How much capital do I need to retire comfortably on ?

[Yoda]

It may have already been said but, the sicker you are, the less important money is to you would you prefer good health and less money, or more money and poor health
Investment in health is just as important that financial investment, after all , what's the point of having buckets of money if you cant spend it, unless you want to leave it for the next generation family . My goal is to live long and prosper, but leave an inheritance for my kids and grandkids, non of whom are on the property ladder in spite of having good jobs.
It seems silly to plan for living till your 80 -90 , thinking that modern medicine will get us there, when we just eat so much sugar, end up with type 3 diabetes, Alzheimer's dementia, and can,t remember where we put the money .. :-)
Grossly overweight, die at 60ish
unfit, smoke, ( latest fad... eating to much red meat causes cancer .. really ?)
spray grass weed killer in bare feet..... die early

I have read that the 'rich' give away 10% of profits, (and I don't mean the religious kind,) And I think there is a lot in that.
I love giving. My 4 yr old granddaughter has leukaemia and giving her an iPad for Christmas( for the 6 hr clinic appointments and hospital stays), from investment profits was awesome.

probably more like a Facebook post than trader .......oh well, Happy new year to you all and good luck in the 2016 comp.

[Lewylewylewy]

I think there's some wisdom in that post, Yoda.

I often grapple with concepts of saving now vs living now, and the idea that I won't live as long as trends suggest is something that has crossed my mind before. For example, expectations that we will live longer than our parents, who will live longer than our grandparents, based on data we have on the longevity of our grandparents and great grandparents is silly. Statistics on older generations living longer are due to healthy diets (no NZE:RBD back in those days and it was sunday dinners and veggies every day) and a leap in medicine. I don't think we've had another such leap in medicine and livestyles are much worse (drugs are commonplace, diets comprise of fast food and carbs with very few veggies and fruit).

Regarding saving now vs living now... If you work out how much you'd need to save each year to attain retirement at 65, without a pension... I think most people wouldn't be able to. I even consider myself a pauper with a $100k salary (ok, the situation would be different if I had a spouse on the same salary), when I consider my retirement goals.

But to give my idea of how much you need to retire, I say work out your daily costs. Break these into need vs want.

Need:
house tax money: $60pw = about $10 per day
Assume you've paid your house off, otherwise include rent / mortgage interest payments per day
health insurance = $5 per day
Food per day = $20
$10 per day saved to cover other costs, like insurance on house or repairs to.. I dunno, the car, say, or xmas presents, etc...

Want:
Petrol to go places = $10 per day
To eat out at a café each day = $10 extra on food costs
some activity = $10 per day
$10 per day savings towards an annual holiday

So, I need $45 per day and want an extra $40 a day to do stuff.

Therefore I break my investments into ones that would return almost guaranteed income that is inflation protected (because I don't want to have to guess how long it will take for me to expire and I'd like to leave something for kids one day, if I have any), such as a rental property or maybe p2p (still unsure of the place of p2p in my retirement plans). Using property, I recon you'd need 2/3 rentals to cover this and your costs of the rentals + tax, etc. And the need stuff, I can put into high risk high returns investments (shares or p2p, for example).

That's roughly how I'm planning my retirement. Currently I've just hit age 34 and I've got two good sized houses ($500k-$650k each) and about ready to buy my 3rd. I'll probably use p2p lending to bridge the grey area between need and want. I'm still grappling with how I will attain the want money and pay off the houses (i.e. do I buy another house and sell it to pay off the others or do I go 100% shares now and become a long term investor, topping up every few year or borrow against the house to buy long term shares and use annual savings to pay off the mortgages or should I use p2p in some way, such as putting share dividends into that rather than reinvesting?) it's an ongoing, fluid plan...

Anyway, I'm just yakking now, so I'll shut up. Hopefully someone finds something useful in that wall of text

[fungus pudding]

I think there's some wisdom in that post, Yoda.

I often grapple with concepts of saving now vs living now, and the idea that I won't live as long as trends suggest is something that has crossed my mind before. For example, expectations that we will live longer than our parents, who will live longer than our grandparents, based on data we have on the longevity of our grandparents and great grandparents is silly. Statistics on older generations living longer are due to healthy diets (no NZE:RBD back in those days and it was sunday dinners and veggies every day) and a leap in medicine. I don't think we've had another such leap in medicine and livestyles are much worse (drugs are commonplace, diets comprise of fast food and carbs with very few veggies and fruit).

Regarding saving now vs living now... If you work out how much you'd need to save each year to attain retirement at 65, without a pension... I think most people wouldn't be able to. I even consider myself a pauper with a $100k salary (ok, the situation would be different if I had a spouse on the same salary), when I consider my retirement goals.

But to give my idea of how much you need to retire, I say work out your daily costs. Break these into need vs want.

Need:
house tax money: $60pw = about $10 per day
Assume you've paid your house off, otherwise include rent / mortgage interest payments per day
health insurance = $5 per day
Food per day = $20
$10 per day saved to cover other costs, like insurance on house or repairs to.. I dunno, the car, say, or xmas presents, etc...

Want:
Petrol to go places = $10 per day
To eat out at a café each day = $10 extra on food costs
some activity = $10 per day
$10 per day savings towards an annual holiday

So, I need $45 per day and want an extra $40 a day to do stuff.

Could I suggest you make a computerised spreadsheet and enter all fixed and known costs on monthly basis. e.g. phone, electricity, rates, insurance - car, house and contents, subscriptions e.g. sky,
Of course enter all income - monthly basis.
Then estimate the extra and variable expenses such as grocery, tax, car running, holidays, personal expenses such as clothes, entertainment etc: Enter all expenses and income in the month you receive or pay them. The object is to get it lining up with your monthly bank statement.
Do this and adjust/monitor it for a couple of years and you'll find out what it does cost to live. The spreadsheet is of enormous value as when you have entered right data it's so easy to look and see your bank balance at any future date - a month, a year five years or more.
Monitor it and adjust as you go and until it's right or as near as possible.
I've done it for the last few years and it becomes a way of life.
Congratulations for thinking about your future retirement before you get there! You're taking the right steps.

[Lewylewylewy]

Could I suggest you make a computerised spreadsheet and enter all fixed and known costs on monthly basis. e.g. phone, electricity, rates, insurance - car, house and contents, subscriptions e.g. sky,
Of course enter all income - monthly basis.
Then estimate the extra and variable expenses such as grocery, tax, car running, holidays, personal expenses such as clothes, entertainment etc: Enter all expenses and income in the month you receive or pay them. The object is to get it lining up with your monthly bank statement.
Do this and adjust/monitor it for a couple of years and you'll find out what it does cost to live. The spreadsheet is of enormous value as when you have entered right data it's so easy to look and see your bank balance at any future date - a month, a year five years or more.
Monitor it and adjust as you go and until it's right or as near as possible.
I've done it for the last few years and it becomes a way of life.
Congratulations for thinking about your future retirement before you get there! You're taking the right steps.

That sounds smart. Also try to factor in costs that change when you retire. for example - health bills go up, fuel to get to work goes down, leisure costs go up as you have more time, etc...

Also, I think it's very significant to think about how you're going to deal with inflation and investment risk.

[smpl]

"If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever."

http://www.mrmoneymustache.com/2013/...one-blog-post/

"As it turns out, spending much less than you earn is the way to get rich."

[fungus pudding]

"As it turns out, spending much less than you earn is the way to get rich."

The Fungus motto. 'Learn to live beneath your means'.

[Yoda]

For those who struggle to live within their means, ie spend more than you earn, i mightsuggest a CAP COURSE. Dont be put off by the name. A simple course with an on line help for ins and outs of budgeting. I found it useful. Its interesting that there are lots of accountants that are not financially savvy. They count other peoples money but cant control their own.
http://www.capnz.org/in+debt/CAP+Money+Course.html

[mlt322]

Don't think I could realistically count on mine if their current I want everything now and completely self obsessed and selfish approach to life is anything to judge their future actions by.

Couldn't agree more. Spend it all enjoying the fruits of a lifetime's work while you can. They can learn to stand on their own two feet like we, and the generations before us, did.

[Bjauck]

Using an annualized average of 15 years of my investment returns - it is reasonable to assume that I can get an passive income of 40k per year from my portfolio going forward. Several years of tax work says that it costs me 24k per year to live a good quality of life in New Zealand (good food, utilities, transport, clothes, fun stuff, living conservatively). Although I do live rent free with a home and income - ie rent pays for the mortgage...

The 24k per year presumably does not include accommodation and is after income tax?

I think these exercises on calculating expenses and income in retirement should include accommodation costs and imputed income from owner-occupied housing. More people are no longer able to afford their own homes and some chose not to own, despite the tax advantages of owner occupied housing.

Likewise I think you should include the imputed income of your owner occupied housing (less applicable mortgage and ownership costs) in calculating your retirement income. If you own expensive and highly rentable property, your imputed income would be high. The property could always be switched for financial investments (and financial investment income) plus a downsized property (and its lower imputed accommodation income) in retirement.

As imputed owner-occupied property income is not taxed, it should be grossed up when calculating projected retirement income if gross income is being used when making calculations.

If the 24k does not include housing and is after tax, I estimate 20k would be needed for average rent in Auckland. So for a single retiree this would translate to approximately 60k gross income requirement.

[Aaron]

What is Diane Maxwell suggesting in this article? That NZ Super is unaffordable? John Key assured us it was affordable and he is a nice guy so was he lying? Surely not.

http://www.stuff.co.nz/business/opin...m-from-culture

Just when you think Diane is being traitorous to her baby boomer generation (the greedies) her suggestion is to push the retirement age up to 67 by 2034. Do the maths the last baby boomer retires in 2029. Why doesn't she suggest that after 2034 people not already on NZ Super will have to fund their own retirement with limited Govt. assistance much like they did after the last baby boomer graduated from University. Tertiary education then became unaffordable.

I bet lots of boomers will vote for a National govt tax cut next year rather than contributions to the Cullen fund to help us through the bulge. F**king greedy boomers make me want to puke.

Hope this doesn't come across too strong for those born between 1946 and 1964 but come on give the next generation a chance.

Sorry just realized this should really be in the off market discussion section, it is just that I discussed the retirement issue earlier in this thread so I used it.

p.s. some of my best friends are baby boomers.