The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: bob999 on July 29, 2015, 06:51:38 AM
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Hi Guys,
I am new to this forum but I have been following MMM for over a year and have read all his posts.
My situation: Married Age 36, OH 31, 1 Child 2 years old.
Live in Australia
Currently Renting: Rent 20k p.a (small two bed unit)
Own 2 Investment Properties worth $880k (in a different city/state), mortgage $573k
Own land: Price $285k, deposit paid $15k (transaction will be completed once the land becomes available mid next year) loan will be $270k (currently $0)
Will build a house on this land once its available, construction cost ~$400k (including 1 bed granny flat for renting until aged parents want to move in)
My Super(similar to USA IRA retirement fund): $75k
Partners: $5k
Combined Income: Gross $265k (since last year)
After Tax Income: ~180k
Super Contribution: 22k p.a for myself
Partner Super Contribution: $5k p.a
Cash $180k in an offset account
Interest rate on loans ~4.75%
No other debts/bad debts
Other yearly living expenses 40k
* I also expect inheritance of around $1M at some stage of my life (as a house) but don't want to count that into my financial planning at this stage.
We can comfortably live off 40k income when retired (without travel). Would like to aim for 60k passive income to retire on. I would like to retire by age 52 or at least partly retire. Noting I can't access Super until age 60.
I am hoping to have a net income of 30k from the two properties once they are fully paid off and an additional 10k p.a from the granny flat.
I am looking at buying Vanguard ETFs. 80/20 shares/bonds but can't convince myself to do it. Reason being that if instead I put that money into my super I get tax advantage of 22%. Downside being that I can't touch the money until I am 60 yrs old.
I expect to have all my debts paid off by the age 48 (12 years from now). Which gives me about 4-5 years of solid cash saving to last me between age 52 to 60 plus the 40k passive income from IPs.
So should I buy Vanguard ETFs or put more money into my super or pay off my debts as a priority?
Any other advise is welcome.
Thanks
Bob
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You should be able to use a super fund with Vanguard options. I can't remember which one has it - maybe Suncorp? What happens if (like several on this forum think - I actually disagree with them) the age you can access super goes up to 65? It's not entirely off the cards, particularly as the aged pension is going up to 70.
Given the cost of aged care packages (especially since the changes last year), you could easily see your inheritance disappear. They appear to be priced so that any money the elderly have will need to be used to fund them. However, granny flat provisions actually allow money to be transferred between generations without any aged pension or tax implications. All that is really required is a "guarantee" of accommodation - not even a granny flat.
You may want to look at a spouse co-contribution rather than as much super for yourself - your balances look a bit uneven.
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You should be able to use a super fund with Vanguard options. I can't remember which one has it - maybe Suncorp?
Given the cost of aged care packages (especially since the changes last year), you could easily see your inheritance disappear. They appear to be priced so that any money the elderly have will need to be used to fund them. However, granny flat provisions actually allow money to be transferred between generations without any aged pension or tax implications. All that is really required is a "guarantee" of accommodation - not even a granny flat.
You may want to look at a spouse co-contribution rather than as much super for yourself - your balances look a bit uneven.
Okay, I will have a look at this for my wife but I don't think this is an option for me as I am a federal employee and we get extra super if we stay with Gov super fund.
Agree, I have read this on gov website. My parents eventually want to move in with us when their health doesn't allow them to live on their own.
How does Co-contribution work? Meaning into my fund or add her name to my fund?
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I take it you are in PSSap? Co-contribution is into her fund.
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I take it you are in PSSap? Co-contribution is into her fund.
Yes, i am in PSSap.
Can you please explain the benefit of co-contributing into her fund? I am 5 older than my wife and would have thought its better to put money into my account as I can access it earlier than her.
Thanks for your help.