Hi Chris, great information here, but I do think you should have added a seventh step as follows; 7. Be prepared to change your retirement plans. I think retirees need to be fully prepared to change the plans they have put in place if things don't work out quite as planned. Many retirees return to work for instance after retiring as they feel a sense of loss or find it wasn't as envisaged. I think the fundamentals mentioned like reducing debts and maximising super are always a great starting point and should be adhered to no matter what your plans may be but I would be a little more flexible on the age at which you retire etc and this may affect strategies like starting an account based or TTR pension etc. Things like parents or loved one's becoming ill and the need for you to be in a carer role is also something that is completely out of your control and can throw your retirement plans into chaos. Just be prepared if things don't quite go as you had originally intended. The average ACTUAL retirement age in Australia is around 56. The avergae INTENDED retirement age is 65. This seems like a huge almost 10 year difference between intended and actual retirement ages where things didn't quite go to plan ! Just some food for thought.
Hi Chris, according to chat gpt the average age of retirement in Australia is 55.4 y.o. Yet most Australian retirement videos assume people retire at 60. Women on average retire at 52. I would appreciate some guidance on how to best manage the gap years after retirement and before you can access super. This is arguably more tricky because of tax issues…
Great video again Chris. A question - are super earnings subject to the tax free threshold ($18,200) while in accumulation mode if I'm over 60 and full retired? Hypothetical Scenario : I'm 63 and fully retired. I have a super account in pension phase providing my primary income stream. I also have a super account in accumulation phase. I receive an inheritance of $100,000. I can stash this away outstide of super in a bank savings account earning 5% (in theory) and wont pay any tax as the earning are under the tax free threshold of $18,200. If I stash it in my super accumulation account instead I wont pay any contribution fees, I can earn 5% (or more), but do I still pay 15% tax on the earnings?
Hi Paul, super accumulation tax and personal income taxes are assessed differently. super accumulation tax is a flat 15%, super pension earnings tax is 0% and personal income tax is taxed at marginal tax rates with a tax free threshold of $18,200. Each tax is assessed independently of one another.
Chris, one thing I get confused by using these calculators is, do they account for inflation? I can live comfortably on $70k per year, so use that in the calc to determine what I need in retirement, but that is $70k in 2024. If the calc says you need say, $800,000 at retirement to cover that $70k for life, is that considering inflation? Thanks.
Also, I'm wondering whether people actually will want the same amount of income as they get much older. I'm just thinking of my parents and in-laws, and noticed that their wants and needs dramatically altered down as they got older. Maybe this fact counteracts or balances out the above question on inflation.
I think the answer is in the calculator’s fine print which sets out the assumptions and calc methodology. IMHO, the gov calc is simplistic, my super fund has a more nuanced and complex one (check your fund), but all these calculators do the same and bring things back into today’s dollars for the purpose of the initial calculation. That’s not a terrible thing as you have to assume that in a reasonably managed economy, a balanced investment option (50/50 - 60/40) will keep up with (normal) inflation (over the longer term), so the inflation aspect kind of cancels out. If your total balance keeps up, then so will your annuity.
The simple answer is yes, these calculators do account for inflation... That is why in most of them you'll set an inflation amount yourself. There's no other reason for that being there... There will be a separate rate for growth in investments.
There are investment options within retail super accounts that have inbuilt leverage. Otherwise a SMSF allows for leverage via a limited recourse borrowing arrangement.
I want to retire from my full time job at the age of 50. Be able to afford working part time and do something else. I’m pushing 40 and we are on track with our retirement goals. We find it hard to maximise our super contribution. But at least we are putting in 15% of our income and will be paying off our mortgage early. 🤞🏻💪
i think "what expenses do you want to cover?" should come before "what age do you want to retire?". they go hand in hand but you can retire at any age if you are happy to accept any lifestyle.
my goal in retirement is to draw from the super balance the same (or more) after tax figure that I earn now. Also developing further passive income outside super "just in case". Just started my TTR, handy to pay for some big home repair items.
I was fortunate enough to be able to retire at 54 y/o on a (private company, not government) defined benefit. We could do that any time after 50 years old. Is that not a common thing any more?
Defined benefits are becoming much less common compared to a standard accumulation account, and are often closed to new members, so they will continue to shrink in size over time. At this point in time, the preservation age of nearly everyone in the super system is age 60, unless they have some special arrangement within a particular fund. But these arrangements are very rare.
I am also doing overseas investments in South East Asia for rentals. The Super still gets contributed by the employer which I can't stop. Only time will tell how I did.
Thanks for the info. Helpful.
You're welcome
Hi Chris, great information here, but I do think you should have added a seventh step as follows;
7. Be prepared to change your retirement plans.
I think retirees need to be fully prepared to change the plans they have put in place if things don't work out quite as planned.
Many retirees return to work for instance after retiring as they feel a sense of loss or find it wasn't as envisaged.
I think the fundamentals mentioned like reducing debts and maximising super are always a great starting point and should be adhered to no matter what your plans may be but I would be a little more flexible on the age at which you retire etc and this may affect strategies like starting an account based or TTR pension etc.
Things like parents or loved one's becoming ill and the need for you to be in a carer role is also something that is completely out of your control and can throw your retirement plans into chaos. Just be prepared if things don't quite go as you had originally intended.
The average ACTUAL retirement age in Australia is around 56. The avergae INTENDED retirement age is 65.
This seems like a huge almost 10 year difference between intended and actual retirement ages where things didn't quite go to plan !
Just some food for thought.
It would be good to know what has driven the big gap between desired retirement age and actual age. Health, caring for aging parents, …?
Hi Chris very helpful information. Do you have local contacts for your Perth office.
Hi Chris, according to chat gpt the average age of retirement in Australia is 55.4 y.o. Yet most Australian retirement videos assume people retire at 60. Women on average retire at 52. I would appreciate some guidance on how to best manage the gap years after retirement and before you can access super. This is arguably more tricky because of tax issues…
I couldn’t get the moneysmart calculator to consider income from assets outside of super. So it wasn’t helpful. Is there a more flexible one online?
Great video again Chris. A question - are super earnings subject to the tax free threshold ($18,200) while in accumulation mode if I'm over 60 and full retired?
Hypothetical Scenario : I'm 63 and fully retired. I have a super account in pension phase providing my primary income stream. I also have a super account in accumulation phase. I receive an inheritance of $100,000. I can stash this away outstide of super in a bank savings account earning 5% (in theory) and wont pay any tax as the earning are under the tax free threshold of $18,200. If I stash it in my super accumulation account instead I wont pay any contribution fees, I can earn 5% (or more), but do I still pay 15% tax on the earnings?
Hi Paul, super accumulation tax and personal income taxes are assessed differently. super accumulation tax is a flat 15%, super pension earnings tax is 0% and personal income tax is taxed at marginal tax rates with a tax free threshold of $18,200. Each tax is assessed independently of one another.
Chris, one thing I get confused by using these calculators is, do they account for inflation? I can live comfortably on $70k per year, so use that in the calc to determine what I need in retirement, but that is $70k in 2024. If the calc says you need say, $800,000 at retirement to cover that $70k for life, is that considering inflation? Thanks.
Also, I'm wondering whether people actually will want the same amount of income as they get much older. I'm just thinking of my parents and in-laws, and noticed that their wants and needs dramatically altered down as they got older. Maybe this fact counteracts or balances out the above question on inflation.
@@cocomonky great point
I have wondered this too.
I think the answer is in the calculator’s fine print which sets out the assumptions and calc methodology.
IMHO, the gov calc is simplistic, my super fund has a more nuanced and complex one (check your fund), but all these calculators do the same and bring things back into today’s dollars for the purpose of the initial calculation. That’s not a terrible thing as you have to assume that in a reasonably managed economy, a balanced investment option (50/50 - 60/40) will keep up with (normal) inflation (over the longer term), so the inflation aspect kind of cancels out. If your total balance keeps up, then so will your annuity.
The simple answer is yes, these calculators do account for inflation... That is why in most of them you'll set an inflation amount yourself. There's no other reason for that being there... There will be a separate rate for growth in investments.
Hi Cris. What software do you use?
Software only available to holders of an AFSL
Is there a super fund that allows you to leverage?
There are investment options within retail super accounts that have inbuilt leverage. Otherwise a SMSF allows for leverage via a limited recourse borrowing arrangement.
@SuperGuyAu The 'Retail Super Accounts' that you are talking about is that a 'WRAP' Administration Structure/Platform?
I want to retire from my full time job at the age of 50. Be able to afford working part time and do something else. I’m pushing 40 and we are on track with our retirement goals. We find it hard to maximise our super contribution. But at least we are putting in 15% of our income and will be paying off our mortgage early. 🤞🏻💪
i think "what expenses do you want to cover?" should come before "what age do you want to retire?". they go hand in hand but you can retire at any age if you are happy to accept any lifestyle.
....and vice versa
my goal in retirement is to draw from the super balance the same (or more) after tax figure that I earn now. Also developing further passive income outside super "just in case". Just started my TTR, handy to pay for some big home repair items.
I was fortunate enough to be able to retire at 54 y/o on a (private company, not government) defined benefit. We could do that any time after 50 years old. Is that not a common thing any more?
Defined benefits are becoming much less common compared to a standard accumulation account, and are often closed to new members, so they will continue to shrink in size over time. At this point in time, the preservation age of nearly everyone in the super system is age 60, unless they have some special arrangement within a particular fund. But these arrangements are very rare.
Very rare for anyone under 50 unless they got a public sector job a long time ago and joined the DB scheme.
Rare!!
I am not relying on my Super for my retirement. Its all invested in the market only to serve the wealthiest in financial meltdown.
What do you rely on? Or invest in instead then?
That's one way of looking at it.
I am also doing overseas investments in South East Asia for rentals. The Super still gets contributed by the employer which I can't stop. Only time will tell how I did.
Sorry, but gotta say these videos are getting so monotonous... Same info over and over again
Thanks for the feedback
Brian Nelson scammer
they show up in every financial channel 🙄
Thanks for the heads up