am stuck in a quagmire and unable to find my way out. Any ideas would be lovely for those of us who made our homes out of straw.Thank you:)

    • Author

      Liam Shorte Principal of Verante Financial Planning

      March 11, 2014 at 4:33 pm

      Anjela, thank you for comment and I know there are many others like you. I will put together some basic ideas and some challenging strategies for those in similar circumstances soon.

      Liam

      • Author

        Nerri

        July 14, 2014 at 3:02 pm

        Hi,
        I was following this string but it went quiet. I am 65 and my husband of 44 years locked me out 2 years ago when I was away working on a book I was pulishing.
        He put the family home in his name and paid himself super. My inheritance really was blown up in the GFC, as I used an unscrupulous adviser. Unlisted Property Trusts collapsed from 1.4M, and I now have just 40,000 The lawyers, and setting up home again used up my money. Just sold my holiday home to pay bills. Gave me another 100,000 to see this case through.
        We are now in court squabbling over health and future earning capacity vs inheritance. I got the low income (Commonwealth Seniors Healthcare Card) as I earn nothing, but cannot get the pension because I am Director of a Family Trust with 2 rentals in it. Advising people to put their assets into a Trust is of no use.
        Its the kids future that is being lost. Major property sales netted me nothing so far – I had no idea how much he borrowed from the bank, and unluckily for us, it was invested in shops that do’t have shoppers or tenants any more.

        The upside is getting a fabulous new boyfriend, but if I move in with him, and ever need the pension, then I won’t get it. Centrelink think he will support me, and will cross-examine everything about him. I think they are encouraging lots of people to occupy homes and flats as singles.. Imagine how much housing would be freed up, and be available for the next generation if Centrelink supported us in moving into coupled new relationships.

  89. Author

    Fwank

    August 7, 2014 at 12:00 am

    I just happened on this thread as I’m setting a savings target for retirement. Talk about the age of entitlement! I could not have imagined so much whinging from such an affluent few. Most here are the extremely fortunate.. Fortunate to have been able to accumulate a self funded retirement in a blessed nation of affluence and peace, whether through hard work or inheritance. So get a grip, get a life.

  90. Author

    jd

    September 22, 2014 at 7:35 pm

    13 x 60 is 780 not 680

    • Aishah Mustapha

      Author

      Aishah Mustapha Blog Content Editor

      September 25, 2014 at 11:50 am

      Hi JD,

      It has been corrected in the article. Thanks!

  91. Author

    Peter

    October 15, 2014 at 11:02 pm

    Thank you for this useful information and table from ASFA. A well written and very easy to read article. Keep up the good work. Cheers Peter

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