Superannuation Discussion + market volatility

[QF WP]

However bare in mind that a number of people require increased health care and may need to buy in to a suitable facility for their last years. So that can require a large capital spend very late in the retirement. If one owns your own home that may be used to fund it, but it is still factor to keep in mind.

The vast number of people don't take aged care advice and simply sell the family home to pay the entire Refundable Accommodation Deposit (RAD) to the aged care facility. However this is not normally the best outcome for the person/couple.

 

[theblank]

The first thing I plan on doing when I retire is to find a job. Otherwise I will go insane.

 

[QF WP]

My father did exactly that - he tried retirement aged 64 (1994) but he and mum drove each other crazy at home 24/7. He lasted 13 weeks and came back to the family business, but we put him on 3 days/week doing our "marketing" (ie taking his former A class clients out to lunch, then coming back to tell us what we needed to talk to them about). 2 years later he went down to 2 days/week and lasted 10 years at that point until he finally realised that he was over "working" (aged 76). I am not going to emulate that experience.

 

[JohnK]

A lot of this discussion goes way over my head. What's the 4% mentioned? The compulsory amount you'd have to draw down on super every year?

If I wanted an income of ~$30,000/pa out of super why would I need a final super balance of $750,000? I should be able to achieve that with a much lower super balance?

Superannuation is convoluted.

 

[CaptJCool]

I'm tending to think the biggest splash of cash would likely occur within 10-15 years of retirement and from thereon in, be a reducing need.

The biggest cash splash is aged care costs..... could be far more than any travel expenditures.

I note the comment about not selling the family home for the RAD BY QF WP. Agreed, not ideal but whichever option is chosen, it's still a good chunk of cash. - Level 4 home care package is more than my current weekly mortgage payments ugh !

 

[Rugby]

I found this retirement calculator sometime ago - a bit of fun.

FIRECalc: A different kind of retirement calculator

 

[Pushka]

I liked the comment someone raised earlier (QF WP perhaps?) about taking into account the super capital and not just the income derived from it. I did note someone had said to allow for perhaps 30 years of life expectancy, but to be honest, if we're lucky enough to live for 30 years over retirement age (unlikely in most cases, I'd assume), our needs become less. My Mum is a classic example. She and Dad enjoyed travel and adventure, but now (she is in her 80's) travel and adventure is not high in her thoughts. She is far more comfortable pottering around her garden and visiting friends and family and doesn't even think about travel and her eating habits are considerably different as well. She eats less, rarely eats out and her financial needs are miniscule in comparison to what I would have thought if I did a budget for her perhaps 10 years ago. She even decided to give up the car as she just didn't want the stress of driving. All this is not because of a lack of funds. She still has a reasonable investment. Admittedly, there will be others very different, but I think spending considerably less as we age would be a fairly commonplace scenario.

I'm tending to think the biggest splash of cash would likely occur within 10-15 years of retirement and from thereon in, be a reducing need.

This is a great point. Our needs change re travel as we age. That’s why I’m doing a lot now. Maybe in 15 years time I’ll be happy tottering pottering in a little cottage garden with a cute fluffy white dog.

Yes JohnK. You have to draw down between 4-9?% in the transition phase. If you are not topping it up each year through SG then capital will diminish.

 

[JohnK]

Yes JohnK. You have to draw down between 4-9?% in the transition phase. If you are not topping it up each year through SG then capital will diminish.

Transition as in transition to retirement? I'd like to turn the lights out at 60. That gives me ~6 years to lump as much as I can into Superannuation to avoid PAYG and then decide whether I take it all and manage it myself or let some clown manage it for their own benefit while keeping me happy with some crumbs.

Need some investment ideas.

 

[Deleted member 29185]

Ah, Regal Funds Management, a blast from the recent past:

Once bitten...

Nope. The Regal that mentions is 2013. The Regal I was bitten by, was considerably earlier. I'd guess late '80's. Dual collapse, Regal and Occidental.

From memory, the theft was in the order of $80m.

 

[burmans]

Much of these conversations are in a foreign language to me. I lost faith in super, not long after Keating made it mandatory. The Regal fund manager stole a phenomenal amount of money (a portion of it being mine) and was aided and abetted by the Commonwealth Bank as I recall and the gov't did very little to get my money back. That taught me a lesson not to trust others to do the right thing with my cash and successive failures (of investment institutions) since then have done little to convince me the gov't have any sway at all, except to continually change the position of the goal posts for us (as we're the easy targets and they know they have absolutely no control over big business scams and fraud).

I decided to invest for my retirement in other ventures, but predominantly bricks and mortar. At least you can see the thieving mongrels stealing your assets but I do have a modest super balance regardless and I'd like to ensure it doesn't get stolen in the next decade or so, hence my (also modest) interest in this thread.

The bit I don't get about this statement is you are equating the vehicle (superannuation) with the investment strategy. There are good and bad fund managers, good and bad share investments, property investments etc. but you can equally invest in each of these within and outside super so I don't see why you think super is the problem.

 

[Pushka]

Transition as in transition to retirement? I'd like to turn the lights out at 60. That gives me ~6 years to lump as much as I can into Superannuation to avoid PAYG and then decide whether I take it all and manage it myself or let some clown manage it for their own benefit while keeping me happy with some crumbs.

Need some investment ideas.

There is now a $25k limit on how much SG and Salary sacrifice you can do now. Thanks Mr Turnbull.

 

[Jacques Vert]

A lot of this discussion goes way over my head. What's the 4% mentioned? The compulsory amount you'd have to draw down on super every year?

If I wanted an income of ~$30,000/pa out of super why would I need a final super balance of $750,000? I should be able to achieve that with a much lower super balance?

Nothing to do with the Govt's BS draw down rules IMHO,

If your income requirement is $30k this year, then with inflation running at ~2% then you will need to generate an income of $30,600 next year, $31,212 the following year, and so on.

The only way to generate this growing income (all other things being equal) is to have an investment portfolio that is increasing at least at the inflation rate (hopefully better). Therefore if your investments are returning an average of 6%, you can afford to spend 4%. If you believe your investments are returning an average of 7%, you can afford to spend 5%. If you believe your investments are returning an average of 7% or more in the current climate, you're kidding yourself (IMHO).

Of course, this is an oversimplified explanation and is not advice.

 

[lovetravellingoz]

The biggest cash splash is aged care costs..... could be far more than any travel expenditures.

I note the comment about not selling the family home for the RAD BY QF WP. Agreed, not ideal but whichever option is chosen, it's still a good chunk of cash. - Level 4 home care package is more than my current weekly mortgage payments ugh !

Which was my point. One should factor in this possible capital cost. ...and there are various ones to provide for it.

The monthly fees will be probably ok as your other spend will probably tail off.

 

[cove]

Aged care costs for parents can be financial black holes for the boomer generation.
I saw a mention of $30,000 cost of living. I think that might cover Thailand or Bali but the Federal Government may not fund an old age pension to overseas recipients.
I won’t be surprised if the retirement age moves up from 67 to 70 or higher by 2030 as the Government will have a deep hole in their annual budget from both medical and retirement / age care.
Our current Federal Treasurer is alarmed that many new retirees are thinking of getting a 4WD and a caravan with their compulsory super to qualify for an age pension.
The family home may get targeted before 2030 if the cost of retirees continues to climb.

 

[Pushka]

My mum was in an aged care facility for 18 months before she died. Before that she was in independent living. For the latter she had to pay $75,000 for a one bedroom unit which was nice. If she left after five years she would get none of that back. Pffft. All gone. Prior to 5 years she would get progressively reducing payments if she left. She moved from that into full care with just 3 months before the five years was up and received $14,000 back.

In the full care facility she was on full aged pension as she and dad didn’t have much at all. She had maybe $100k in the bank from sale of original home and proceeds from independent unit sale. Each month her pension in full was extracted back by the residential care place plus another $300 from her own account.

She actually spent more on aged care living then on any other time in her life. It’s kind of wicked the cost of aged care.

I will not go into aged care. I hated it when mum was there. And she was in a nice home. I vented frequently on here about it. She enjoyed it but as a visitor it was awful.

 

[CaptJCool]

Nothing to do with the Govt's BS draw down rules IMHO,

If your income requirement is $30k this year, then with inflation running at ~2% then you will need to generate an income of $30,600 next year, $31,212 the following year, and so on.

The only way to generate this growing income......
.

Just think of age pension as doing exactly that..... a couple would need $1,000,000 to earn rake in 3.4%. And even better positioned seeing my uncle is the carer (legitimate as my aunt was rather ill). And they receive the extra $7k or so carers allowance. And then there's the home care package.

Who woulda thought spending all your superannuation would see you rolling in the pension salary package that good !!

 

[CaptJCool]

I found this retirement calculator sometime ago - a bit of fun.

FIRECalc: A different kind of retirement calculator

Wow the finances are on fire !
Burnin thru the cash
Don't get burnt
All fired up

 

[cove]

Friends went to their accountant and she said they needed to cut down their living costs which she calculated at $180,000 for last year. The only fix I could think of was to change accountants.
Everyone has a different lifestyle and last year they did a cruise thru the Bahamas before that hurricane smashed into those islands.
My in laws lived comfortably on the age pension in their nineties because their social appointments became mostly medical but with a gold card so costs were modest. We paid for Foxtel and Medibank Private for one and they were quite ok.

 

[Pushka]

My in laws lived comfortably on the age pension in their nineties because their social appointments became mostly medical but with a gold card so costs were modest. We paid for Foxtel and Medibank Private for one and they were quite ok.

That works unless one needs to go into a nursing home. Everything changes from then on. It’s like running 2 households on the same income. Health is king.

 

[tgh]

The cost and logistics of aged care can be challenging.
We have a family member (in her mid 90's) in care and it is hard to fault the quality of life, cost notwithstanding.
Some folks plan for live in care, but it seems most don't plan at all until something happens
Live in "professional" carers who are well paid seems a great concept save for the cost.
Sadly we have seen several recent examples of progressively less mentally able carees (is that a word?) messing up the process
by interfering with the objectivity of carers who may be tempted to progressively milk assets and minimise the care..