Originally Posted by
Beagle
I would think $400K at age 65 which if skillfully invested might give a return of 6% average or $24,000 plus the national super of $31,000 for a married couple = $55,000 income before tax to be comfortable (if you can call living on $55K comfortable) would need to be in a debt free home.
I think its refreshing to see more realistic targets as portrayed in that Herald article and I suspect many participants on this forum would be ahead of those targets at the various age's mentioned.
I for one think conventional thinking mainly espoused by kiwisaver funds and others with a vested interest that one needs at least $1.5m to retire comfortable is complete nonsense if one owns their own home outright. As I suggested much earlier in their thread all this does for the majority of people is completely undermine their motivation to save as they see $1.5m as an unattainable goal.
I also suggested there are many ways to skin a cat and even having a simple flat or apartment, just one, plus the super is probably enough for a reasonable retirement income provided one doesn't have aspirations of fancy trips every year or need significant private health care.
Now I will get on my hobby horse / soap box properly and opine on how young people are bleating about how tough it is to get started on the real estate ladder...WARNING, if you're easily offended or don't like hearing the harsh truth just stop reading right here !!
Fact - It has always been incredibly difficult to save the deposit for one's first home. Its requires really serious discipline and going without luxuries and serious saving for several years and always has done. Much has been made of the average house in Auckland being about 9 times the average household income but few if any ever objectively note that interest rates are just one third of what they were in the late 1980's or early 1990's. Back in 1987 earning just $28,000 before tax I decided that I would save $10,000 per year for my first home. There was absolutely no money for travel, beer, socialising, entertainment of any kind other than free at parks and beaches...I was absolutely determined. I went without what many people consider to be basic necessities for three whole years to save $30,000. $10,000 per annum was nearly half my take home pay. I can't help wondering how many young people could put aside having the latest smart phone, trips to cafe's, overseas trips, trendy clothes or even simple cheap restaurant meals ? My first home cost me $138,000 in a very modest suburb in Auckland and was a modest 3 bedroom house in 1990. It was about 4.6 times my gross in come at the time of purchase had a mortgage of just over $100,000 at 15.5% which after paying I was even more broke than when I was saving for the deposit.
I started working two jobs to make ends meet for a few years but over time with salary increases things became more comfortable.
What I find annoying is how our kids have expectations that they will start at the top with no effort required on their part ! We tried to help our oldest daughter into a modest two bedroom flat as a starter and would have been the bank of mum and dad to help with the deposit. If was a 1960's basic flat in New Lynn Auckland about 5 years ago and was for sale for $270K. She and her boyfriend turned their nose up at it as it wasn't good enough and needed a lot of work. What has happened to young people's work ethic ? Have they never heard of sweat equity ? Do we need to see even more TV programs beyond the already nauseating level of home renovation projects adding value ?
If she and her boyfriend had of rolled their sleeves up and got stuck in and painted, redecorated and refurbished that flat five years later is probably worth $600K today...but remember it wasn't good enough for them. I think a lot of young people need to lower their expectations, (start at the bottom) and grow some serious spine and backbone and some serious discipline with their saving otherwise they'll always be renting and in that case will always struggle to save enough to have a comfortable retirement. "Make the most of now" a lifestyle so fervently encouraged by social media in all its forms and classic thinking of life is too short to drink bad wine probably ends one way, in hardship in older age.
Anyway...I share my story of how I did it so anyone who wants to follow suit can but I think we have a generation of young people that have grown up without being taught properly how to save.
I blame in many respects all the interest free deals retailer shout at us. I ask young people sometimes what about saving up for consumer items...why should we is the standard answer when its freely available on 5 years interest free terms ? End of soapbox rant.