Author Topic: Aussies - Your FI number and FIRE strategy?  (Read 2263 times)

bob999

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Aussies - Your FI number and FIRE strategy?
« on: September 05, 2017, 03:29:17 AM »
Hi All Aussie Mustachians,

As you are well aware, most of the Personal Finance information on the web and on MMM is USA specific, I wanted to find out what numbers / FIRE strategy Aussies are working with?

How are you accounting for Superannuation given that we can not access this money before age 60?

Below are the numbers that I am working with, feel free to critique.

Draw down @ 4%
Total return: 7-8% (less fees, taxes)
Expenses: Basic standard of living: $40k p.a.
               Average Standard of living: $50k p.a
               Comfortable Standard of living: $60k p.a.
Assuming PPOR paid off.

Stash required (based on above expenses) $1M to $1.5M plus owning own place of residence outright.

(I have assumed there are no daycare costs / kids education costs post FIRE or these are covered from side hustle post FIRE)
 
All figures above are in AUD.

(assuming about 30-50% difference in cost of living between AUS vs USA due to weaker AUD and things being more expensive down under).
 
 

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #1 on: September 05, 2017, 05:27:44 AM »
I probably need a million plus a paid off residence. That'll get me to 65ish, by then my super will be another million.

Surprisingly I have not bothered to figure out the maths behind that. I reckon I'll simply just know when the time comes. It's hard to determine with investment properties and debt and interest and negative gearing...

I could ramble but I'll desist.

Ozstache

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #2 on: September 05, 2017, 06:07:31 AM »
I FIREd 4 years ago with my home owned outright and a $75K annual spend estimate, of which $50K would come from an after tax defined benefits pension and the other $25K would come from $700K @ 4% minus tax. Of this $700K, $430K would be locked up in super for another 15 years after I FIREd, which meant I would only just make it over the line to preservation age.

Fast forward to now and those numbers are mostly still good, with the exception that my wife kept working casually and brought in at least $25K per year meaning our withdrawal rate has been zero. Coupled with notable underspends most years, our stash is still growing nicely.

chasingthegoodlife

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #3 on: September 05, 2017, 02:36:17 PM »
Great idea for a thread.

My annual spend is around $24k without savings or mortgage repayments.

When I get to 600k stash and paid off PPOR I'm planning to reduce my work hours so I'm earning just enough to cover my expenses and let the stash continue to grow for a few years while I evaluate my spending level and what the  final number should be. I'm guessing around $1 million AUD in today's dollars plus PPOR.

I haven't thought too much about super - I have a pretty small fraction of my stash inside super at the moment and I'm not adding extra for now.

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #4 on: September 05, 2017, 03:07:48 PM »
At the moment I am adding extra to super - about $12,500 a year salary sacrificing. If only to get the 24% tax concession on it - $3k tax saving is nothing to be sneezed at.

Having said that, I'll probably end up having too much in super and not enough outside. 1st world problems I guess. Needs a rethink.

Spiffsome

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #5 on: September 05, 2017, 07:51:38 PM »
Location: Brisbane
FI number: $1 million in income-producing assets
Drawdown: 4%, for FIRE income of $40,000
Strategy: real estate rental (family has a background in commercial RE)
House: already paid off
Current savings rate: 65%.

We're 6 - 7 years away from FIRE at current income. The above calculations do not include superannuation or pension, simply because at our age (mid-30s and mid-40s) there are so many ways that the rules on super and pensions could change in the future.

bob999

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #6 on: September 06, 2017, 02:16:03 AM »

Fast forward to now and those numbers are mostly still good, with the exception that my wife kept working casually and brought in at least $25K per year meaning our withdrawal rate has been zero. Coupled with notable underspends most years, our stash is still growing nicely.

That is what I am hoping for as well. My wife wants to continue working (at least part time) until traditional retirement age. My estimates are that we should be FI by the time I am 44 and she is 39 but we will likely work part time or do something productive that generates some active income for a few years after FI.

But first need to reach FI which is still 6 years away. sigh. 

bob999

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #7 on: September 06, 2017, 02:18:28 AM »
At the moment I am adding extra to super - about $12,500 a year salary sacrificing. If only to get the 24% tax concession on it - $3k tax saving is nothing to be sneezed at.

Having said that, I'll probably end up having too much in super and not enough outside. 1st world problems I guess. Needs a rethink.

We are doing the same. Maxing out Super for both of us, can't let go of tax concessions. :)
However, in our case majority of our stash is outside super so no issues with retiring before preservation age.

bob999

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #8 on: September 06, 2017, 02:27:08 AM »
Location: Brisbane
FI number: $1 million in income-producing assets
Drawdown: 4%, for FIRE income of $40,000
Strategy: real estate rental (family has a background in commercial RE)
House: already paid off
Current savings rate: 65%.

We're 6 - 7 years away from FIRE at current income. The above calculations do not include superannuation or pension, simply because at our age (mid-30s and mid-40s) there are so many ways that the rules on super and pensions could change in the future.

Do you feel 40k is enough for retirement or is this your bare minimum number? My own calculations show that 40k is doable but doesn't include things like car replacement, overseas travel, kids education / weddings, house repairs etc.


chasingthegoodlife

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #9 on: September 06, 2017, 05:41:04 AM »
Might be helpful to know if your planned annual income is for single/couple/family too.
(Mine is for just me, but I share expenses with my partner. So $48k annually for both, hypothetically, if he was anywhere near as thrifty as me ;) ).

Marty, $3k is certainly no sneezing matter :)  And fairly easy to course correct and start pumping everything into taxable accounts if you're out of balance, as long as you don't leave it too late.


Rob_S

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #10 on: September 06, 2017, 06:30:11 AM »
We are looking at 450,000 in VHY by the end of 2018 along with a cash buffer of about 20,000 to smooth over a year or two of crap returns. We are looking to buy a two bedroom place in Ballarat as our PPOR in the next 6 months and will likely carry a 270,000 mortgage into early retirement.

The strategy is to live off VHY's dividends. Last year we received 35,000 in dividends + franking credits. Our yearly budget is 39,000.

Upon quitting the shares will be split equally to make sure we pay $0 tax and receivethe full benefit of the franking credits. Keeping both our incomes at around 20,000 ensures we qualify for solid family tax A & B allowances acting as a safety net incase of market melt down.

life_travel

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #11 on: September 06, 2017, 06:41:55 AM »
We are looking at 450,000 in VHY by the end of 2018 along with a cash buffer of about 20,000 to smooth over a year or two of crap returns. We are looking to buy a two bedroom place in Ballarat as our PPOR in the next 6 months and will likely carry a 270,000 mortgage into early retirement.

The strategy is to live off VHY's dividends. Last year we received 35,000 in dividends + franking credits. Our yearly budget is 39,000.

Upon quitting the shares will be split equally to make sure we pay $0 tax and receivethe full benefit of the franking credits. Keeping both our incomes at around 20,000 ensures we qualify for solid family tax A & B allowances acting as a safety net incase of market melt down.
Rob_S does your whole stache is in VHY?
From your numbers does it mean you get 8% dividends? Or some income is from other sources ?

Rob_S

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #12 on: September 06, 2017, 07:20:19 AM »
Yep the whole stache is in VHY. Many posters think I'm crazy. Marty had some VHY in the mix but sold out when it went miner heavy. The falcon when he posted here was a fan whose arguements convinced me to head down this road but he later abandoned it due large capital gains in the distributions. FFA has been trying to talk me out of it every now and then.

They might be right. So far it seems to be working well being held in my wifes name while she isn't working. Our focus is on the dividends paid and not the capital value. During the GFC the fund VHY is based on dropped its dividend by about 25% so with a decent cash buffer I reckon we can ride out any turbulance. According to ETF watch the current yield on VHY is 7.2% with 42% franking making the total return around 8.2%.

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #13 on: September 06, 2017, 04:01:23 PM »
ok yeah... putting my hand up as not the biggest fan of VHY.

But it seems you've found a way to make it work Rob, so who am I to judge :)

life_travel

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #14 on: September 06, 2017, 04:37:10 PM »
ok yeah... putting my hand up as not the biggest fan of VHY.

But it seems you've found a way to make it work Rob, so who am I to judge :)
Marty, can you give your reasons why not VHY?
I'm still learning about investments and it's invaluable to read different opinions!

HappierAtHome

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #15 on: September 07, 2017, 12:02:53 AM »
I wanted to find out what numbers / FIRE strategy Aussies are working with?

How are you accounting for Superannuation given that we can not access this money before age 60?

Paid off home plus roughly $2M in other assets. This is for a family of four or five (currently a family of three). Still about thirteen years out from FI and so I imagine we'll need to recalculate several times in the interim, especially as we have only just had our first child but will have two to three kids aged maybe seven to thirteen when we (expect to) hit FI. We're really just guessing at future expenses at this stage.

$2M may seem high, but we're trying to overestimate rather than underestimate the costs of kids.

Our strategy: taking the slow and steady path, both working part-time from here on out. First goal is to offset the mortgage completely, then to stash everything in income-producing assets.

Mr Happier will be 50ish when we hit FI, so we will essentially be looking at a bridging strategy + super, but I suspect that means we'll overshoot our goal.

Plan at this stage is that I RE as soon as we hit FI, while Mr Happier thinks he'll want to keep working part-time a bit longer.

Possible curve balls:
Kids - how many, any disabilities / special needs etc.
Super access rules.
The economy.
Sudden increase in ambition inspiring us to work forever?!

ozbeach

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #16 on: September 07, 2017, 03:39:44 PM »
As a single, I am planning for a nice round $1M in super at 60, for a 4% withdrawal of $40K per year.

I have been tracking spending for around five years and am sitting comfortably on $20K per year. The difference will fund those large infrequent costs such as replacing the car.

I am FI now at 53 with enough investments outside super to retire on $55K per year. I'm waiting on a redundancy package, so the longer that takes, the more buffer goes into the stash.
Late to FI; but better late than never!

Spiffsome

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #17 on: September 08, 2017, 05:04:09 PM »
Do you feel 40k is enough for retirement or is this your bare minimum number? My own calculations show that 40k is doable but doesn't include things like car replacement, overseas travel, kids education / weddings, house repairs etc.

I think this is enough for retirement. We don't have kids, and our current lifestyle costs about $35K / year including work expenses. Current car cost us $7K, so replacing it every 5 years or so should not be an issue. Health costs are the elephant in the room, so I'm changing my lifestyle to reduce the likelihood of lifestyle-related problems like heart problems, osteoporosis and diabetes.

The $40K also does not include potential income from super or from the pension; any of that will be a bonus.

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #18 on: September 09, 2017, 06:04:40 AM »
ok yeah... putting my hand up as not the biggest fan of VHY.

But it seems you've found a way to make it work Rob, so who am I to judge :)
Marty, can you give your reasons why not VHY?
I'm still learning about investments and it's invaluable to read different opinions!

Because of the rebalancing every 6 months in June and December. It sells out of stocks at the worst possible time after they have crashed, and buys stocks long after they've gone up in value.

For example it sold out of BHP and RIO after they both announced cuts to their dividends... seem to recall BHP was sold when it was trading at about $17.

I'll bet it'll sell a bit of Telstra now in December, long after when it should have, if the goal was to preserve capital instead of focussing on yield.

VHY also misses out on some big stocks which have been market darlings over the years including CSL.

VAS has its downsides by including every shit stock on the market, but at least you know you'll get every good one too, and that the good always outweighs the bad.

life_travel

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #19 on: September 09, 2017, 06:31:24 PM »
That makes sense , I got a similar answer from someone on a different forum so it's good to start understanding the fundamentals.
We are starting to plough all extra money into mortgage offset but when we sell our vacant land , we ll be able to start investing in index funds or LICs. So I'm learning :)

Phryne

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #20 on: September 10, 2017, 09:30:46 PM »

We're aiming for $1.4m + paid off house. $1.2m is the 'real' number though, as $200k of the $1.4m will be a buffer / EF / travel fund / consolidate 2 older cars into one newer one. The close I get I wonder if that buffer is really necessary!

We do have a decent amount in super, but DH is 52 and will be able to access a few years after we finish. Most of the rest is in rental propoerties which we'll sell at 1 per year the next FY after we finish as the CGT will be large!

ETA by 'paid off house' I mean the offset will equal the balance :-)


Bee21

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #21 on: September 11, 2017, 03:04:31 AM »
Don't you guys find these aussie numbers a bit depressing? I look at those expense reports from the US guys and apparently they can live happily on 20-30k a year. Then I look at my half mustachian aussie budget and the required stash needed to maintain a decent sounding lifestyle and I get discouraged. Very discouraged. The only way we can make this early retirement work if we spend a considerable time in the future overseas. Or on a boat. Or a in rusty caravan. Not that there is anything wrong with it. But still.

Anyway, according to the latest version of THE PLAN, my delusional little self is planning to retire with around 6-700k (plus around 700k in combined super which will have plenty of time to grow until we reach preservation age). I think we can do that before we turn 50 and I go completely crazy in my job.Already paid off the house so no need to worry about it. My husband thinks that I am crazy and we will live in poverty. Hm.


life_travel

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #22 on: September 11, 2017, 04:52:38 AM »
Well I get depressed when I see Aussie numbers :( When people say " oh I only have 500k " and then add " plus Xx super " . We plan to semi RE on just some savings( as in completely spend them in 6 years) , live cheap overseas , travel , come back to AU, travel around in a caravan then properly retire on 700 k when we can access super .

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #23 on: September 11, 2017, 06:07:41 AM »
Don't you guys find these aussie numbers a bit depressing? I look at those expense reports from the US guys and apparently they can live happily on 20-30k a year. Then I look at my half mustachian aussie budget and the required stash needed to maintain a decent sounding lifestyle and I get discouraged. Very discouraged. The only way we can make this early retirement work if we spend a considerable time in the future overseas. Or on a boat. Or a in rusty caravan. Not that there is anything wrong with it. But still.

Anyway, according to the latest version of THE PLAN, my delusional little self is planning to retire with around 6-700k (plus around 700k in combined super which will have plenty of time to grow until we reach preservation age). I think we can do that before we turn 50 and I go completely crazy in my job.Already paid off the house so no need to worry about it. My husband thinks that I am crazy and we will live in poverty. Hm.

Yeah the numbers are maddening. I can't seem to make it work without having $2m, and I'm on my freaking own.

Spiffsome

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #24 on: September 11, 2017, 05:56:18 PM »
Occasionally I get jealous of the low food or rent costs that the Americans are paying, but then I remember they're also paying HUNDRED OF DOLLARS PER MONTH

ETA: in health insurance. Hit enter too soon. Anyway, I'd much rather pay more for petrol and computer games than have to take on the abomination that is the US health insurance system.
« Last Edit: September 12, 2017, 09:40:19 PM by Spiffsome »

urbanista

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #25 on: September 12, 2017, 01:38:01 AM »
My friends in NYC are paying 2K a month for a "great employer subsidised" health insurance for a family of 3. So when I feel depressed that I need at least 60K a year for a simple lifestyle in Australia, I always remember about their health insurance.

Little Aussie Battler

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #26 on: September 12, 2017, 04:37:25 AM »
There are so many swing factors - particularly investment performance and unexpected 'one-off' expenses - that I really struggle to come up with a target.

I'm currently thinking $2.5m plus the paid-off house (family of 4), but can come up with a rational argument for why we might need/want either substantially more or less.

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #27 on: September 12, 2017, 03:04:24 PM »
My friends in NYC are paying 2K a month for a "great employer subsidised" health insurance for a family of 3. So when I feel depressed that I need at least 60K a year for a simple lifestyle in Australia, I always remember about their health insurance.

Ahh yeah good point, health insurance is a killer over there.

nnls

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #28 on: September 12, 2017, 09:17:23 PM »
My friends in NYC are paying 2K a month for a "great employer subsidised" health insurance for a family of 3. So when I feel depressed that I need at least 60K a year for a simple lifestyle in Australia, I always remember about their health insurance.

Ahh yeah good point, health insurance is a killer over there.

And I read horror stories of it not covering enough and people being left with hundreds of thousands worth of medical debt

Sapphire

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #29 on: September 12, 2017, 10:06:24 PM »
There are so many swing factors - particularly investment performance and unexpected 'one-off' expenses - that I really struggle to come up with a target.

I'm currently thinking $2.5m plus the paid-off house (family of 4), but can come up with a rational argument for why we might need/want either substantially more or less.

I struggle too with the end game - our ER will be in our 50s so not as early as many here, but it also means we have a smaller gap to fill until we can access super.  Definitely paid off house and I am so thankful for our health system.  Dear friend spent six months dealing with breast cancer, great care, all funded by Medicare and from what I can tell her only out of pockets were for alternative medicine type stuff to assist in the process. 

JLR

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #30 on: September 14, 2017, 08:02:45 PM »
Posting to follow.

onewayfamily

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #31 on: September 16, 2017, 01:26:06 AM »
Well I get depressed when I see Aussie numbers :( When people say " oh I only have 500k " and then add " plus Xx super " . We plan to semi RE on just some savings( as in completely spend them in 6 years) , live cheap overseas , travel , come back to AU, travel around in a caravan then properly retire on 700 k when we can access super .

Don't get depressed :-)
We FIRE'd around the $600k mark (with 2 young kids) - just try to think of better ways to increase yield or lower your expenses - campervanning and slow/cheap-travelling is a great start - similar to what we have done for a lot of the time since we FIRE'd.
We FIRE'd at age 28 (me) and 29 (Mrs. OneWayFamily) and are now trying to travel to every country on Earth - it takes longer with 2 toddlers!

If you'd like to keep track of where we're at - check out our photos @ Instagram or our lame attempt at a blog at onewayfamily.com

itchyfeet

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #32 on: September 16, 2017, 02:20:08 AM »
Well I get depressed when I see Aussie numbers :( When people say " oh I only have 500k " and then add " plus Xx super " . We plan to semi RE on just some savings( as in completely spend them in 6 years) , live cheap overseas , travel , come back to AU, travel around in a caravan then properly retire on 700 k when we can access super .

Don't get depressed :-)
We FIRE'd around the $600k mark (with 2 young kids) - just try to think of better ways to increase yield or lower your expenses - campervanning and slow/cheap-travelling is a great start - similar to what we have done for a lot of the time since we FIRE'd.

We are toying with FIREing in June next year with a stash that is prob 10% short of what I'd be super comfortable with, but still a very large stash by This forum's norms. One idea is to caravan around the country for a few years, plus bum around in cheap places overseas, and let the stash grow the final 10% by living on only 2% of our stash per year for just a few years. Then once we hit the desired number we buy a house and live happily ever after.

mjr

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #33 on: September 16, 2017, 06:24:52 AM »
Don't you guys find these aussie numbers a bit depressing? I look at those expense reports from the US guys and apparently they can live happily on 20-30k a year.

Looking at pocketbook for the last 2 years, I spent $27k/year and that includes small cars + insurance + rego for the kids, as well as work transport expenses.   $40k/annum when I retire will be ample, I doubt I'll ever spend that much.

I have $1.1m in super and closing in on $900k out of super.  The magic number will be that $2m which I'll hit in March.  I know I've overshot, but I'm ok with it. I have a pretty good income from a job and leaving it will be irreversible so I'm making plenty of hay while the sun is shining.  If it means I have to buy a unit up the coast or a plane, I'm ok with that.

MrThatsDifferent

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #34 on: September 16, 2017, 10:32:34 AM »
My strategy is to get $250k in super, after 20 years, that should be a million.  I then want $500k outside of super and plan on living on $20-30k a year, while slow traveling around the world for 10 years or so. Plan on doing some consulting for 10-15 hours a week to keep the mind going. Whenever I get to mid-60's find some place to settle down.

marty998

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #35 on: September 17, 2017, 05:16:17 AM »
My strategy is to get $250k in super, after 20 years, that should be a million.  I then want $500k outside of super and plan on living on $20-30k a year

This sounded a lot like my strategy that I posted up several years ago. I am racing towards the $250k in super very quickly now, but quite a fair way away from having enough outside of super.

It's hard to time it right so you don't have too little or too much.

Bee21

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #36 on: September 18, 2017, 01:02:58 AM »
Don't you guys find these aussie numbers a bit depressing? I look at those expense reports from the US guys and apparently they can live happily on 20-30k a year.

Looking at pocketbook for the last 2 years, I spent $27k/year and that includes small cars + insurance + rego for the kids, as well as work transport expenses.   $40k/annum when I retire will be ample, I doubt I'll ever spend that much.

Your numbers are impressive. Care to share how you keep your expenses this low?

uncleshaka

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #37 on: September 18, 2017, 04:43:38 AM »
I'm loving hearing from other Aussies! Thank you!

 Is there another thread about how Australians are investing in index funds and what funds they're investing in (a little more of the process). I have done a heap of reading but haven't really come across anything Aussie specific.

I am relatively new to the Mustacian lifestyle, one I wish I had found 10 years ago. But I appreciate any guidance.

Cheers

Uncleshaka

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stashgrower

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #38 on: September 18, 2017, 05:24:04 AM »
Welcome, uncleshaka! Here is the Aussie investing thread:
 https://forum.mrmoneymustache.com/investor-alley/australian-investing-thread/

chasingthegoodlife

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Re: Aussies - Your FI number and FIRE strategy?
« Reply #39 on: September 18, 2017, 02:42:02 PM »
Welcome, and definitely check out the Aussie investing thread. I've found it really helpful.