Also remember that the Aussie housing market is different to the US. Our mortgage rates are 4+% and likely to go up to the historical average of 6-7%. So you need to be able to have a paid of PPOR in Newcastle for this plan to work on day 1 of FIRE. Your partners lump sum and DBS are 13 years away.
So you need a couple of things:
- Unless the dependent child turns 18 you are on the hook for $20K of after tax money while hubby works.
- You need 600K in cash to buy your Newcastle property in 7 years.
- If you take the ASIC comfortable living for a couple FIRE number (55K) you will need 350K in Vanguard to supplement your 40K pension at 4%
- You currently earn 126K roughly after tax and CSA. With a 50% saving rate you can stash 63k a year, 441K in total.
Option 1
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On FIRE Day:
120K Equity on sale of home (taking into account transaction costs of 50K)
-120K 20% Deposit on Newcastle Home (480K Mortgage at 7%)
Ongoing cost of $3400 a month for mortgage
720K in Vanguard, drawing down on 55k and 4% after tax compound - 513K left at pension age
On Defined Benefits Day:
Use 40K pension + $20,523 from vanguard to live off.
Pay additional super off mortgage.
Sell vanguard down to 350K (15K at 4%). Pay capital gains tax and then pay rest off mortgage.
Not sure how much you have in super but should cut the mortgage by half. Leaving you with 2K a month to pay off mortgage, cutting your living expenses to $2000 a month.
Option 2
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140K Equity from selling house - transactions costs
600k cost of new home + transaction costs
At 63K per year for 7 years you would have 450k (Assuming offset at 4%)
That will get you 590K of your purchase price, more if you get your savings rate above 50%
Your vanguard + shares will be at $260K with a paid off PPOR.
If you draw down on this over 8 years until your DBS kicks in at 55 you are likely to run out of money.
A few things that will change the model considerably:
Savings rate about 50%
Cutting your living cost to 45K instead of 55K
Equity growing faster than the average 2.7% Sydney has grown for the last 30 years
Interest rates staying at 4%
Try AussieFirebug's FIRE calculator for Aussies with super to model it more accurately if these change.
http://www.aussiefirebug.com/australian-financial-independence-calculator/I suspect that your timeline will need to move to 7-10 years to avoid hitting a negative balance between FIRE and Defined Benefits Scheme.