Hi from Australia

[Scar]

Hi all,
I have been lurking these forums for a few years now and while I understand alot of the advice and numbers are based on living in the US I am starting to consider retiring early in Aus by age 53-56 and just was interested in some other ideas.
My details below


Age: 49 and single with no kids/dependents.
PPOR: Is fully owned and worth approx $1.2M
2 x IP's worth about $1.4M, owe $350k and rent of $46k a year
Investments/shares worth about $210k
Superannuation $539k
Current job earning approx $120k after tax
Topping up max superannuation contributions at $27.5K per year



I have not worked out my estimated expenses however I am planning on a $110k a year draw down for no reason at all other than that being my after tax income now from my primary job.
Plan was to pay down IP debt to $0 by retirement and then live of rent and drawn down on shares until super draw down kicks in at 60.



I would love to hear from all of you what I should be doing extra, is retiring in 4-5 years possible?
Cheers.

 

[Kork13]

Getting a good handle on your current expenses, as well as your expected post-retirement expenses will be key. Consider that you will not longer have debt payments on the IP's, though you'll have continuing expenses for insurance, taxes, utilities, maintenance, etc. on both your primary home & the IP's. So your expenses should go down somewhat from current.

Looking initially, the plan of IP rent + investments for the first 5-7 years looks concerning. I'm guessing that after expenses (excluding debt payments, since those will be paid off), the IP rent provides an income of around $35k-$38k? If you anticipate spending roughly $100k/yr, you'll burn through your investments within 3-4 years. That doesn't account for investment growth & contributions between now and retirement, but in any case, that seems very tight.

How much income do you anticipate the Super to provide once you hit 60? How long do you anticipate holding the IP's for income, vs. selling & starting to live off the proceeds?

These are just very initial "big picture" thoughts... You need a solid plan for income vs. expenses. Others will certainly have more in-depth questions to consider.

 

[2017ish]

Welcome!

You have to help this USA person out on superannuation workings. (I looked up PPOR, as we don't use that acronym here!) In 4-5 years, with your max top-off, what will your super balance be? And what would that equate to as an annuity once you hit 60? Is the Super Annuity inflation adjusted?

Are you sure that $110,000 a year will suffice in your 50's and 60's? Rather than relying on what your take home is now, you need to determine what you would like/need to spend once you quit the work force. Many people spend the same as when they were working, some spend less, and some of us spend a lot more.... (Twice as much in my case, as DW and I always wanted to travel extensively.) That may be the most important step in retirement planning...

You say 46K a year in rent from your investment properties. What expenses, capital and otherwise need to be subtracted from that?

Ballparking, with retirement at 53, no expenses whatsoever on rentals (hah!), you'll need 64,000 a year from your draw down on shares. With 210,000 now in taxable accounts, you'll need good market performance and nice savings to be able to arrive at a total sufficient to fund that.

 

[Scar]

Hi 2017ish,
Thanks for the reply

Welcome!

You have to help this USA person out on superannuation workings. (I looked up PPOR, as we don't use that acronym here!) In 4-5 years, with your max top-off, what will your super balance be? And what would that equate to as an annuity once you hit 60? Is the Super Annuity inflation adjusted?

I have roughly worked out based on 6% annual returns the super should be worth around $800k-$900k by the time i turn 55 and it isn't inflation adjusted. In Aus after 60 you can access your super tax free and by then hopefully should be worth around $1.1M

Are you sure that $110,000 a year will suffice in your 50's and 60's? Rather than relying on what your take home is now, you need to determine what you would like/need to spend once you quit the work force. Many people spend the same as when they were working, some spend less, and some of us spend a lot more.... (Twice as much in my case, as DW and I always wanted to travel extensively.) That may be the most important step in retirement planning...

You say 46K a year in rent from your investment properties. What expenses, capital and otherwise need to be subtracted from that?

Ballparking, with retirement at 53, no expenses whatsoever on rentals (hah!), you'll need 64,000 a year from your draw down on shares. With 210,000 now in taxable accounts, you'll need good market performance and nice savings to be able to arrive at a total sufficient to fund that.

Definitely think I need to work on getting a handle on my spending/costs.
I based the $110k a year spend based on my after tax wage and rental income combined of about $160k, of that I am paying down debt and adding to shares of about $100k a year.
I think more than likely I will end up working until 54/55 and then an additional year on paid LSL/AL etc and then actually retiring at 56. For those extra 3 years makes the numbers a bit bigger.

Getting a good handle on your current expenses, as well as your expected post-retirement expenses will be key. Consider that you will not longer have debt payments on the IP's, though you'll have continuing expenses for insurance, taxes, utilities, maintenance, etc. on both your primary home & the IP's. So your expenses should go down somewhat from current.

Hi Kork13 thanks for your reply,
As mentioned previously yes I think I really need to get a handle on how much I currently spend/expect to spend etc.

Looking initially, the plan of IP rent + investments for the first 5-7 years looks concerning. I'm guessing that after expenses (excluding debt payments, since those will be paid off), the IP rent provides an income of around $35k-$38k? If you anticipate spending roughly $100k/yr, you'll burn through your investments within 3-4 years. That doesn't account for investment growth & contributions between now and retirement, but in any case, that seems very tight.

I am working on the figure by age 54/55 the IP's should be bringing in about $40k-$45k after expenses and the shares etc should be worth around $450k and drawing down on the $60k a year it should last about 7 years which I then can access super.

How much income do you anticipate the Super to provide once you hit 60? How long do you anticipate holding the IP's for income, vs. selling & starting to live off the proceeds?

Hopefully by age 60 the super will be worth around $1.1M which I then can continue to draw down on that.
No real plans on when to sell the IP's however I expect they would be sold during my 60's and then the proceeds reinvested. Both properties are relatively new 10-15 year old and are of brick/tile construction so other than minor issues I cannot see them being too much of a maintenance issue.

These are just very initial "big picture" thoughts... You need a solid plan for income vs. expenses. Others will certainly have more in-depth questions to consider.

I appreciate the feedback from both you and 2017ish and already I know i I have to spend some time going through expenses to come up with a better idea of future spending rather than just "coming up with a number".

 

[MarieIG]

Dear Scar,

Welcome to the ER forum.

Two of our resources are linked below. (Obviously you would need to adjust your input in FIRECalc to fit your needs.)

Some Important Questions to Answer Before Asking - Can I Retire?

FIRECalc

You have made very impressive strides in your savings - and have time to "fine tune" your plan. I would look at flexibility and how you would handle a largish - unexpected expense or (temporary) decrease in asset levels or income.

 

[Out-to-Lunch]

Welcome aboard!

 

[mistermike40]

Welcome!