How much capital do I need to retire comfortably on ?

[Vaygor1]

.... Better play Chess folks. Better play Chess

e2 to e4 is a popular opener.

[blackcap]

e2 to e4 is a popular opener.

and I will reply to that with c6

[winner69]

and I will reply to that with c6

d4 ....and lets see which variation of the Caro-Kann Defense Black will take now

[Vaygor1]

d4 ....and lets see which variation of the Caro-Kann Defense Black will take now

Black obviously responds with d5, white then goes e5 for the advanced version of the Caro-Kann. Now will black go c5, Bf5 or something else? Spassky Gambit coming up?

[winner69]

Black obviously responds with d5, white then goes e5 for the advanced version of the Caro-Kann. Now will black go c5, Bf5 or something else? Spassky Gambit coming up?

You go d5 - I respond Nc3

And then let you decide how aggressive you going to be

Odds not in your favour mate - best u hope for is a draw methinks

[Beagle]

The million invested and return added to your super would only give a very modest lifestyle, in my opinion. Inflation is a killer over 25 to 30 yrs. Rule of 72 is a good yard stick. Inflation at 3% and you will your expenditure will be double what it is now in 24 yrs. If 2.5% then double in 28.8 yrs. How long will your million be able to provide that extra income when you start having to eat into it to survive, especially if there is a spike in inflation without the immediate increase in your return. The variables are important. Everyone has different life styles to fund: inflation, rates of return and tax rates are all going to affect the amount you need to start with. A simple spreadsheet can be created for each individual to see the impact of any changes is those variables. Then the next questions are: how long are you going to live (spouse as well)? How much do you want to leave your offspring (Some people also have dependants to consider due to health reasons)? Do you allow an amount set aside for large health issues you may encounter? Car replacement, house maintenance, replacing your specs etc are other things to consider.

Me, I would suggest closer to 3 million. Some of that could come out of your mortgage free house if you downsize. Of course the amount you need now will be less than what you would need to start with in 10 or 15 years time (current 50 to 55 year olds.)

I would hate to go out for dinner when I am 75 and only be able to afford one glass of red wine because I hadn't started with enough. Some things are important in life.

Many thanks for your post, definitely one of the best ones of the entire thread. Allow me to go back to my opening post and expand a little in response.

Just thought it might be a good idea to float this as a subject seeing as that's the reason many of us invest !!

I am sure many of us readily recall that famous line from the movie Wall Street when Bud Fox asked Gordon Geeko, How much is enough Gordon, How many Yachts can you waterski behind ?

So how much is enough ?

First up its clear everyone will have different idea's and different goals and aspirations regarding their lifestyle in retirement. The argument has been put that $1m in today's dollars would only give a modest lifestyle in retirement. I beg to differ. I believe a well balanced portfolio of stocks and bonds would return circa 5-7% after tax in the medium term giving $50,000 - $70,000 per annum on average in addition to your national superannuation. Lets have a think about this. For most people with a debt free home that would be more than sufficient and comfortable, (remember the thread question is how much money do you NEED to retire comfortably on, not retire in ultimate luxury. Yes absolutely you can aim for more than $1m and that's fine but a couple of questions arise. 1. Investment by its very nature has been defined as simply deferred consumption. There is no cast iron guarantee you'll definitely live until you're retired and certainly no guarantee you'll be in good health to enjoy your vast surplus of money when you do so I maintain that a balanced approach is best. Enjoying your lifestyle along the journey in life is at least as important as enjoying it in retirement in my opinion.
Secondly everyone will have different perspectives on when they want to retire and will have varying idea's about their likely lifespan when they retire.The central theme of what I hear from retired clients who completely turn a switch and stop work entirely is they're bored and wish they had something to do. Maybe working part time in retirement is a better solution ?
Others will continue to enjoy working part time in their career or their business even after retirement.

There's also the open question of whether the Government will have sufficient funds to keep paying the superannuation when the huge tidal wave of baby boomers retire.
Will they bring back some sort of National Superannuation surtax like in the old days or is this such a huge political hot potato no party would dare take a position that would offend the grey tsunami ?
Will there be some sort of wealth or inheritance tax in the future ?

So how does one go about some sort of logical reasoning in terms of retirement planning ?

Lots of questions and I'd love to know others plans but for what its worth here's a starting point for consideration.

If one were to take the viewpoint that they'll work on until they're say 70 (at least part time) then how much capital should one have to live comfortably, (talking today's dollars) ?

Does one take the view that $1m should cut the mustard and with a well diversified portfolio of stocks and bonds earning an average return after tax of 7% should be possible, $70,000 per annum.
Add in national superannuation and some part time work or rent from a rental property or two and assuming your mortgage free on your house then all should be good right ?

Thoughts ?

Inflation has been raised as a concern and its something people would do well to consider. In my view investing at least half one's retirement funds in something who's income grows with inflation, like shares or a rental property helps ameliorate the risk. Inflation is well contained at present but may not always be.

So...let me advance the debate. Is $1m and a debt free home enough in your view assuming the current superannuation scheme remains or do your sacrifice more consumption and enjoyment of lifestyle now so as to be sure you'll be in complete comfort and total luxury later on ?

[Vaygor1]

You go d5 - I respond Nc3

And then let you decide how aggressive you going to be

Odds not in your favour mate - best u hope for is a draw methinks

My last post was an attempt to get me back to playing White (where I started) , but I'll stick with Black and see how we go... I'd respond with a dxe4.

Best move this to another thread or PM if we are to continue....

[Vaygor1]

So...let me advance the debate. Is $1m and a debt free home enough in your view assuming the current superannuation scheme remains or do your sacrifice more consumption and enjoyment of lifestyle now so as to be sure you'll be in complete comfort and total luxury later on ?

At age 48, my own analysis needs to exclude super because I am not eligible for many years.
Further to this, given the time frame until I am eligible, I can't afford super to be a fait accompli so must plan to not rely on it.
With the rate of medical advancement I need to plan to live for a lot longer than I probably should, despite the permanent damage I must have done to some pretty major organs in my youth.

On my above basis I entered retirement quite recently with no need to ever work again, so assuming my method of analysis is sound, it can be done without super (and in my case, without inheriting a cent, or needing to inherit a cent, from anybody). In saying this though, I believe I will need to do something regarding work for a number of good reasons. Just taking a bit of a break for now and doing a bit of catch-up house maintenance.

[Beagle]

Let me be the first on here to congratulate you mate on doing so well in life that you can afford to retire at 48 and I know you're a very bright chap so I'm sure you will find plenty of ongoing things to keep yourself challenged. Looking forward to seeing you again at our forthcoming Auckland ST get-together, (date to be decided hopefully late February sometime).

[JBmurc]

Let me be the first on here to congratulate you mate on doing so well in life that you can afford to retire at 48 and I know you're a very bright chap so I'm sure you will find plenty of ongoing things to keep yourself challenged. Looking forward to seeing you again at our forthcoming Auckland ST get-together, (date to be decided hopefully late February sometime).

9 more years hopefully I can do the same ......personal 1.5-2mill is my target (in current NZD value)