How much money do ya need to retire

Richard

Well...work out how much money you need per year.

Multiply that number by 8 (%)(current average investment return)

And that is what you will need.

e.g 50,000 x 8 =400,000

We are pensioners and seem to get by on $20,000 per year and still do a few trips here and there. It is a matter of budgeting.


Cheers

Can you work part time for a while? 55 seems obscenely young to be retiring (from someone who will be 55 before the end of this year, but who will keep working til he drops). I guess it depends what you do. If you have shovelled shyte for the past 40 years then retirement would be looking very attractive indeed.

Willem,
Thanks for the reply.

I am trying to sort out the finances and reckon I would have trouble on that amount - may be if i stopped getting things for the 4wd we could :).

My super is not to bad and may be I am just getting to greedy but there are lots of things I would like to do and get.

But figures like that and comments on the this forum make me think the time is very near - may be next year :)

Just being home would allow me to spend more time with my dog which getting old as well, oh and the wife (who seems to be getting younger ).

Richard

Richard

I had no choice, I had to retire at 55 because of a rare illness. My wife and I manage easily on about $560 per week but we own our home and I do about 99% of the maintenance on our Hilux. It could be a bit difficult though if we were renting.

It is hard to answer a question like this because no two people lead exactly the same lifestyle. As an example, a couple of years ago my wife and I were touring Tasmania and we met a retired elderly couple in a small late model Mercedes van that did not look like a motor home. It had no pop top roof and you had to bend over slightly to move around in it but it was very tastefully and professionally fitted out inside. They lived in the car all the time and even stayed in the car park at the casino while in Hobart! They said it just looked like an ordinary car while parked there and nobody worried about it.

I would say their accomodation costs for the entire trip would have been zero.

Some people would have been happy with a thrity year old Bedford. Others would want a top of the range Winnebago. A caravan park or motel each night would have been essential for some while nothing but the finest room in the casino would have satisfied others. Your living costs after retirement depend entirely on what you want.

That Tasmanian trip took us two months. We did 4,000ks in the State with a bit more to and from Melbourne. At current diesel prices, that distance over that time would cost about $90 per week. If we were out on the road full time, I am sure we would not even average that much each week so it would be easily affordable even on our income.

We do expect to be full time on the road within the next couple of years but it will most likely not be in a 4wd. We will probably buy a late model two ton pantech and fit it out ourselves with a very spartan no frills interior that will include our own bed from home. We will be out to see the country, not the inside of a luxury vehicle. All windows and doors will be concealed behind the stock rear opening doors and a side door so when closed up it will look like a stock truck. It will be self contained and we can stop over night in it anywhere. Our only accomodation costs will probably be a few National Park fees.

A vehicle like this is cheap to buy and although it is not a 4wd, it has a lot more ground clearance than a motor home or bus and can be taken over some very rough roads.

I think the key to being a grey nomad if you have to watch your finances is to do it full time, slow down, take it easy, don't drive all day every day and have a vehicle you can live in even if it is only pop top camper on a 4wd ute with a box trailer carrying a bit of extra gear. If you do that then the cost can be no more than living at home.

If on the other hand you base yourself at home and take off on regualr trips for a month or two to the other side of the country, then the running costs, particularly for fuel, could be a killer.

Brian

Richard,

You could spend day or weeks trying to work out how much money you will need . And you could get a thousand different amounts from others. Perhaps a two or three month trial holiday doing the grey nomad thing and checking on your expenses during that time would give you a better indication.

When it comes down to it, all the money in the world is no good if something happends and you are unable to enjoy it.

I have heard of, and seen, too many people work those extra years to save those extra dollars only to have some tragedy destroy all their plans.

I am a lot of years away from retirement so am a little distant from having to make the decision you are faced with, and perhaps I will look at this in a different perspective when the time draws nearer.

Regards Gunna Do

Go for it! I too am nearly 55, will retire the day I turn 55.
As has been said I've seen too many mates and acquaintances who have worked that little bit more to have more and have either retired at 60 with health problems or carked it a few years later.
Why wait till you are too old to do all the things you've dreamed about. I've met too many people over the years that regretted not retiring as soon as they could.
As for the workaholics, good on them, but not for me.
They don't dig you a bigger hole in the cemetry or give you a bigger urn because you are richer than the rest.

All depends on what sort of lifestle you want. My Dad retired in his early 50's and could have done it much earlier but he always told me he needed 4 mil to maintain his lifestyle. I said to him he had to be joking as a mill would set me up for life even at my then young age. But he wanted to maintain his current spending patterns.

At 55 you have a long life ahead still (can't spend all your money in next 10 years), so assuming you don't draw down on your capital work on the calc Willem put forward ... although probably at 6 or 7% rather than 8% as a long term avg.

I reckon $1M would do the trick for most people, giving a *pre-tax* income of $70000 per year roughly. If there are dependents then that's another issue.

Income, although important is not the only consideration. You can always dip into your savings and run down your 'nest egg'. Sure this will reduce investment income (interest) but if you only run down your capital slowly to supplement your weekly spending or for large 'one-off' purchases then you do not need a huge income. I have no income other then interest on bank deposits. I calculated that if I live on capital alone it will take me x years at y dollars per week till I have zero $ left in the bank. As I reckon I will be sitting in front of the tv for most of the day at that age I am happy to run down my own savings as well as living on the investment interest.

After I retired (mid 50's) I worked part time at a local high school helping out in the woodwork / metalwork classes. I did not care what my income was as long as it reduced my draw down on my bank balance. The work was a few hours each day one block from home, school hours and I had the same holidays (unpaid) as the school kids have. It was great fun and no responsibilities I just did what I was told and showed the kids how to use machinery and all the other things that teachers did not know how to do ! :-))

bugga
gone past 55 some years back...but i also have 2 kids to get thru and finish college, so i'll be working a few more years yet :(( ...but when they finish .....it will be YAAAAHOOOOOO!
there is much i want to see and do.....buying all my toys...err tools for my new office (existing garage) and with still some more to come to keep me busy later in life...if i dont kark it b4 hand

if you think you can afford it...Do It

Richard,
I am not an investment advisor so please verify everything I say.
You have an indexed pension and I presume a lump sum and are still working.
Use the retirement lump sum to buy a Non-commutable Allocated Pension. Salary sacrifice your wages back into super. Build up a new lump sum work a couple more years and then retire fully.
Example of a bloke near me who retired from the public service at 54 years and 11 months to exploit a loophole.
He has an indexed pension of $45000, and returned to the workforce on $50000. He used part of his lump sum to buy a NCAP of $20000 pa and salary sacrifices all of his wages into super. If you can't buy an NCAP just salary sacrifice as much as you can for a couple of years, living off your pension only and see if you can make ends meet.
I sure as hell wish I had sought better advice a few years ago.

Mike

Wow, all this talk of millions in your super!

I think realistically there was a post here quoting a bloke on 200k pa, he'd be about only one liable to tip figures like that.

As said above, everyones different, but one thing common is we all want as much as poss. Therefore:-

Aim for about 300k min in super, but in your last 10yrs working should try to keep most in low risk investment as you dont want to lose 25k a year like some have this year. True you wont make as much but its safe.

In final years working, bung in as much as you can afford on salary sacrafice.

Dont know about this 55 thing, I'm told 59 is first you can get super.

Agree totally with retire as early as poss, enjoy things in life, instead of working yourself into poss health issues.

Then go explore this great land!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Rgds

Ron

According to the Super industry, the "average" couple needs around $48K a year to retire on. That's a lot of super or investment! Plenty have to make do with a lot less.
There are some "what if's"
How healthy are you ?
Can you do most of your own home and vehicle repairs?
What are your expectations for retirement (and of course SWMBO)?
Don't expect the stock market to provide a stable income.
Try and have an escape clause...can you do a bit of paid work if you really need to later on ?
Overall, retiring is about the best thing I've ever done. Even if it was medical retirement. I've been healthier since I retired than I ever was at work. Mind you the poor missus still has to work for a couple of years yet.
Do you have hobbies that aren't expensive? Keeps you busy between trips:)
Whatever your decision, good luck with it :))

I think the hardest thing is making the initial decision to leave the work force regardless of how old you are. I can testify though, once you have made the decision you will feel a whole lot of relief. As to how much you need in your super, its all a matter of what you expect in retirement.

Statistically, men are now living to 81 whilst women are living to 84.

I made the decision at age 52 to leave and whilst I need to wait until age 55 before accessing my super you are permitted to access some funds in your super prior to 55 however,you will pay the usual tax.

The one thing you need to remember in this whole discussion is......... they don't make shrouds with pockets in them.

Any decision should be based on what you really want to do and enjoy. Money should be secondary to your decision because your a long time dead.

Just a comment on the calculations used in this thread. I think historically you should only be calculating your funds at 5%. Furthermore, if statistically you are going to live for the next 30 years remember $40,000p.a. today aint gonna be worth the same $40,000 in 20 years time whilst returns will fluctuate over the same period.

I could go on and on but don't want to bore anyone to tears.

I strongly recommend seeking out a good financial planner and when you have discussed your own situation, go and seek out another financial planner for a second opinion. I'm sure you will find it a most valuable exercise if you haven't had the discussion already.

Cheers.

Far as I know you don't need any money to retire.

HOWEVER - you will require money for living expenses. Surely you must have a budget, use that as the basis for calculating. Not all that difficult - surely.

What ever you do make sure you see a good financial adviser before you do anything

HI Richard,
How much you need depends entirely on the lifestyle you desire.
However financial gurus like Noel Whittaker was recently asked this question and suggested a figure of $1.4 million (excluding family home).
Over time low risk blue chip investments will yield an average of about 6%. (Yes you can get 8% interest on deposits at present but 5 years ago you couldn’t). At 6% a superfund of $1.4m will yield an income of $84,000 pa (or $42,000 each for a couple). This is the amount considered reasonable to provide a worry free retirement with enough income to travel overseas or in Australia, replace assets as necessary and generally enjoy life without financial problems.
Obviously this is a self funded retiree - there would be no Government pension..

Cheers,
GPM

G'day Richard

I was made redundant almost 9 years ago (due to govt cutbacks) and have never looked back as I hadn't planned to work till I dropped anyway..no pockets in shrouds!

Unfortunately my husband died at 44 so didn't get a chance to start our retirement plans.

For me, as long as I have enough to keep my head above water, that's all I need and so far things have worked out OK, which is just as well because I wouldn't have enough time to go to work now...retirement is too busy. Imho, if you sit around worrying about what 'will' or 'might' happen with a super fund/investments/etc then you will never stop working.

Just do it!!
Bronwyn ;-)

Richard,
investigate seasonal work, which lets one be a grey nomad, but still provides some income. Plenty of work up north in the tourist season (and beyond). A lot of jobs provide a wage and keep. We found we could even save money whilst doing this type of work. You do not necessarily have to be "qualified" - husband and I were both white collar professionals before early retirement. Since then have done a lot of seasonal work in tourist places (cleaning, cook, reception, campground upkeep, tour guide), driving, harvest work, etc. If you have a home base but travel to and from it to do a short term job up north, the travel becomes a tax deduction. I am not sure whether this is so for moving from one job to another, as harvest workers do. If you live for 181 days of the financial year in certain areas up north, you get a Zone A or Special Remote Zone tax rebate, too, which can also help the finances.

To All,
Given the number of responses and comments it is a hot topic.

Obviously a lot of old bugger like me roaming around - baby boomers I guess.

There have been many comments and all good. I was not sure how people would take it as it was not a 4wd question but it is a life style question and I very much appreciate the responses.

I have had financial advise and am following it but still like the idea of getting out ASAP and try something else work or otherwise.

I do have some commitments that will stop me from hitting the road full time but I have other things locally to keep me busy I reckon.

All the best to every one and thanks for the thoughts
Richard (thread orginator)

- About to go to my daughters 30th birthday dinner