Nabtrade outage

Non-individual and NEL onboarding may be unavailable between Friday (14 June) 20:00 to Sunday (16 June) 20:30 for scheduled maintenance.

 

How much do you need to retire?

Marcus Padley shares ten pieces of retirement wisdom that might surprise you.

If you Google the title “How much do you need to retire” you will see hundreds of articles on the subject, most of which have been written by financial planners, fund managers and accountants. The Marcus Today 'community' has many financially sophisticated (and unsophisticated) retirees in its ranks many of whom have already experienced decades of retirement so we decided to take a different approach and rather than tell our Members how to retire, we asked them how to retire, because quite honestly, we're not retired, and a lot of them are, so who should be lecturing who?

We asked our Members two simple questions, “What is your Retirement Calculation?” and “Do you have any other retirement wisdom to share”. We received around 200 emails in reply. Here are some of the numbers, some of the revelations and some of the wisdom. 

 

The numbers

The answer to the questions “How much you need to retire?” clearly revolves around three main questions and the answers come in ranges, with a thousand variables and what-ifs of. But there is a standard answer:

  1. How much do you need to live off in retirement? The answer is generally $65,000 (singles) to $200,000 (wealthy couples) per annum with most assuming around $100,000 pa.
  2. What return on investment on your capital can you expect? The current number is anywhere from 3% to 10% pa less inflation with most retires are assuming they could and should be able to earn 5% pa after inflation. 
  3. So how much do you need to retire? The capital required from those calculations ranges from $650,000 to $6.6m with $2m the standard amount for a $100,000 income pa and an investment return of 5% pa.

 

Ten pieces of retirement wisdom that might surprise you 

These comments are from Members themselves.

 

  1. “Look at your relatives and ancestors and you can work out how long you are going to live. How long you live is a major variable in all your calculations. Unfortunately for me most of my family lives to over one hundred unless they are murdered or run over. So I’m not going to able to afford to retire early.” 
  2. “It is better to retire at 62 and live off $70k per annum than at 70 with $100k per annum. I see a lot of people (I'm a financial adviser) afraid to retire in their 60s, who keep pushing the boulder up the hill till they're 70. In their 70s they bitterly regret having put those years into work that could've been spent doing the Camino while they were young(er) and healthy(er). Money generally gets worth less when you're older.”
  3. “If you have more than one child never ever ever leave them any joint assets that require an investment or disposal decision. Be that shares to be managed or a property to be rented or sold. Insist that everything is sold and the cash divided without them having to agree on anything. They can make their own investment decisions from there with their own partners, families, themselves. The last thing you want is one child thinking they can be, or being forced to be, responsible for ‘managing a portfolio’ or ‘managing a property’ on behalf of the others. There is only one outcome from there. And it’s not good. And if you think they can agree, wait until their spouses, kids, friends, get involved! Do their relationships a favour. Only ever hand them assets that have been sold already, are to be sold immediately, or cash to be distributed. Nothing joint. Unless you want them to hate each other. The last thing you want on your deathbed is to hear your kids shouting at each other in the kitchen.”  
  4. “The Government hands us control of our own super, regardless of how much we know or care about financial markets or investment. No wonder so many people end up on the age pension. If you are not interested just put it in a fund. They may not be exciting but they'll catch a long term bull market and logging into a website once a year is a lot easier than managing your investments every day, especially if you don’t enjoy it, don’t understand it and cock it up. And let me tell you, being your spouse's fund manager is not good for your marriage!”
  5. “Everyone talks about leaving money to the children. Let me improve everyone’s retirement by a million dollars. Only in extreme cases would they factor in my calculations. I don’t plan on giving mine anything. If I live until I’m 90 they will be retired. You will obviously assess your own children according to their own circumstances but most are not the vulnerable needy children we imagine them to be when we first make our retirement calculations. By the time they inherit they will be older. We don’t need to sacrifice our quality of retirement for them to have an even better quality of retirement. They wouldn’t want it anyway. And the grandkids will be thirty. They won’t need it. Forget the kids unless they really are in need. Which is rare.”
  6. “Tell your kids they are not getting an inheritance and your kids will quickly become responsible for themselves, get up earlier in the morning, make more financial effort, establish their own financial security and be even more thrilled when they get something, which they were always going to get anyway. But you don’t need to tell them. They will be better for not expecting to be looked after.”  
  7. “I hadn’t thought enough about who I am, what I want to do, and how I would be productive, healthy and challenged once “work” stopped. I had no idea how many hours of my life I had sold to employers, and equally no idea what to do once that time became my own. We now have detailed spreadsheets that are updated daily, with projections of assets, income and expenses on a monthly basis, well into the future, using accurate information as it comes to hand and reasonably conservative assumptions about the future, property maintenance costs, super contributions and future drawdowns, and on it goes. This information has been crucial to me, to build confidence in a future without income from employment.”
  8. “The most important thing is not to leave the kids with a problem! Having worked for many years as a rural GP I have seen the damage a poorly structured will and consequent greed can do. So leave some but not enough to cause a fight, divided absolutely equally despite each child’s financial position, let the kids' generosity solve the need of one sibling who may be in need.”
  9. “We've been married sixty years and retired for 25. In many ways we live separate lives together, enjoy strong acceptance and don't have too high expectations of each other. I have many friends financially devastated by broken marriages.”
  10. “What caught us by surprise in retirement? The joy of freedom.”

 

A free trial of the Marcus Today newsletter for nabtrade clients is available here.

 

 

Marcus Padley is the author of the daily stock market newsletter Marcus Today. Analysis as at 07 February 2022. This information has been provided by Marcus Today (AFSL is 473383), for WealthHub Securities Ltd ABN 83 089 718 249 AFSL No. 230704 (WealthHub Securities, we), a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances.