Many of our new clients come to us with around $700,000 in assets and about ten years left of their working lives. Their goal is to make sure they have enough money in order to live a good lifestyle during retirement. The first question we ask them is: how much money do you spend now? This is important, because we find that nobody wants to downgrade their lifestyle once they retire. So, to know what you need in retirement, first work out what you need right now.
Who remembers the ad from 1994 about the average family having 2.3 children? It may be stretching the memory a little, but we clearly remember the little boy in the ad who certainly wasn’t a fan of being ‘the .3’. In the ad, he complains of never fitting in the backseat of their family car. Enter the Ford Laser – the car which all families must buy in order to fit all three kids! For a blast from the past, check it out here: https://youtu.be/jNNIJBiSyA
Towards retirement, we always discuss assets and liabilities with our clients. Many of them talk about their house as an asset and part of their retirement savings. But there is a problem with this. Unless their plan is to sell the house before or during retirement, this is not an asset that will generate an income for them to live off.
Having a hot shower is just one of the many luxuries we enjoy in the modern world. But hot water systems are a relatively recent addition to our lives over the course of human history – and just one of many luxuries people often take for granted.
In the previous blog we discussed the benefits of becoming self-employed during semi-retirement. Taking this step suits some people more than others.
We decided to record a three-part series about setting up your own business in semi-retirement, because we have seen it working successfully for many of our clients.
Have you ever watched Gordon Ramsey’s Kitchen Nightmares? It’s actually one of Michael’s favourite shows, and he sees many similarities between failed retirement plans and failed restaurants. On the other hand, successful restaurants have a lot in common with successful retirement plans.
Michael’s son had his first day of school this year. In the week leading up to it, he was incredibly anxious about his first day – it was almost challenging to even get him into the car! But the afternoon told a different story, when he came home with a grin from ear to ear and spent the rest of the afternoon talking about how much fun school was. Life brings us many challenges – but Richie had conquered his fear.
In the previous podcast we discussed ‘bolting it all together’ while you are still working – meaning getting everything in order financially before you retire. We gave the example of a couple who earn $90,000 each in the final 10 years of their working lives, and their ability to claim $113, 505 in personal tax returns if they make voluntary super contributions in that time. If we subtract the 15% earnings tax from this, it would leave a benefit of $64,155. There are other benefits the couple could tap into while they are working, such as spouse contribution and government co-contribution. There are many small things you can do while you work to chip away at growing a larger amount of money for your retirement.
We often discuss owning the great companies of Australia and the world and how it benefits you in retirement. Today, we look at some things you can do while you are still working.
Dallas Davison, Michael Hogue and Ali Hogue.