Thread: Retirement Funding - How much $ is enough?

my parents still work for wages about 10 weeks a year - it puts em right up to the tax free threshold and doesn't impact all the tax free perks pensioners get... they intend to do this as long as they can physically manage it - no retirement age for university examination invigilators

that said, how long is a piece of string? - if you are debt free (and you should be if you are retired!) then your costs should be relatively low, if you have alternate sources of income (eg rent out the spare room, mow lawns for cash, make something to sell at markets) then you should be fine and not need to worry too much - relying on the proceeds of managed funds to pay the bills would have me worried though! what happens when they go backwards? (they will someday soon!) you can't eat nothing can ya?

yes, EchiDna, you're quite right in saying its like asking how long is a piece of string

I should have written too that I was assuming the no debts bit...

but I guess I'm loooking for general opinion/views like $150k may well not be enough but maybe $250k could be, or $350k, or $450k or whatever...

what prompted me to write was it is that no-one who should know seems to want give a straight answer - even in ballpark amounts

thats coz we all live to a different age and die spending a wide range of $$$ on medical bills in the process!

ideally we would all die with $0.25 in the bank and have retained all our assets so that we can hand something on to the next generation... but that is rarely the case

I'm budgeting on dying at the average age of about 85 quitely in the night while never having had a thing go wrong in my life medically (by the time I get there it might be 100 - who knows)...

impossible to be accurate as we are all different, but chances are your accountant is right and there is no such thing as enough to be certain it's enough!

Unfortunately it does vary dramatically between individual circumstances, including how you want to live.

The biggest uncertainty is how long you are going to live. The thing we would all like to do is to keep the capital and just live on the interest/growth. But this, for any realistic life expectancy, means a lot bigger sum of money than would otherwise be needed, and leaves your heirs with a big windfall.

Then there are unexpected expenses - for example, in my case we had to pay for oxygen for nearly two years for my wife (no subsidy if you don't have a pension), and a lot of travel for medical treatment. The treatment for her itself did not cost much - most was bulk billed or charged at the scheduled fee. But a recent cancer operation I had, and an earlier foot operation had staggering "gap" charges, despite private health insurance (main advantage of this was no waiting list).

Other expenses include having to help adult children financially or in ways that involve costing you money even if not actually paying it out directly to or for them. (Weddings, home purchase, emergency bailouts etc.)

But remembering all these variables, my view, after 13 years as a self funded retiree is that a minimum is probably round $500,000, but again I have to emphasis that it all depends on circumstances.

John

Originally Posted by JDNSW

Unfortunately it does vary dramatically between individual circumstances, including how you want to live.

The biggest uncertainty is how long you are going to live. The thing we would all like to do is to keep the capital and just live on the interest/growth. But this, for any realistic life expectancy, means a lot bigger sum of money than would otherwise be needed, and leaves your heirs with a big windfall.

Then there are unexpected expenses - for example, in my case we had to pay for oxygen for nearly two years for my wife (no subsidy if you don't have a pension), and a lot of travel for medical treatment. The treatment for her itself did not cost much - most was bulk billed or charged at the scheduled fee. But a recent cancer operation I had, and an earlier foot operation had staggering "gap" charges, despite private health insurance (main advantage of this was no waiting list).

Other expenses include having to help adult children financially or in ways that involve costing you money even if not actually paying it out directly to or for them. (Weddings, home purchase, emergency bailouts etc.)

But remembering all these variables, my view, after 13 years as a self funded retiree is that a minimum is probably round $500,000, but again I have to emphasis that it all depends on circumstances.

John

thanks John i'm really looking forward to retirement now
4 kids and all them added pressures

i think i might need a couple of mill to retire on

As another self-funded retiree, my principal income is from two allocated pensions. These are balanced funds that have earned around 14% last last 3 years. I am drawing the minimum permitted from these and the balance is going up in spite of drawing an income. I also receive a Superannuation Fund pension which is indexed at CPI six monthly. This fund did not give a pension increase last June as they say there was no CPI rise, "no inflation", in spite of the Reserve Bank saying there is 6% inflation. This fund also earned at 14% but does not pass the earnings on to the members saying the returns are to build up the fund for the bad years. If you do not wish to claim an Age Pension from Centrelink then I would say you need around $500,000 in allocated pensions to produce an income of $40,000 pa based on retiring at 55 and a life expectancy of late eighties. As the asset value of the allocated pensions declines with withdrawals then you would become eleigible for an Age Pension.

After me having to give up working at 48 due to illness we have been looking at this issue very intensely.

It's not until you get $0 from anywhere and the bills keep arriving that many people realise how income dependent we are driven as a society.

Our solution, stop looking at advertising that only wants our money and give us goodies we don't need.

Look at the reoccurring expenses like electricity, phone, Internet, rego, etc. For an example we saved $20 per month just by changing Internet providers and now have double the speed that we used to.

Limit take away meals as these can add up to over $100 per week easily just for the convenience of a quick feed.

As well as the above do a detailed budget to see exactly where money is going. Make sure to include holidays as these are needed.

Another idea is to either reduce liquid assets enough to get pension benefits or have enough not to need a pension. e.g. some people buy an expensive house as their place of residence so not to have cash assets for CentreLink purposes.

Certainly not an easy exercise and be careful of financial 'experts' as they get thousands for signing you up to a investment plan. Our financial adviser lives very well on 3 days per week work and he is under 40 years of age. Lucky for us that he is a family friend and takes minimal commission from us.

Originally Posted by Brian Hjelm

As another self-funded retiree, my principal income is from two allocated pensions. These are balanced funds that have earned around 14% last last 3 years. I am drawing the minimum permitted from these and the balance is going up in spite of drawing an income. I also receive a Superannuation Fund pension which is indexed at CPI six monthly. This fund did not give a pension increase last June as they say there was no CPI rise, "no inflation", in spite of the Reserve Bank saying there is 6% inflation. This fund also earned at 14% but does not pass the earnings on to the members saying the returns are to build up the fund for the bad years. If you do not wish to claim an Age Pension from Centrelink then I would say you need around $500,000 in allocated pensions to produce an income of $40,000 pa based on retiring at 55 and a life expectancy of late eighties. As the asset value of the allocated pensions declines with withdrawals then you would become eleigible for an Age Pension.

Wise words Brian.