Retirement Planning in 13 minutes! So EASY ð°
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- āđāļāļĒāđāļāļĢāđāđāļĄāļ·āđāļ 15 āļ.āļ. 2024
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Ever wondered about retirement here in Australia? Nervous if you can even afford to do it? How does the pension actually work?
Let's break it down
Subscribe to the channel for practical help guiding you from your first investment to early retirement - / @dadinvestor
Articles, reviews, and guides on personal finance and investing www.dadinvesto...
The information provided on this site is based on my own personal experience and is not to be construed as professional financial advice. The contents of this site and the resources provided are for informational and entertainment purposes only and do not constitute financial, accounting, or legal advice.
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I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
@RawlinsesPierces That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@RawlinsesPierces I will give this a look, thanks a bunch for sharing.
Great video, One primary concern is the uncertainty surrounding the future cost of living. Inflation can erode the purchasing power of your savings over time, affecting the quality of your retirement.
Thats right and why it can be risky to hold cash that has a return competing with inflation rates
Mid 2026 I reach 67, I have about $173,000 right now in super, I am debt free and own a home, and less then 10k in the bank as I have nearly reduced my work hours to near nothing ( life style choice), I am off grid, own water etc, small rural village and less then $1,000 rates, With a single age pension in about 2 years time and a draw down on my super of about $200 a week at 67, I will not be rich but comfortable, as I am now
Sounds like you have built yourself a solid base to be retiring on, Ross. Thanks for sharing.
Sounds like the dream mate, well done
Sounds like you expect my taxes to completely fund your retirement. Thanks ð
I have been working for over 50 years without taking money, now that's a lot of taxes I have to support this country and done without while having a mortgage for more then 40 years, if you are a lot younger then me ,I have probably funded you in one way or another through taxes or education, so if you think I should be denied a pension for that?@@liamwindsor5854
ðâ@@liamwindsor5854
Thanks for resubmitting without music. Much better!
Glad you liked it!
Thanks for the no nonsense info. It is worth emphasising that the given figures for a comfortable retirement are based on owning your own home and accessing the pension in later years as the super balance is drawn down.
Do you have a video on concessional vs non concessional contributions? Iâm maxing salary sacrifice but Iâm starting to consider how I might be able to top up the super balance to well exceed ASFAâs comfortable super balance and retire at 60 with some youth left to enjoy it.
Yes you are right the ASFA standards assume you own your home and are also a guide for those in the 65-85 year old age bracket.
I dont' have a video on contributions (yet) but here is a page from the ATO that has a nice explainer on them which may help
www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/understanding-concessional-and-non-concessional-contributions
That is great you are currently maxing the $27500 yearly concessional cap. Post June 30, it looks like it will rise to $30K. You can "catch up" any concessional amounts from 2018/19 (remembering in 2018/9 it was max $25K) that fell short of the max. Important caveat is your balance has to below $500K to do this.
You can also make a non-concessioal contribution of up to $110K (2023/24) without paying extra tax on the way in.
As always get professional advice from a reputable financial advisor (not some random TH-camr).
@dadinvestor @TheSuperdodgy Thanks for those informative responses!
No concessional catch up options for me, so will take a deeper dive into the non-concessional option and the necessary paperwork around it.
You have a clear communication style that makes it easy to listen to and learn about a somewhat daunting topic. My wife and I are approaching the time where we need to be more sure about our strategy for savings, super and pension. I am wondering, do you provide a general advice service on demand (not necessarily professional advice)?
Thanks for the feedback. You can find my email on my channel page if you'd like to get in touch and will explain how I can help.
For many low-income earners, and single Mums who supported kids on one income, or found themselves single with no support, superannuation is someone else's dream, the pension becomes the main income.
I donât know why expected age pension figures can even be close when outgoings are not even taken into account. It all should start with do you own your own house, or unit?
If the answer is no, then the living draw downs are vastly different.
Love your attitude about not relying on the government to fund retirement. It is quite likely as the years go by the government pension rules will change and it will be much harder to qualify.
For me I love the thought because it means not having to deal with Centrelink!
Very useful video
Thanks a lot
We bought a retirement unit many years ago so We plan on selling the house and making a downsizer contribution - adding $1,260,000 to our $1m super balance. We want to convert $2M of that immediately to a life annuity. Do we have to retire first? - or are we limited to the TTR limit of 10% of our balance. Our thought is - we are risk averse, the annuity will have $100,000 or so annual income indexed to inflation which covers all or needs and we have other investments and remaining super to top up incomeâĶ..maybe even an inheritance! Can we but the annuities without retiring?
Thanks for the questions. There is a lot going on here so while I'm not going to provide any suggestions in the comments and recommend you finding your own independent advice, here is what I believe the ATO's stipulations are.
Downsizer Contribution: If you are 55 or older, you may be able to contribute up to $300,000 from the proceeds of the sale of your home into your superannuation fund. Itâs a non-concessional contribution and doesnât count towards the contribution cap. However, it does count towards your transfer balance cap, which applies when you move your super savings into retirement phase.
www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/downsizer-super-contributions
Transition to Retirement (TTR): The minimum and maximum withdrawal thresholds are calculated as 4% and 10% of your TRIS pension balance each financial year.
www.ato.gov.au/individuals-and-families/jobs-and-employment-types/working-as-an-employee/leaving-the-workforce/transition-to-retirement
Life Annuity: If you are using super money to buy an annuity, you must have reached preservation age (between 55 and 60). You must also meet a condition of release, such as permanently retiring. Annuity income can increase each year by a fixed percentage, or indexed with inflation.
moneysmart.gov.au/retirement-income/annuities
Again please refer to the links I've sourced and your super fund directly for more specific scenario planning.
I think you haven't enough yet to retire.
Thanks for a great video. I find super very confusing. I agree if you can be self funded is the best option, but I canât figure out how much that is if you have minimum drawdown % by age then wouldnât eventually you would drawdown below the limit to get a part pension?
Is there a way to calculate how much you would need to start at age 60, taking minimum % and never go under the maximum by say approx age 85 (current life expectancy) is that something you could work out as a guide to aim for? Thanks again, your content is helpful in getting an understanding.
If you draw 4% each year youâll
Never deplete the capital
There are minimum draw down amounts at 65 and over it is 5% and then every 5 years it goes up by a percentage until you are 95 and over its at 14%.
If I have 330k in super at 42 thinking about retiring now. Think I will have over $1M by 60. But hanging onto my job which pays over 100k a year.
Yeah it's hard to give up the income but retiting doesn't mean you need to quit work. You can pivot to something you enjoy more that still pays. The challenge with early retirement is filling the gap between now and 60
What's the point of a couple with a home having super between $450K (full pension) and $1m (no pension)?
Isn't anything above $450K just leading to less pension? Does the pension reduce dollar for dollar above $450K?
True. If you are a homeowner couple and have over the $451k limit for the assets test you start seeing a reduction in your pension (known as part pension).
It's not dollar for dollar and the formula isnt stated on the ATO site.
Whats the point of having more than $450k in assets if you miss out on the pension? I guess you are less reliant on the government.
You mean tax payerð@@dadinvestor
The pension sweet spot, $451K Super @ 5% pa + Full Pension. Sometimes I wonder if forgoing my expenditure during my working life, which is coming to an end, was worth it. $1M Super @ 5% pa. In some circles this would be in the "sour spot" range.
For every one thousand of saving above $450000 your pension reduces by $78 a year.
Great informative video (well done!!).
Iâve been lucky enough to work in the Wealth Management/Financial Services Industry for approximately 26 years and in that time, I have learnt a lot and between my wife, we plan to retire on approximately $870,000 pa, using a combination of both our Superannuation, as well as income from our investment property, direct shares, ETFâs and Managed Funds.
Some people may say that is a high number to aim for, however, the higher the better in my opinion.
Absolutely. Very few people know what enough is but the more the better and then you can have all the control over what to do with it. Thanks for sharing.
If you have 700000 by the end of your working in super, u can say good bye to pension. But anything less s not enough. So in conclusion, you can either make your own way and do it well or be an absolute bum and wait for the pension every 2 weeks
Check out this page, which says you can have between $300k and $693k in your super (depending on your situation) before you miss out on the full pension.
www.servicesaustralia.gov.au/assets-test-for-age-pension?context=22526
It's something that needs to be planned for early in your career life.
It needs to start the moment you get your first job at 15.
Your information on the required superannuation balances is incorrect. ASFA DOES assume age pension will be used. $70k on 690 super would have to earn more than 8% over and above inflation to last a bit under 20 years. It's a bit scary to think that you believe 690k can give a prolonged income of 70k per year
In case I wasn't clear, the assumption is that the retiree will draw down all their capital (super, savings or otherwise) and receive a part Age Pension from age 67.
Savings required for a comfortable retirement at age 67
Couple
$690,000
Single
$595,000
All figures in todayâs dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6 per cent. The fact that the same savings are required for both couples and singles reflects the impact of receiving the Age Pension.
The lump sum estimates prepared by ASFA take into account the receipt of the Age Pension both immediately and into the future. The Age Pension is adjusted regularly by either the increase in the CPI or by a measure of wages growth, whichever is higher. The ASFA lump sum figures are therefore not updated quarterly.
Source: www.superannuation.asn.au/resources/retirement-standard/
Also note that the 70k per year isnt taken entirely from the $690k in savings or superannuation but includes the amount provided as per your age pension.
The max rate for a couple at the moment is around 39k per year so your super/savings are only reducing by 31k per year or so which is below the earnings expectation of a 690k balance earning 6% pa.
@@dadinvestor you very clearly said in the video these were figures for retirees to fund themselves without relying on the aged pension.
Ahh yep, found it. Have made the edits so its more accurate.
Hi I've been watching a lot of your videos recently and reading a lot of websites regarding investing and more over investing in the US market as an Australian and I was wondering if you would have an online brokerage recommendation? Obviously low fees is good, I don't think overnight fees will apply to me as I think they only apply to a type of trading I'm not going to do and inactivity fees wont matter since I will be dollar cost averaging at around $1k-$2k monthly. Of course it would need to have access to the US and AUS market but any other markets it would have access to is a + and I will be mainly going for index funds, dividends and a tiny amount of crypto. I think Webull is looking the best at the moment but what would you think? any help would be wonderful assuming you are aloud to give a recommendation based on this info
Thanks for watching.
Best thing to note is that the process of you investing is going to account for vast majority of your success than the tool you use.
Brokers I know of and have used for AU / US trading included
Stake
Selfwealth
WeBull
WeBull isn't Australian run like the other two, so you might want to create free accounts to see how easy or capable its going to be for your needs.
Thanks for the vlog and I just want to clarify a point that you appear to have made a mistake with. You said a couple would need $690000 or thereabouts to fund a comfortable retirement without relying on the age pension. This is not correct as ASFA states that a part pension would need to be taken with the self funded portion to get to that comfortable lifestyle annual amount of about 70k.
Yeas you are correct thanks for pointing out.
When referring to the ASFA standard the amounts suggested you need is for that in your superannuation account. IE. 690k in your account as a couple to live off 70k comfortably but does include age pension that contributes to create this income along with your super balance.
Stuff super its the great Australian con job, we are told stick as much as you can into a non performing super fund yer right ,they make the money not you, then you lose some or all of you pension, just buy $300K in dividends producing shares get at least 10% with the franking credits and full pension there is your 50K per year and your balance never disappears after 10-20 years unlike super.
Why not have your super in High growth until retirement, then withdraw it as a lump sum and invest in dividend stocks (I wouldnt). At least use the tax advantages super brings while you are still working, or self manage if you think you can do better than the funds managers. If you want to retire early then investing outside of super is the only way though, and while doing that id steer clear of dividend stocks to avoid tax-plus you want to actually GROW your portfolio , and div stocks are definitely not the way to do that.. Having all your money in piss-ant Aussie companies isn't the way to go either. My super fund is killing it -I'm aggressively invested. The 4% drawdown rule is what kills super funds (and people being too conservatively (or too aggressively) invested in retirement. What shits me is the government dictating how much super you must withdraw..Thats why ill be taking a lump sum at 60 thankyou very muchly. I don't reckon 300k is enough unless you work until pension age. I'm out at 60, and for me the quickest way to get enough of a stash is to get huge tax concessions on contributions to super. I'm salary sacrificing 300 extra a week into super. I wish id started much much earlier- 60 comes up quicker than you think hey. Don't fight the system mate-do what rich fckers do and take advantage of it.
Terrible "advice". You clearly have next to no understanding of Superannuation or it's interaction with the Aged Pension system. Yours is a great example of why people should not take advice from the comments section...
@@theowenssailingdiary5239 Great reply and I agree build your super up while its tax advantaged but remember anything over the minimum allowable asset at retirement age needs to be earning over 7.8% because that's what your pension gets reduced by for every 1000 over. Dividend stocks are the way to go, once your on the pension and retired you what income, not growth that's going to reduce your pension due to asset increase (unless you sell). I've been happily retired since 56 I'm 63 now living on the dividends and rent from my home ,which I intend to leave empty once I get to pension age and then receive the pension ,which is more than the net income I receive from my rent anyway. Another example of the government not solving problems for renters but encouraging empty houses or retirees living in grand homes exempt from asset test.
All my working life I've been told you need 1 million in super at 5% for have 50K retirement by the experts, guys at work staying on till 67 to boost their super what a joke. I'm never going to be rich with millions in super that is never going to happen but I'm more than comfortable and 7 years into retirement, living the dream while I'm still relatively fit.
Replying to me?@@reggrunow1460
@@reggrunow1460 you must work in the industry please enlighten us. Pension is reduced by $78 per annum for every
$1000 over minimum rate that 7.8% you need to earn on your supper just to break even.
Thankyou for some simple retirement advice which is about Australia. I'm 59years old and just $100K short of that $700K target with my Super and the small contributions from the wife. I already own my house. My Super appears to be earning +$50K a year so i know I'm on track to a self funded retirement any time from 2years ahead. But like most people I'm worried that i should continue working longer just to be careful. I intend to talk to my super fund about the pension stream given I keep working next year. I've already changed jobs to less stressful position with less pay. What really kicked my super up was that when i was 35years old for 10years i contributed 20% of my high income into super. 17% from Uni and whatever from a part time job. Before and after that period my super contributions were 10% or less.
The longer you work the easier it becomes and I find many people heading into their 60s transition from full time work to more meaningful work they can enjoy time doing.
Also do think loading up kn super early if possible is the way to go. Pre kids I rode salary sacrifice hard and so now feel well ahead of were I would have been without it
Your age and super are almost identical to me. You sound like a smart person. You know your spending habits, so youâll know when you have enough. For me, once I have enough money to retire, working longer to have more of what I wonât spend doesnât make sense. Every day worked past that point is a day Iâve lost of my retirement years. Iâm 58 and will be fully retired by 60. Most people work much longer than what they have to, because they think theyâll run out of money in retirement, and all theyâre doing is gaining more of what they donât need (wealth) and sacrificing what theyâll never get back, which is time. Enjoy your retirement.ð
@@markandkim66Yes I agree with your comments at the end. Time and Health in our life are crucial above how much money we need in retirement . We do not want to die in the office
A very depressing video when you donât have lots of superannuation or savings. So much for living the Australian dream .
Lol to retire in Australia with the way our government and inflation is going you will need at least a Million dollars
Here's my video on how to do that!
th-cam.com/video/ZGe8ytW7sZI/w-d-xo.html&lc=UgxZtjupXGARzF2EilN4AaABAg
wow .. we can withdraw from our pension acc tax free ðŪ ... its money we've already paid tax on ðĪ·ð
Not everyone knows or understands this about pension accounts or pension mode.
So apparently i need $50 to $70 thousand a year to be comfortable life. Well i only earn $45000 now, you people are nothing but a bunch of clown. You should put a warning up at the startof this video, by saying, must be a doctor or lawyer to watch this video?
You got a mortgage Paul? Or renter?
What's that got to do with it? Whether I'm a renter or a home owner, you are saying that people need $50000 plus to retire, when there are millions, who don't earn that now! Your whole video just like super is rubbish. It was never designed for poor people, it was designed for the union movement to have and income stream after falling union membership and as a by-product, the rich get richer, because they can use it as a tax dodge! You know and so do I?
$45k a year? You must be a casual or part-time worker. Or you're a teenager on minimum wage.
Drs earn on average $200k a year which might sound alot but a 4 year medical degree costs around $90k per year.
@@Michelle_Emm, if you lived in the real world more than half the population earnes less than $60000 a year, but obviously people like you are too busy sipping lattes, to know what your waitress, lawnmower man, taxi driver, shop worker and many others earne, so there's no point having a conversation? Oh by the way the average GP, now earns closer to 400k per year!
@paulsandford3345 I made $43k at my casual job in the last year I worked. My 3 kids all make 6 figure incomes, none of them have university degrees. I live on $30k a year.
You are statistically incorrect, more than half the population do not live on less than $60k a year.