Just read this article. It is in an Australia daily newspaper with very wide readership. No wonder people fear retirement when this is the garbage they get given for advice. I am baffled as to where they get their numbers from. The following paragraph is the pick of the article, I wonder what math is used to figure out that on assets generating 5% return only allow for $34,000 spending a year on an asset base of $1,000,000. They must have used 5% as the total return (income+growth) and deducted inflation to give a net income of just 2%. Or maybe I am just being crazy.........
"So, until then, I would suggest a mix of blue chip shares, balanced managed funds and property. Frankly, I don't think $1 million is enough savings for you to retire at 45. Given your wife's average life expectancy of 41 years at that age (longer if she stays healthy), then to stretch $1 million over that time period, you could only spend around $34,000 a year, indexed to CPI at 3 per cent, assuming the money earned 5 per cent a year."
http://www.brisbanetimes.com.au/money/super-and-funds/early-retirement-looks-attractive-but-is-it-a-goer-20150129-1310nj.htmlEven with a SWR of 4% these guys could be spending $40k a year on non housing related expenses for the rest of their lives. Considering they're netting $135,000 as a couple and have three fully paid off properties at 43 (which suggest they have been living frugally to some extent) I would suggest they should be retiring today!!! If they dump the $800,000 home and settle for something around $400,000 and work two more years they would be sitting on around $1.6m (or more depending on how frugal they are) of invested assets plus $400,000 to pick up a house with. That's $65,000 a year plus a paid of property at 4% SWR.
I read these newspaper column on a regular basis and I ahve to say apart from taxation advice anything related to retirement comes straight from the book of insanity.
Any comments??