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What are people's experiences here, and what are your consideration s in choosing one ?

Edited by Merv

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All they want to do is sell you their product to get commission. Talked to one lately just wanting basic advice and he wanted to sign me up for over 3 grand for stuff I don't need.

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2 hours ago, oldave said:

All they want to do is sell you their product to get commission. Talked to one lately just wanting basic advice and he wanted to sign me up for over 3 grand for stuff I don't need.

Yeah similar experience with me.  Wanted some basic advice but end up paying $1600 for him to tell us to invest our money in Managed Funds (managed by him).  Wasn't a particularly good deal either.  We are getting a better ROI off our shares than what they were offering through the managed fund. The piss poor part of all this was that we told them we wern't interested in managed funds after extremely poor experiences previously.  

Pretty much walked out of his office  thinking that we had a better grasp of the financial world than he did.  Absolutely certain that he was way out of his depth with the complexity of our financial situation.

I'm sure there are some excellent financial advisers out  there but you have to wade through the plethora of half baked people following a generalistic formula to find the one that can provide the right advice for your unique circumstances.

AJ

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Teach yourself, it really isn't that hard when you have the time and inclination

Failing that, speak to other people you respect and ask them who they use.  Take into account what their goals are and if your situations are somewhat similar.  Go hard on the planners in the first meeting and tell them to explain their commissions, if they don't answer - walk.  Get them to explain how they will charge you - flat rate and they might not care enough, some sort of incentive plan for them is okay but nothing too steep.  Ask if there are any exit fees

Avoid anyone attached to a bank or a financial institution, they will always put their interests before yours, and do it all while smiling right at you

And finally don't take their advice without questioning it.  Ask them what they are doing and why, then do your research.  If they tell you to invest in a strawberry farm empire that can't lose, do some google searches and see if Strawberries are a good investment

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They're in a battle to the bottom of the scum pond with used car salesmen, News Ltd 'journalists', ambulance chasing lawyers and any shock jock...

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Don't get me started on these $%^&s

Experiences over 30yrs - 100% bad.  

Any half decent industry super fund will shit all over these clowns.  Or an index tracking fund.

Thanks f*ck I negotiated down the fee with the current mob I'm involved with (only pay half their fee unless they can get me at least 6.5% return income + capital).  So far they've managed -0.23%....which went up to 1.8% when we rolled the shares we bought 20yrs ago into the portfolio.

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1 hour ago, A2K said:

A strawberry farm? 

Probably a good investment.

My wife bought 5kg today at a farmgate "getting rid" of what they say they can't now sell. The lady was wearing a diamond at least 2 carats.

Yesterday there was a queue about 2 hours long, this morning an hour. I'd suggest the price they were charging (which was cheap retail wise) was probably more than they would get from Woolies or Coles if they were still buying. If the farmers want to sell their crop, they can. If they want to dump them & pick up the insurance, that's also an option.

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Interesting.   so how are people managing their money in retirement then ?  

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It's called the pension.  If not, I kept the box the fridge came in.

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38 minutes ago, Merv said:

Interesting.   so how are people managing their money in retirement then ?  

Mostly ourselves and we will get good impartial advice from the advisers at our industry super funds when the time comes.  You have to pay them (about $3K) for detailed advice, but we are not at that stage yet & can get limited free advice from them.  Ultimately, we will roll our super into one of their pension products which pay a regular income stream.

As for our other share investments with the local financial advisers, we have not got all our eggs in that basket thank Christ.  That portfolio of about 20 shares (and growing) has recently returned about 3.8% in earnings (dividends & interest), but because they bought TLS and VOC for us, has shown a capital loss, so overall a small negative return over the 12mths we've been invested with them.  Now compare that to our super funds which have averaged 7-8%+ over the last few decades and up to 16% in some periods.  Even the periods of negative return have been very few and very short.

Finally, I intend to work one-day per week for as long as I can (into my 80s if the body holds up?) which will add $400-600/wk to the income stream.

We also do big salary sacrifice to build up the coffers - can afford it now the kids are more or less self-funding.

Read the Barefoot Investor book for good basic advice on all this.  Nothing clever or flash, no financial adviser get rich quick bullshit.

Some people go well doing the stockmarket thing on their own, but we're not interested enough.  Some go well with real estate investments but we found it a pain in the arse and sold out.

One thing that we need to work out is to try and ensure one of us qualified for a part-pension (even if it is only $1 worth) to get all the benefits that come with it.  But I think we may exceed the thresholds - though somehow my BIL managed it & I'm buggered if I know how - need to pick his brains at the Noosa Tri, 

Finally, I stopped worrying about retirement funding so much - financial advisers just prey on that worry.  A lot of people around me in my late 40's died, so we decided to spend more $'s on experiences now than shit ourselves about retirement.

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I still have some time to go, doesn't hurt to have a plan of attack still.  Will probably be doing something similar with my super funds. The number of retirements happening across the board over the next 5 - 10 years is staggering.

 

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My guy is excellent. Doesn't get commissions from anyone. I pay the fees for his service and the advice and assistance we've received has been and will continue to be invaluable. Financial advice and investment strategy is really just one part of the service, it's more about lifestyle planning and support. Like having a coach, consultant and advocate in your corner. Helps with all the financial strategies of course, planning the big picture life things (like our home relocation), dealing with important tactical matters (shit this has happened and we need help to sort it), dealing with government agencies and so on. Talk through ideas and get objective advice on what's sound, what's possible and what alternatives there might be. It's very much an evolving and long term relationship.

If your focus is only on the money side of things, or you are only thinking short term, or you just want to get rich quick, then it's not for you.

No doubt there are plenty of sharks out there. And for this reason alone the ability to make the leap of faith and work with someone is pretty hard to do. I really don't know how you best choose one. Mine was via personal referral and was also already known to me personally.

 

Edited by Alex Simmons

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On 20/09/2018 at 8:35 PM, ComfortablyNumb said:

Don't get me started on these $%^&s

Experiences over 30yrs - 100% bad.  

Any half decent industry super fund will shit all over these clowns.  Or an index tracking fund.

Thanks f*ck I negotiated down the fee with the current mob I'm involved with (only pay half their fee unless they can get me at least 6.5% return income + capital).  So far they've managed -0.23%....which went up to 1.8% when we rolled the shares we bought 20yrs ago into the portfolio.

You seem to have financial advice and products tangled up. They are completely seperate. Financial adviser’s role is to help you to set goals and determine an effective way to meet these goals. Theu are there to educate you and to help you understand risks and trade offs. They do not invest money, this is done by the fund. Which could very well be a super fund, indexed managed fund, ETF, bond, direct share, annuity or any other investment. 

I would be worried if you and your adviser are basing your relationship on an arbitrary return figure. What happens in the event where the most appropriate strategy is to reduce debt or move to cash? 

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On 21/09/2018 at 7:25 AM, ComfortablyNumb said:

Mostly ourselves and we will get good impartial advice from the advisers at our industry super funds when the time comes.  You have to pay them (about $3K) for detailed advice, but we are not at that stage yet & can get limited free advice from them.  Ultimately, we will roll our super into one of their pension products which pay a regular income stream.

As for our other share investments with the local financial advisers, we have not got all our eggs in that basket thank Christ.  That portfolio of about 20 shares (and growing) has recently returned about 3.8% in earnings (dividends & interest), but because they bought TLS and VOC for us, has shown a capital loss, so overall a small negative return over the 12mths we've been invested with them.  Now compare that to our super funds which have averaged 7-8%+ over the last few decades and up to 16% in some periods.  Even the periods of negative return have been very few and very short.

Finally, I intend to work one-day per week for as long as I can (into my 80s if the body holds up?) which will add $400-600/wk to the income stream.

We also do big salary sacrifice to build up the coffers - can afford it now the kids are more or less self-funding.

Read the Barefoot Investor book for good basic advice on all this.  Nothing clever or flash, no financial adviser get rich quick bullshit.

Some people go well doing the stockmarket thing on their own, but we're not interested enough.  Some go well with real estate investments but we found it a pain in the arse and sold out.

One thing that we need to work out is to try and ensure one of us qualified for a part-pension (even if it is only $1 worth) to get all the benefits that come with it.  But I think we may exceed the thresholds - though somehow my BIL managed it & I'm buggered if I know how - need to pick his brains at the Noosa Tri, 

Finally, I stopped worrying about retirement funding so much - financial advisers just prey on that worry.  A lot of people around me in my late 40's died, so we decided to spend more $'s on experiences now than shit ourselves about retirement.

You mention impartial advice from your superfund. That is not impartial advice, it is advice provided from the product  manufacturer. This is whole issue that the royal commission is trying to get to the bottom of. 

The limited “free” advice is solely on their superannuation product. You need to be careful thinking this is comprehensive advice that is in your best interest. They are paid by the superfund, this creates a conflict.

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6 hours ago, ashley_s said:

You mention impartial advice from your superfund. That is not impartial advice, it is advice provided from the product  manufacturer. This is whole issue that the royal commission is trying to get to the bottom of. 

The limited “free” advice is solely on their superannuation product. You need to be careful thinking this is comprehensive advice that is in your best interest. They are paid by the superfund, this creates a conflict.

Have to agree on this, some of the worse advice I've seen given was by an industry super fund 'adviser' - on multiple occasions.  They may not gouge you in fees like retail funds, but at the same time they don't exactly hire the sharpest tools in the shed either

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7 hours ago, ashley_s said:

You seem to have financial advice and products tangled up. They are completely seperate. Financial adviser’s role is to help you to set goals and determine an effective way to meet these goals. Theu are there to educate you and to help you understand risks and trade offs. They do not invest money, this is done by the fund. Which could very well be a super fund, indexed managed fund, ETF, bond, direct share, annuity or any other investment. 

I would be worried if you and your adviser are basing your relationship on an arbitrary return figure. What happens in the event where the most appropriate strategy is to reduce debt or move to cash? 

Ok so all the ones I've talked to over the years have been calling themselves 'financial advisers' , but are not really. That's what you seem to be saying? Which makes them lying @#$%^&*s and supports my initial take on them.

7 hours ago, ashley_s said:

You mention impartial advice from your superfund. That is not impartial advice, it is advice provided from the product  manufacturer. This is whole issue that the royal commission is trying to get to the bottom of. 

The limited “free” advice is solely on their superannuation product. You need to be careful thinking this is comprehensive advice that is in your best interest. They are paid by the superfund, this creates a conflict.

Yes I'd agree with that. But I've found those attached to our industry fund to be far less slimey than those attached to retail funds/banks.

In general I think the whole investment thing is a significant gamble. Stuff happens no one can predict but so far our industry super fund has done remarkably well (Unisuper) compared to my old retail fund (MLC).

1 hour ago, Cottoneyes said:

Have to agree on this, some of the worse advice I've seen given was by an industry super fund 'adviser' - on multiple occasions.  They may not gouge you in fees like retail funds, but at the same time they don't exactly hire the sharpest tools in the shed either

Agree. Many blunt tools. What really shits me about them is they talk like they know what they are doing but so far it's all turned out to be a giant crap shoot....except for our industry funds which are doing exactly what I wanted.

Edited by ComfortablyNumb

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It is common for people to make an investment/super fund change believe it is a good or bad decision purely it is performing better/worse than what the old investment previously has. It is very important to take into context what the overall market has done since making any changes. 

As an example people who made changes in late 2007 or early 2008, felt that they have made bad decisions as the new investment performed poorly compared to the returns they were use to receiving. This completely ignores  the fact that markets (particularly Australian shares and Listed property trusts) had just had the best 10 years of the past century. Then they started losing money. 

ComforablyNumb, I am not sure of your age. But given you raise the question around age pension, I assume this is at least on somewhat on your mind. I would hope that you would have asked these questions to your "adviser" and that they explained the rules to you in a way you can understand. Just as a note provided you and your partner are of age pension age. You are paid the same, there is no 1 of us qualify. A lot of the "benefits" of receiving a $1 of age pension can be obtained from the Commonwealth seniors health care card, which is based on income only, not assets. 

 

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Can't say I'm an closer to finding anyone.  Over the next 6 years, my office is expected to see 23 retiremennts. Many seem fairly clueless in what path to choose.

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2 hours ago, Merv said:

Can't say I'm an closer to finding anyone.  Over the next 6 years, my office is expected to see 23 retiremennts. Many seem fairly clueless in what path to choose.

PM me if you'd like the details of my guy. He's based in Sydney (north side) which may or may not work for you.

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4 hours ago, ashley_s said:

Just as a note provided you and your partner are of age pension age. You are paid the same, there is no 1 of us qualify. A lot of the "benefits" of receiving a $1 of age pension can be obtained from the Commonwealth seniors health care card, which is based on income only, not assets. 

 

And this is what has me scratching my head about my BIL and his wife Ashley.  She has an old C'wlth defined benefits pension (i.e won the lottery) and he had bugger all super as he was self employed.  But they are married so I thought everything was based on being a couple (i.e. they either qualify for a couples pension or part thereof, or they get nothing).  So I thought her Govt pension and their other assets (they have other super funds) would have knocked them out from getting any pension (plus the benefits that go with at least $1 pension - rego, electricity etc discounts)?

But perhaps you are saying those discounts are attached to the seniors health care card, not qualifying for the pension?

They live in Noosa so when we go up for the tri in Nov, I want to get to the bottom of his 'part pension' claim.

We are not of pension age yet (54 & 55) but in a situation where we can semi-retire in 5-10yrs.  But I want to start getting ducks in a row now.  Our 'adviser' only really advises us on the portfolio of shares we have invested through their accounting/financial firm.  We have not had the pension discussion with her yet as not quite at that stage, but of all the advisers I've encountered, she seems the most 'straight shooter'.

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My FIL gets electricity discounts etc and he's self employed and not on pension but is over the age for pension card...

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29 minutes ago, Alex Simmons said:

PM me if you'd like the details of my guy. He's based in Sydney (north side) which may or may not work for you.

He sounds like what I'm looking for, in Brisbane though

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26 minutes ago, ComfortablyNumb said:

We are not of pension age yet (54 & 55) but in a situation where we can semi-retire in 5-10yrs. 

Don't forget to look into Transition to Retirement in a couple years as well (if it hasn't been abolished totally by then). It can help you build a bit more super without reducing your take home income.

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8 minutes ago, Ex-Hasbeen said:

Don't forget to look into Transition to Retirement in a couple years as well (if it hasn't been abolished totally by then). It can help you build a bit more super without reducing your take home income.

Yes our adviser has mentioned this.

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My recommendation in selecting a adviser would be ask friends. If they use someone then ask them what they like and dislike about them. If you don't have any contacts at all, perhaps look on the Financial Planning Association website. There will be a list you can choose from in your local area. I personally would look for a CFP(R). There is an additional year or 2 of education to obtain these designation (disclosure I am a CFP(R).  

If there more than a few I would narrow this down to 2 or 3 by calling the planner and having a very quick chat asking what is the main area of advice that they specialise in. Many will provide advice in many aspects but they should be able to tell you what they are particular strong in. It might be wealth creation/debt structuring, retirement/Centrelink, personal insurance. You should know what type you are looking for. 

During the 1st meeting, you are looking for the type of questions they ask you, to determine if they likely to be a good adviser. 

1. The questions should all about you and what you are comfortable with. These initial questions should have in depth followup questions. The purpose of these are to really get to the bottom of what you are trying to achieve and your investment psychology. If they do most of the talking about investments etc, this is usually a sign you are talking to a product seller.      

2. They should be able to make concepts easy to understand for you. Some concepts you may not need to understand fully or even want to know the details, but you should be able to understand what and why.

3. The first meeting they shouldn't really be talking about any specific products especially names. Structures yes, but not particular products. I would be very reluctant to use an adviser that states their value is delivered through excess investment returns or being able to pick investment managers. 

4. They should also be able to easy explain how they charge fees. They may not tell you exactly what the fees will be at that time as it is not likely to be know exactly what is involved at that stage. But they must be able to articulate how they charge. 

Hopefully this gives you some information to help you make a decision. All the best. 

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2 hours ago, ComfortablyNumb said:

And this is what has me scratching my head about my BIL and his wife Ashley.  She has an old C'wlth defined benefits pension (i.e won the lottery) and he had bugger all super as he was self employed.  But they are married so I thought everything was based on being a couple (i.e. they either qualify for a couples pension or part thereof, or they get nothing).  So I thought her Govt pension and their other assets (they have other super funds) would have knocked them out from getting any pension (plus the benefits that go with at least $1 pension - rego, electricity etc discounts)?

Just for information only as there is so much misconception in relation to age pension. Generally 90% of these defined benefits pension counts towards the incomes test for age pension. So say she is receiving $60,000 pa around $54,000 pa would count. You can have roughly $80,000 pa of income and get a $1 of pension of pension. They could still have around $800,000 in other super/pensions together and still be receiving age pension.  

These Commonwealth defined benefits are as you say are just like winning the lotto. 

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2 hours ago, ashley_s said:

Just for information only as there is so much misconception in relation to age pension. Generally 90% of these defined benefits pension counts towards the incomes test for age pension. So say she is receiving $60,000 pa around $54,000 pa would count. You can have roughly $80,000 pa of income and get a $1 of pension of pension. They could still have around $800,000 in other super/pensions together and still be receiving age pension.  

These Commonwealth defined benefits are as you say are just like winning the lotto. 

Yes i was reading up on this this arvo and was amazed how much income you can actually recieve and still get a part aged pension and the benefits that come  with it I assume like cheap pensioner car rego. I thought we'd probably end up in a no mans land with a moderate income from our super but not qualify for any pension but it seems not.

Edited by ComfortablyNumb

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Can you guys all make heaps out of your retirement funds please.  I need ya's to leave as much of that aged pension for me and the Mrs.

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I've had a Financial Planner for the past 10 years and have had good service and direction, so all I can say is that they do offer something I don't have, so it has been worth it. 

My 50 rupees worth with respect to retirement...it's a myth. Most of us will continue to work until we are in the early to mid 70's.

I'm 56 and will be 57 next year and have a reasonable amount of super and a share portfolio. I spent 4 months in Oz 2 years ago in between projects and while I recovered from femur surgery. It was then I decided, there was only so much gardening, fishing, golf, surfing that a person could do each week. You still need some kind of stimulation and challenge or you'd go nuts.

Added to that, the cost of living in Australia is ridiculous - and getting ridiculousa ! Let's say you need $5,000 per month to live, that's $60k per year. You hope to live until you're 90. If you stopped working at 70, you need to fund 20 years at $60k per year. So that's at least $1.2m you need to live. The cost of stuff is going to continue to rise in the next 20 years Personally, I think you need to be mortgage free and between $2-3 million in assets and cash to live comfortably, not just survive. Also plan on the government giving you fark all.

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Agree Softy. Debt free and $2m in income earning assets plus earning $400/wk guiding till I'm 80 is the goal. The Unisuper adviser told my mate he only needed $1m in super but I don't think that will cut it.

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The gold piece of retirement advise that was handed down to me from my mentor. About having a happy and meaningful retirement.

Retire to something, not from something.

This I have found to be very true. For a lot of people though, especially men that can’t find that thing. You need to start creating thinking about your something a good couple of years before leaving work.

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3 hours ago, ashley_s said:

The gold piece of retirement advise that was handed down to me from my mentor. About having a happy and meaningful retirement.

Retire to something, not from something.

This I have found to be very true. For a lot of people though, especially men that can’t find that thing. You need to start creating thinking about your something a good couple of years before leaving work.

Yes, I agree, and this will not be a problem for me as a hobby-addict.  Have been working on the retirement job (fly-fishing guide) for the past 25yrs, doing it as a part-time job for that long.  The Mrs & I have our regular exercise, a little racing & holidays, plus I have 2 other hobbies.

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I remember when my Dad retired he had less spare time than when he was working. I think he did up the last couple of BSA Goldstars (though that may have been just before retirement), then did 3 x FJ utes. The first he did original, sold that to buy the next & did that slightly modified, then sold that to do the 3rd, a canary yellow, lowered, beauty, with bucket seats & even aircon.

He even used to machine up old unobtainable BSA parts to sell, so he could buy the parts he needed for his other projects.

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19 hours ago, softy said:

I've had a Financial Planner for the past 10 years and have had good service and direction, so all I can say is that they do offer something I don't have, so it has been worth it. 

My 50 rupees worth with respect to retirement...it's a myth. Most of us will continue to work until we are in the early to mid 70's.

I'm 56 and will be 57 next year and have a reasonable amount of super and a share portfolio. I spent 4 months in Oz 2 years ago in between projects and while I recovered from femur surgery. It was then I decided, there was only so much gardening, fishing, golf, surfing that a person could do each week. You still need some kind of stimulation and challenge or you'd go nuts.

Added to that, the cost of living in Australia is ridiculous - and getting ridiculousa ! Let's say you need $5,000 per month to live, that's $60k per year. You hope to live until you're 90. If you stopped working at 70, you need to fund 20 years at $60k per year. So that's at least $1.2m you need to live. The cost of stuff is going to continue to rise in the next 20 years Personally, I think you need to be mortgage free and between $2-3 million in assets and cash to live comfortably, not just survive. Also plan on the government giving you fark all.

Hi Softy, I hope you don’t mind me asking, but are you aiming for $60k a year for a single person or married couple?

Just wondering as my wife and I are both retired and are drawing the minimum requirement of 4% (soon to be 5% for me when I turn 65) from our Super fund and living well on less than that.

Note: I know living well is open to interpretation as we all live different lifestyles.

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3 hours ago, fiftyplus said:

Hi Softy, I hope you don’t mind me asking, but are you aiming for $60k a year for a single person or married couple?

Just wondering as my wife and I are both retired and are drawing the minimum requirement of 4% (soon to be 5% for me when I turn 65) from our Super fund and living well on less than that.

Note: I know living well is open to interpretation as we all live different lifestyles.

fiftyplus... as a married couple. I think I've even been a bit conservative because I didn't want to sound like a wanker.

I think people may be surprised when they take a snapshot of their actual, essential full monthly costs. Not just the week to week costs, but annual ( eg. insurances, rego, rates etc.) costs and add those to their monthly bill. I think most will find it very easy to pass 2.5k per month. Then you add all the other bits and pieces and 5k comes up quickly.

Agree with your 'living' definition, but I've not worked my arse off for the past 38 years ( with the last 20 out of Australia ), to  be scratching around to exist when I'm not working.

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Softy, fair enough, I agree that doing a budget of annual expenses is quite daunting plus allowing for a few surprise expenses as well. Every household is different and only you know what’s  going to work for you.

Good luck with it

Edited by fiftyplus

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I read something  recently that said the average man of my age (59) has around $230k in Super. I think women were about $180k. If that's all I had, I'd be convinced I'd be working till death.

I'm hopeful we'll retire in 3 years with income (through my pension fund) of about $140k pa tax free. We also own a few properties and will likely keep them until 70 where we might sell them if we're sick of managing them.

We've worked hard to get where we are. I've worked 3 jobs most of my life and paid into super since 1980. I've contributed maximum salary sacrifice for many years and my wife for a few.

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I've been in a govt job for 28yrs and pretty much forgotten about super until recently. Done nothing with it other than salary sacrifice. 

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I've forgotten about super too!  Funny enough, yearly Super docs turned up today.  Gonna be rich.

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15 hours ago, ashley_s said:

Re the first one they are saying for a comfortable retirement a couple owning their own home need a lump sum of $640K which will all be drawn down (say over 25yrs = $25,600 pa) & returns of 6% ($3,200 pa) plus they get a part age pension (which a calculator I found estimates at about $11,700 pa based on their super income).  So their total annual income is $40,500.  But the second one is saying their expenditure is $60,604 pa, so they'd need to be drawing down more of their capital and it would only last 16yrs at that rate.

I estimate our annual expenses in retirement would be about $58,000, so close to what the second article says & that includes $10K on holidays.

If you have $2M in super, the calculator says you get no pension, but its providing $63,725 pa income (which would be enough for us).  If it was also earning say 5% that is $100,000 pa, so the capital in the super fund would actually be growing - which for us would mean when we drop off the twig the kids inherit $2M+ which is my goal.  However, there may be rules about having to use at least some % of your super?  Or can you just live off the earnings and not convert it all to an income stream product?

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Obviously, there are factors that affect your expenditure!  

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It seems to me the income test for the pension is quite friendly (e.g. as a couple you can earn $3,000/fn and still quality for a few $'s pension).

But the asset test is the killer as I read it.  If you have over $848,000 in assets (excludes the family home, but includes your super balance, shares, other property, house contents, cars etc) you fail the assets test so get no age pension.

So heaps of people will get knocked out as a result of their super savings alone.

The full aged pension payment for a couple is $1381.40/fn = $35,916 pa

If you had $848,000 in your super, to match that pension income level it would need to be earning 4.2% pa (assuming you were not eating into your capital as you wanted to pass it onto your kids).  Ours have averaged about 10% return over the last 10yrs, 17% for the last year!

 

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41 minutes ago, goughy said:

Obviously, there are factors that affect your expenditure!  

Holidays are our big luxury item...a man has to fish!

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54 minutes ago, ComfortablyNumb said:

Re the first one they are saying for a comfortable retirement a couple owning their own home need a lump sum of $640K which will all be drawn down (say over 25yrs = $25,600 pa) & returns of 6% ($3,200 pa) plus they get a part age pension (which a calculator I found estimates at about $11,700 pa based on their super income).  So their total annual income is $40,500.  But the second one is saying their expenditure is $60,604 pa, so they'd need to be drawing down more of their capital and it would only last 16yrs at that rate.

I estimate our annual expenses in retirement would be about $58,000, so close to what the second article says & that includes $10K on holidays.

If you have $2M in super, the calculator says you get no pension, but its providing $63,725 pa income (which would be enough for us).  If it was also earning say 5% that is $100,000 pa, so the capital in the super fund would actually be growing - which for us would mean when we drop off the twig the kids inherit $2M+ which is my goal.  However, there may be rules about having to use at least some % of your super?  Or can you just live off the earnings and not convert it all to an income stream product?

From years of experience the lump sum numbers in the AFSA report will be very close to the required lump sum. People often do it on slightly less but do probably forgo a little extra when doing renovations etc and have a little less fat in the numbers when it comes to living well beyond life expectancy. At $640k a couple would be initially receiving approx $15,000 pa. But this would very quickly increase until the the point where the assets are around $390,000 when they would largely be receiving full age pension approx $35,000 pa. 

Very basic rule of thumb is for normal range of income needs you need roughly 17x income to retire at 55, 15x at 60 and 13x at 65. 

The only thing you are missing in your $2m example above is inflation. When looking at retirement returns and how long money will last you need to use a net return (after inflation). So a $2m earning 5% would seem like it could provide someone with living expenses of $100k pa and hold its value over retirement. But your living expenses if they are $100k at the start of retirement will grow. Therefore in this case if inflation averages 3% your money would last around 26 years (ignoring age pension). Age pension would however make this last significantly longer, way beyond anyone normal life expectancy. 

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2 hours ago, ComfortablyNumb said:

If you have $2M in super, the calculator says you get no pension, but its providing $63,725 pa income (which would be enough for us).  If it was also earning say 5% that is $100,000 pa, so the capital in the super fund would actually be growing

I'm not an expert but here's how I understand it.

With pension funds/TTR you're required to take out 4% per year so at $2M you'd be getting @ $80k tax free. You can take out up to 10% if you wish ($200k). My current pension fund is returning a spit under 10% so my capital is still going up after taking out the 4%. It may not always return that much, but the 10 year returns look fairly stable around that amount. The beauty is if it's going up by roughly 6% pa it's well ahead of inflation.

We're also fortunate our properties are positively geared - we make money on them despite having mortgages. I'm confident they will increase a fair bit in the next 10 years so we can capitalise them and use the capital gain to top up our other investments if the need arises. Like you, I'm keen to leave the kids something. We're thinking we will knock down our current Sydney home and build a duplex. We've got two kids so they'd get one each. This way they will always have a roof over their heads if things go bad.

Being on the aged pension has never even entered my mind - I'd like to be 'master of my domain'.

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I really need to pull my head out of my bum and start looking at this stuff.

Being mortgage free I don't want to get used to spending the "leftover" money.

Nearly 50, have about 500k in super and am salary sacrificing a bit as well. But think while we are in a decent position we need to look at at property (but Sydney is too overpriced to make it worthwhile) so not sure where or just dump as much as we can into super (we are both in industry super funds) 

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29 minutes ago, roxii said:

I really need to pull my head out of my bum and start looking at this stuff.

Being mortgage free I don't want to get used to spending the "leftover" money.

Nearly 50, have about 500k in super and am salary sacrificing a bit as well. But think while we are in a decent position we need to look at at property (but Sydney is too overpriced to make it worthwhile) so not sure where or just dump as much as we can into super (we are both in industry super funds) 

Your max would be $25k each for salary sacrifice - you could do more but you'll pay more tax.

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1 hour ago, trinube said:

I'm not an expert but here's how I understand it.

With pension funds/TTR you're required to take out 4% per year so at $2M you'd be getting @ $80k tax free. You can take out up to 10% if you wish ($200k). My current pension fund is returning a spit under 10% so my capital is still going up after taking out the 4%. It may not always return that much, but the 10 year returns look fairly stable around that amount. The beauty is if it's going up by roughly 6% pa it's well ahead of inflation.

We're also fortunate our properties are positively geared - we make money on them despite having mortgages. I'm confident they will increase a fair bit in the next 10 years so we can capitalise them and use the capital gain to top up our other investments if the need arises. Like you, I'm keen to leave the kids something. We're thinking we will knock down our current Sydney home and build a duplex. We've got two kids so they'd get one each. This way they will always have a roof over their heads if things go bad.

Being on the aged pension has never even entered my mind - I'd like to be 'master of my domain'.

Thanks Trinube, I seem to remember being told something similar.  I'm guessing however the 4% rule does not kick in till you roll your super savings over into something which produces an income stream like a pension product.

Your kids are gonna love you giving them each a house in Sydney!  I buy RSL Art Union tickets with the dream of getting our girls a place in Syd 🙏

The only reason I'd be interested in a dollar of pension is for the pensioner discounts you get with it, but I think we'll be over the asset (not the income) threshold due to our Super so will not get it.  I'm still scratching my head about how my BIL and his wife get it though. Her Cwlth Govt defined benefits pension must not count as an asset?  And as Ashley said, the income from it is not high enough to knock them out on the income test.  Talk about the fn govt gravy train!

1 hour ago, roxii said:

I really need to pull my head out of my bum and start looking at this stuff.

Being mortgage free I don't want to get used to spending the "leftover" money.

Nearly 50, have about 500k in super and am salary sacrificing a bit as well. But think while we are in a decent position we need to look at at property (but Sydney is too overpriced to make it worthwhile) so not sure where or just dump as much as we can into super (we are both in industry super funds) 

We both salary sacrifice a lot, but not enough to blow the $25K threshold.

Investment properties don't float my boat after our one experience with them, but I'd still consider it again, but would have to be positive geared and decent capital gain prospects.  For now, I find it hard to go past super though so long as you don't need the cashflow now (which we don't, and it sounds like you don't either Roxii?).

Edited by ComfortablyNumb

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