Retirement Requirements

[Sparra]

Hey folks...There seems to be plenty of retired people on the forum so I thought I would throw it out there...How much is needed to retire and how comfortable do we really need to be??? I guess this is a bit like how long is a piece of string...My wife and myself are both in our mid 50s and have a few assets that if sold would add up to a reasonable bank account...Her idea is to sell up everything,buy a van and do the nomad thing but my way of thinking is that you can only do that for so long and need something to come back to...But if you leave it for too long and keep working towards it ,when the time comes your too old to do it...If you do it now, when you are finished doing it you have nothing left to live off and only a busted up van to live in...Any thoughts????

Cheers...Sparra

 

[richo966]

getting hurt made me retire early

 

[Croc]

My wife and I have bought our retirement house and have it rented out. When we retire we also want to travel, so will sell everything else and pay off the debt, keep the house rented out until we have finished exploring full time. I pick up so many people that are asset rich but health poor, there is a balance and timing that only you can work out. Financial advisers can help you make sound choices.

 

[penfooey]

Hey folks...There seems to be plenty of retired people on the forum so I thought I would throw it out there...How much is needed to retire and how comfortable do we really need to be??? I guess this is a bit like how long is a piece of string...My wife and myself are both in our mid 50s and have a few assets that if sold would add up to a reasonable bank account...Her idea is to sell up everything,buy a van and do the nomad thing but my way of thinking is that you can only do that for so long and need something to come back to...But if you leave it for too long and keep working towards it ,when the time comes your too old to do it...If you do it now, when you are finished doing it you have nothing left to live off and only a busted up van to live in...Any thoughts????

Cheers...Sparra

All I know is that we spent about 1 year getting things together to make our travels comfortable. You need to ask yourself how much you need to pay your bills - the usual utilities etc and how much you need for food, petrol and anything else you might want. Your question is not an easy one to answer. Everyone's situation is different. We bit the bullet and retired early this year. We've started our travels and so far LOVE IT! One thing we did consider was 'are we going to be too old to do what we want to do, if we don't retire now' so we did. Do it while we can and worry about the future as it happens. I am in my mid 50's and partner is in early 60's so for us it was a no brainer. Ha ha, if worst comes to worse we can always sell the home but think we should be ok. We are looking at where all the free camping grounds are, so that should save some cash. Only you guys know what will work for you...perhaps just downgrade if you need the cash to get started and want somewhere to come back to when you think you've had enough of this great way of life. Anyway, good luck with what you end up doing. All the best, Pen & Harro

 

[condor22]

Remember one important thing,

Houses and land APPRECIATE in value !

Cars, Caravans and Boats DEPRECIATE in value.

If you got the house, keep it and if needs be rent it out if away long term. Buy the van and tug on top of that and do the Nomad thing.

If you can't afford both, keep the house and find a cheaper hobby !!!!!!

 

[KarlS]

Remember one important thing,

Houses and land APPRECIATE in value !

Cars, Caravans and Boats DEPRECIATE in value.

If you got the house, keep it and if needs be rent it out if away long term. Buy the van and tug on top of that and do the Nomad thing.

If you can't afford both, keep the house and find a cheaper hobby !!!!!!

Although this is true, you never know when you gonna kick the bucket. All your assets will make bugger all difference when you are six feet under. Memento MORI.
Karl

 

[Digger Danny]

Horses for courses but I am with you condor22

 

[condor22]

We normally never know how long we are going to live, but.....simply

Scenario 1 - Sell the house, buy a caravan and tug or a motorhome. So, if you have to sell the home to do this, there probably will not be enough left in the kitty to buy another home later. So, then travel this great country for a few years past the mobile stuff having any tangible value. At some point you and or your partner will either have had enough, or have an illness or worse a bad accident, making it impossible to live in a mobile home. - What do you do ??? Or you both may live well into your 90s, in which case at some point you WILL have your license revoked, how do you then trip around?

Scenario 2 - As above except you can afford to keep the house as well as buy the mobile solution. You still have a home to come home to at some point.

Scenario 3 - You don't have a home of your own, you don't have any money - You're buggered already

 

[gcause]

Have you considered another scenario with renting a house.

A lot of people say rent is dead money but I've found the opposite.

Here is an example I saw used once to explain it:

Suppose you buy a house for $750,000.
Alternatively you can rent that same house for $465 per week.

If you buy the house with an 80% mortgage it will set you back $40,320 per year in interest charges.
Yet if you rent that house it will only set you back $24,180 per year.

In cash flow terms, thats $16,140 you are saving each year.

In other words, youre making more from the rental home than the landlord.

Now if you put those savings into a bank account earning around 56% each year in interest that will earn you another $800 a year. Even more when its compounded.

So thats now around $17,000 per year you are saving renting.

Now the housing market works on roughly a 7 year cycle so thats between high house prices and low house prices. But that cycle has changed in recent years so its now around a 10 year cycle but for our exercise we will use 7 years.

Now for the renter thats $17,000 x 7 = $119,000 in savings without the hassle of maintenance costs, depreciation, etc.

For the owner thats $40,320 x 7 = $282,840 in interest plus whatever maintenance occurred in 7 years i.e. Painting house, re-carpeting, termites, plumbing, electrical, etc.

Now note how that properties value is assessed by the market.

Your house is worth next to nothing.

Its the land that gets valued.

Its the land that appreciates.

Your house may be knocked down by the new owner and and a new one built or a block of apartments put up.

In the 7 years the market may have been declining so the house that was worth $750,000 is now only worth $550,000 on the market.
Thats a potential loss of $250,00 on top of the mortgage outlays.

Now on top of that in those 7 years the State Govt or local council could have decided to rezone your land because of new developments, population increase, etc and they may decide to charge you more in rates or even potentially devalue your land value. If you are lucky it could actually increase your land value.

In the 7 years the market may have been improving so the house that was worth $750,000 is now worth $850,000 on the market.
Thats a gain of $100,000 less the mortgage outlays.

So you own a house and have an asset that you can borrow against if needs be but do you really need more debt you potentially cant afford to service?

Doesn't it make more sense to have savings in the bank and use cash to buy what you need rather than credit?

Do you leave your kids with a large mortgage to pay off when you are gone on the chance they might sell the house for a profit or do you leave them with a large bank account full of cash?

Is having the house as an asset really worth it these days?

The gap between owning a home and renting is decreasing rapidly each year, not just in Australia but worldwide.

My plan is to sell the house, rent somewhere, save up buy a caravan and then go travelling around Australia prospecting, find lots of gold and then rent another house when I am done travelling.

 

[Beagleboy]

You are forgetting one thing. The rent also goes up.

 

[Digger Danny]

Also you can be evicted at 80 years old just because your lease is up, big shock to the system at that age.
But at the end of the day it is what you are happy with. I have an aunty that sold up everything her and
her husband traveled Australia she said that she would not change it for the world but she wishes she still had
her house. Most of all I think we would all like good health.

 

[dwt]

My parents are retired, sold their business, spent a fortune on a F-truck to run around australia, dad done up my grandfathers old fergie tractor and they were going to head to the simpson desert for a bash across the simpson with another bunch of fergie tractor enthusiates, the fergie bash got cancelled, mum got crook, by the time the bash was going to be run mum couldnt be that far away from the doc's.
Mums health is up and down like a yoyo, and they have never made it around australia, the F-trucks been sold, the fergie sits in the shed gathering cobwebs, the furthest they have been in the last 4 years is just to visit us kids.
Dads biggest regret is just not running accross the simpson on his fergie with mum (before she fell ill) running the F-truck as support, even if they were on there own.
Dads words of wisdom, " make a plan and stick with it, life's happening while you wait" :|

 

[gcause]

You are forgetting one thing. The rent also goes up.

So do interest rates. Sure you can fix it but it's still money going to a bank not to your pocket. Weigh up the cost of all that maintenance every year and you still come out ahead renting. I've owned two houses in my lifetime, give me renting any day.

 

[gcause]

My parents are retired, sold their business, spent a fortune on a F-truck to run around australia, dad done up my grandfathers old fergie tractor and they were going to head to the simpson desert for a bash across the simpson with another bunch of fergie tractor enthusiates, the fergie bash got cancelled, mum got crook, by the time the bash was going to be run mum couldnt be that far away from the doc's.
Mums health is up and down like a yoyo, and they have never made it around australia, the F-trucks been sold, the fergie sits in the shed gathering cobwebs, the furthest they have been in the last 4 years is just to visit us kids.
Dads biggest regret is just not running accross the simpson on his fergie with mum (before she fell ill) running the F-truck as support, even if they were on there own.
Dads words of wisdom, " make a plan and stick with it, life's happening while you wait" :|

Sorry to hear that DWT.

Life has a habit of kicking you in the guts sometimes.

My wife was diagnosed with a Brain Tumour last year after she had a Gran Mal seizure whilst sleeping one night just out of the blue. Had been healthy all her life until then. She bit her tounge almost in half during it and nearly choked to death on the blood. Luckily I heard the gurgling noise from the other room, I was watching TV at the time, and found her with blood gushing out of her mouth and nose with her eyes bright red and bulging out of her head. I got her in the recovery position and whacked her back to clear her airway then rang the ambulance and thankfully she came good after the air got back into her lungs. Apparently this type of tumour you are born with its embryonic tissue that hangs about it's called a DNET. So it took 40 odd years to show itself. Now she's under specialists, on the highest doses of seizure medication with regular MRI's and CT scans to monitor it for growth, which thankfully it hasn't.

Just before that I had a heart issue that landed me in hospital for a while and earlier I was injured in a car accident (car got pushed under a bus) and have a ruptured disc in my back pressing on my motor nerve as a result. Doctors who look at my scans say I shouldn't be able to walk but I proved them wrong.

So it means we are in the same boat need to stay close to doctors.

Sold the house to pay off debt and the medical expenses. Started renting, never did it before that. That's when I heard about the savings I mentioned which made our mind up to sell. Best move we ever made.

I contract for a living and the work dried up in Brisbane just after we sold the house (unemployed for 8 months living on savings) so now I am Cairns for work and she is still in Brisbane close to specialists and hospitals. It will be November by the time I get back.

On the upside now My wife's seizures are under control with medication (otherwise I would still be in Brisbane) my back is not as painful as it used to be, we rent and are relatively debt free except for credit cards but working to pay those out. And in Cairns I can hit the goldfields in search of that retirement nugget. We still have our plans to travel but we have to save for that, but we will get there

 

[Beagleboy]

You are forgetting one thing. The rent also goes up.

So do interest rates. Sure you can fix it but it's still money going to a bank not to your pocket. Weigh up the cost of all that maintenance every year and you still come out ahead renting. I've owned two houses in my lifetime, give me renting any day.

I agree with you that it is cheaper to rent than own a house. The reality is that 99% of people will not put the difference between what it cost to rent as oppose to own a house to their saving account. The money will be spent on lifestyle. Owning a house is a form of forced saving.
I will give you an example. The last property I bought in 2006 cost me $384,000. I rented a similar house before for 12 months for $260 per week. Since than the market has moved and my home is worth about $750,000. Maintenance and improvements of the house over the years has been maybe $5,000 if that. I will be moving to another property soon so we will rent our house for approximately $490 per week. With my mortgage of about $300,000 the house cost me nothing to own and will put money in my pocket.
My 16 year old daughter has decided to become a commercial pilot. The training is very expensive and it takes about 2-1/2 years. Although I earn reasonable income I could not cover her flying lessons. She flies once or twice a week and each time it cost me $350 per lesson. I have arranged with the bank a line of credit and if I am short of money that week I can dip in to it. If I was renting I would have no savings and she could only dream about flying jets as a job.
I will never sell the house and will keep it rented out. In 10 years time the rent will double while the mortgage will be less than what it is now. I will be collecting cash every week from the tenant that will help me when I retire.

 

[gcause]

You are forgetting one thing. The rent also goes up.

So do interest rates. Sure you can fix it but it's still money going to a bank not to your pocket. Weigh up the cost of all that maintenance every year and you still come out ahead renting. I've owned two houses in my lifetime, give me renting any day.

I agree with you that it is cheaper to rent than own a house. The reality is that 99% of people will not put the difference between what it cost to rent as oppose to own a house to their saving account. The money will be spent on lifestyle. Owning a house is a form of forced saving.
I will give you an example. The last property I bought in 2006 cost me $384,000. I rented a similar house before for 12 months for $260 per week. Since than the market has moved and my home is worth about $750,000. Maintenance and improvements of the house over the years has been maybe $5,000 if that. I will be moving to another property soon so we will rent our house for approximately $490 per week. With my mortgage of about $300,000 the house cost me nothing to own and will put money in my pocket.
My 16 year old daughter has decided to become a commercial pilot. The training is very expensive and it takes about 2-1/2 years. Although I earn reasonable income I could not cover her flying lessons. She flies once or twice a week and each time it cost me $350 per lesson. I have arranged with the bank a line of credit and if I am short of money that week I can dip in to it. If I was renting I would have no savings and she could only dream about flying jets as a job.
I will never sell the house and will keep it rented out. In 10 years time the rent will double while the mortgage will be less than what it is now. I will be collecting cash every week from the tenant that will help me when I retire.

I am glad it is working for you but as you can see by my previous post our hand was forced into renting but it is working for us as we are putting the savings in the bank.

 

[lids]

yep, my mortgage has gone down since I bought by about $100 a week and my next door neighbour has had his rent go up!

find whatever works for you and your situation, if you need to change your plans later you usually can.

 

[Beagleboy]

You are forgetting one thing. The rent also goes up.

So do interest rates. Sure you can fix it but it's still money going to a bank not to your pocket. Weigh up the cost of all that maintenance every year and you still come out ahead renting. I've owned two houses in my lifetime, give me renting any day.

I agree with you that it is cheaper to rent than own a house. The reality is that 99% of people will not put the difference between what it cost to rent as oppose to own a house to their saving account. The money will be spent on lifestyle. Owning a house is a form of forced saving.
I will give you an example. The last property I bought in 2006 cost me $384,000. I rented a similar house before for 12 months for $260 per week. Since than the market has moved and my home is worth about $750,000. Maintenance and improvements of the house over the years has been maybe $5,000 if that. I will be moving to another property soon so we will rent our house for approximately $490 per week. With my mortgage of about $300,000 the house cost me nothing to own and will put money in my pocket.
My 16 year old daughter has decided to become a commercial pilot. The training is very expensive and it takes about 2-1/2 years. Although I earn reasonable income I could not cover her flying lessons. She flies once or twice a week and each time it cost me $350 per lesson. I have arranged with the bank a line of credit and if I am short of money that week I can dip in to it. If I was renting I would have no savings and she could only dream about flying jets as a job.
I will never sell the house and will keep it rented out. In 10 years time the rent will double while the mortgage will be less than what it is now. I will be collecting cash every week from the tenant that will help me when I retire.

I am glad it is working for you but as you can see by my previous post our hand was forced into renting but it is working for us as we are putting the savings in the bank.

I am sorry to hear that mate. I wish you all the best and hope you both get to travel around as planned.

 

[Goldpick]

It's always sad to read through caravan and rv trader classifieds to see how many people were forced to sell up their dream due to bad health, often before they even take one step out the front door. You only get one chance at life, so I believe if you have a dream to go travelling, then you should work towards making it happen before bad health strikes. If you can't realistically afford that once of a lifetime trip around Oz, maybe look at down scaling the trip to a more modest target - possibly renting a motorhome or caravan vs an outright purchase or buying someone elses second hand bucket of bolts, or limit accommodation to onsite vans/cabins. Sure that sort of accomodation is reasonably expensive in the long term, but at least you don't have to sink your life saving into a depreciating caravan, and then find you have trouble selling it when you desperately need the cash.

Look at concentrating the trip to areas you really want to visit vs just following the crowd of RV's doing the usual annual migration around Oz. Nothing is set in stone, so you can always modify the trip mid flight should finances allow you to do so.

I was personally looking at travelling around Oz, but to be sensible about things, my partner and I are probably better off financially looking at a series of smaller trips to go prospecting and sightseeing interstate, and continue paying off the mortgage.

With this realisation, I think I will be more happy with a near new 4WD in the driveway to go travelling in, and keep costs down by staying in accommodation in the off-season, you will be surprised how cheap accommodation is when the throngs of tourists have eventually headed home, often more than half price.

I am not of retirement age as of yet, but I intend to enjoy myself to the fullest whilst I still can. My father did the opposite, and he now very mucn regrets it.

 

[elrodeo]

Wait until Prime Minister sluggo's get's the 70 year old retirement age legislation passed through.
Will be a very different style of grey nomad on the roads. Ones with their own paramedic teams in tow !!