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I went to a retirement conference put on by the (as they were known at the time, New Zealand Society of Accountants). Was about 15 or thereabouts years ago and really freaked me out.
So called experts there reckoned you need $1.5m - $2.0m to retire comfortably on and had a raft of expert opinions and analysis to back it up.
Key Themes they espoused at that time included.
1. Despite a widely held belief by many older folks they are happy to trade down in their house when the time comes to retire, so as to free up capital, the evidence suggests most people are extremely reluctant to do so.
2. Best to plan on an average of 3 - 4% per annum after tax from a well diversified portfolio of low risk investments.
3. It is best to plan that National Superannuation in its current form won't exist when it comes time to retire.
When I have more time tomorrow I'll unpack why I believe all these three major theories are fundamentally flawed.
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People off say you can downsize in retirement and your living costs reduce. That is fine while you are healthy and mobile, and then die suddenly.
With modern medicine though, you are more likely to live to a very old age, requiring lots of medical and home care assistance. So you need to ask yourself, not just what sort of active retirement do you want, but what sort of retirement do you want once you are no longer healthy and active.
My Grandparents decided they wanted to say in their own home. That's all well and good but 24/7 care costs $200k a year if you go through an agency and that doesn't include all your other costs. Sure that is the expensive way but what would a similar level of care cost in a nice retirement/care facility? $100k. And how long can you last in that condition - my grandmother was looking dodgy for a while but then they put a pacemaker in (at over the age of 90!) and now she will probably live till 100! 10 years x $200k = $2m - Ouch! and that is just from the age of 90. God knows how much they spent from 65 to 90 when they were still active enough for multiple overseas trips a year.
I'm aiming for $10m plus on the basis I dont lead a cheap life now so why would I want to in retirement. I'm quite a bit behind where I should be unfortunately.
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The size, quantity and variety of cheese usually spurs the avid treadmill devotee on to the necessary levels of effort. Keep up the good work
 Originally Posted by Harvey Specter
People off say you can downsize in retirement and your living costs reduce. That is fine while you are healthy and mobile, and then die suddenly.
With modern medicine though, you are more likely to live to a very old age, requiring lots of medical and home care assistance. So you need to ask yourself, not just what sort of active retirement do you want, but what sort of retirement do you want once you are no longer healthy and active.
My Grandparents decided they wanted to say in their own home. That's all well and good but 24/7 care costs $200k a year if you go through an agency and that doesn't include all your other costs. Sure that is the expensive way but what would a similar level of care cost in a nice retirement/care facility? $100k. And how long can you last in that condition - my grandmother was looking dodgy for a while but then they put a pacemaker in (at over the age of 90!) and now she will probably live till 100! 10 years x $200k = $2m - Ouch! and that is just from the age of 90. God knows how much they spent from 65 to 90 when they were still active enough for multiple overseas trips a year.
I'm aiming for $10m plus on the basis I dont lead a cheap life now so why would I want to in retirement. I'm quite a bit behind where I should be unfortunately.
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So right Harvey re medical costs and don't get me started on what specialists charge!. I want to be able to help family members occasionally with medical costs, education etc and donate to good causes .I'm thinking re $1.3-5 million plus a house is what i need.. I don't currently have a house, all funds in shares, fixed int and some cash atm.
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Originally Posted by huxley
Funny quote
I love it
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Originally Posted by huxley
You just need **** you money! ...
Actually that is why I started investing in the first place. Had a good job but a bad boss, but was locked into the job. Solo parent, no child support, hefty mortgage. Decided never again, so made a financial plan where I could walk out the door if I chose to. Took quite a few years. Never needed to do it, but a huge relief to know I could.
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Rethink your retirement. For me, "retiring early" was getting to stay home and bring up my kids and take all the holidays we wanted and then choose a new career. And never stressing about the possibility of us both being out of work. And being able to choose to retrain and take up a new career that suited me. This took a small, debt-free house and a starting sum of $30k (and currently needs about $300k with one modest part-time income and 3-4 teenagers).
After that, I am seriously keen to work out the rest of my life and never retire again 
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We cannot be really certain for sure, I guess. And it will be at the end of our lives when we get to know whether what we have saved or our capital was enough
or not. So just aspire to get as much above that very low threshold of $1M as per what KW shared on the link above and having passed all the conditions that are given (no debt, an unencumbered house, etc). If you're really an investor and have not started rather late $1M is easily attainable.
Last edited by RGR367; 23-04-2015 at 03:52 PM.
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Originally Posted by RGR367
We cannot be really certain for sure, I guess. And it will be at the end of our lives when we get to know whether what we have saved or our capital was enough
or not. So just aspire to get as much above that very low threshold of $1M as per what KW shared on the link above and having passed all the conditions that are given (no debt, an encumbered house, etc). If you're really an investor and have not started rather late $1M is easily attainable.
I agree and see that as a minimum target BUT here's another perspective from some retiree's I know well.
Mary has retired and lost her second husband to cancer many years ago. She lives in Turangi and is actively involved in the community and has very little in the way of retirement savings BUT she makes jams and pickles and knits colourful baby booties with pictures of cute farm animals on top which she sells at the fortnightly markets down there, often to tourists passing through. She makes about $300-400 per fortnight and she lives reasonably comfortably on that and her national super in her unencumbered home there which is basic and not worth much more than $100K but she seems happy enough.
Sylvia lost her husband a few years ago and lives on the National super plus a modest super policy her husband took out many years ago which pays for the monthly management fees, (about $550 a month) in the village she enjoys with a supportive and caring community. Her son manages a very small portfolio which pays her another $60 a week and she seems happy and well able to meet all her bills and travels down to see her extended family in Southland quite often.
Neil and Chris didn't have any money when they retired, in fact due to non existent retirement planning, excessive spending and some unfortunate events they still had a $200K mortgage on their modest Auckland family home. They love animals, (former manager of Animal welfare centre in Auckland), and didn't have enough room for their many different animal's and strays they took in at their home. They traded down to an nice unencumbered 8 acre property in Te Kuiti which cost around $250K from memory and run a full suite of chooks, pigs, sheep, goats e.t.c. as well as domestic animals they love including cats and dogs and seem very content. The bonus is they're close enough to Auckland and have room for their kids to come visit on the weekends and the kids seem to like having a break from Auckland.
Proof that you don't need an absolute fortune to retire on ?
Others I know have converted part of their house into a separate flat and rented it out and seem to be doing fine on one lot of rent plus the Supernanuation.
I wouldn't advocate aiming too low but I think we can all agree that human beings provided they're adaptable are capable of more than one way of skinning this retirement cat.
There's also the point that there's absolutely no guarantee whatsoever that you'll make it to say the age of 70 and even if you do its odds on favourite that you'll enjoy spending that XYZ amount of discretionary spend a lot more in your thirties, forties or fifties than you will in your nineties. Food for thought ? I think a balanced approach is best.
I've probably erred on the side of enjoying it as you go a little too much but you've got to call this thing as you see it.
Last edited by Beagle; 23-04-2015 at 02:00 PM.
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