April Reflect: How Much is Enough?

Dear All,

We were lucky enough in March to benefit from one of the wide range of activities available at schools today. Short thing went away on school camp for a week!

Smelling freedom, we rushed off to Bankstown to take the “home-made plane” for a holiday, and over 4 days we covered nearly 4,000km. We visited Charleville (a ghost of a town, suffering badly from multiple floods), Birdsville (a pub that really is in the middle of nowhere), Broken Hill (surprisingly cosmopolitan – with a great restaurant on top of the slag heap) and finally Temora. Perhaps where Glenn would love to retire, as you can actually live right on the taxiway of the airport – can’t wait!

Anyway, whilst away and sampling the delights of mini bottles of wine at the Charleville RSL (where, yes they dress for dinner! – eaten whilst sitting on plastic garden furniture) we did what all couples should do at least once a quarter.

We checked how the retirement plan was going!

It may sound fundamentally dull, however if you are going to live a life of moderately luxurious retirement – shall we say $60k p.a. to live on, you will need c.$1.5m in today’s dollars in your retirement fund when you turn 65. The magic fairy doesn’t make this happen. You do!

So assuming that you are putting in the full concessional contribution of $25,000 each and every year, have good investment returns (I have used 4% above inflation), work to age 65 and have adequate income protection in place (to age 65) in case you can’t work, then here is a ball park figure of what you need in your fund now, based on your current age, in today’s dollars.

Your Age & What Your Balance Needs to Be:

40 – $165,000

45 – $340,000

50 – $550,000

55 – $800,000

60 – $1,100,000

65 – $1,500,000

So how are you going? On target, or falling short? If, like most Australians, you are falling short, you need to take action now – that’s today. So here is your homework…

There are three essential steps to the process;

Write down your assets and liabilities as they stand now. Then, together if you are in a couple, discuss how you are going to pay off those debts, grow your assets and fund your retirement. Please discuss whether you are going to sell the family home to retire on – this is a huge stumbling block for most couples.

Prepare a cash flow of exactly what the family money has been spent on over the past few months. Work out where you can save. Your aim is to free up cash flow to invest. You are not allowed to say that you could not possibly spend less – if that’s the case, how on earth are you going to live in retirement on a much lower income?

Finally, talk to me as to how to use the spare cash flow to salary sacrifice up to the maximum and then invest outside super to generate additional wealth.

Simple really, but it won’t happen if you don’t take control and get on with it! So do it today.

Please feel free to forward to family and friends, and call me if you want to discuss any of these further on 02 8090 4112 or 07 3103 0771


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