Australia - Early Retirement Planning Calculator

[KittyZero]

Hi All,

Sorry if this has been asked before. I tried searching but search takes me to an error.

I am looking for a calculator, or tools, or anything that could really help me understand exactly what it is I need to have in my account to retire.

I know my current situation, I know when I want to retire and I know roughly how my retirement investments across super/property etc will be spread and what I will be likely spending and when.

No calculators I can find are Australian, they wont allow me a scenario to retire early, allow me to input a 'stop date' to my super (they all assume I will contribute until retirement age, obviously I plan on stopping when I retire early), options on how I can utilise that super, I know that I will have income stream from 1 investment property, and at some stage during retirement we will inherit another property making this a 1 primary and 2 investment residence. We plan on keeping these as an income stream but again I would like a calculator that would allow me to mix up these scenarios, allow me to stop an income stream at a certain point and lump sum this to investments etc etc. look at draw down scenarios.

I want to figure out how much I will need to last me in to my super etc. Does something like this exist? Or am I dreaming and should I get in contact with a financial planner?

A resource on what things in the future like food and energy will likely cost would also be nice! I know what they cost now, not what they will likely cost in the future.

I like detail, I want my plan to be very detailed and I want to be able to present this to my other half to show its possible and improve the buy in, but I am struggling to find things to help me design a solid plan. Even if I have to pay for something like this, I'm willing to if it gets me what I want. The 'save everything until you have enough' just isnt a good plan for me. I want a 'save everything and according to your plan you could be here in x years'

Any help would be greatly appreciated!

[steveo]

http://networthify.com/calculator/earlyretirement?income=50000&initialBalance=0&expenses=20000&annualPct=5&withdrawalRate=4

Don't worry about super. Just make it part of your total asset allocation.

[Ozstache]

I have searched over the last few years for something similar and have also come up with nothing. As a result, I ended up writing my own spreadsheet ER model that projects various income streams against cost of living estimates against a portfolio of pre and post super investments. It sounds great in theory but things like tax significantly complicates the calculations as it not only varies by income type, asset class, age and retirement status, but is very unlikely to remain the same throughout ER. Even small changes in variables like inflation, wage growth and investment growth significantly alter the result, which seriously throws into the question the usefulness of such a model. I have not modeled investment properties as I currently don't have any, but if I did this would add further complexity.

Nonetheless, I use my model to make broad projections of portfolio survive-ability when changing one key variable and keeping all others set to historical norms. I am specifically interested in whether my pre-super stash will survive until I can access my super, because that is lowest point that my portfolio tends to get to in the model across my ER time span. This tells me that I should probably have put more into non-super than super before retiring, but I do have the contingency that I can withdraw nearly half of my super before preservation age as it is categorised unrestricted non-preserved, so it turns out that it doesn't really matter.

In short, while finding or making a complex model tailored to your circumstance seems like it will give you a more accurate projection, its very complexity can give such a broad range of results that you end up questioning the usefulness of it. There's a lot to be said for keeping it simple IMO.

[KittyZero]

Thank you, I had seen this one but it really didn't answer my questions. I'm confused when you say dont worry about my super, but I need to worry about how much is going to super, and how much I need outside of that to last me until I can access my super. By the 4% withdraw (which I am not sure will suit us) doesn't that mean that I need enough to withdraw my wage until I access super, then when I access my super that is combined I still withdraw 4 and I'm just getting a lot more? This isn't really what I want. If anything I want more earlier, less later. If my super has enough to last us post 65, then would I need enough money now to withdraw right down and then get topped up at super age? I think this is where I am getting confused and dont understand how it works. The calculators all seem to assume I will have access to all my money at the point I retire that I withdraw 4% from but that isn't true.

[KittyZero]

I have searched over the last few years for something similar and have also come up with nothing. As a result, I ended up writing my own spreadsheet ER model that projects various income streams against cost of living estimates against a portfolio of pre and post super investments. It sounds great in theory but things like tax significantly complicates the calculations as it not only varies by income type, asset class, age and retirement status, but is very unlikely to remain the same throughout ER. Even small changes in variables like inflation, wage growth and investment growth significantly alter the result, which seriously throws into the question the usefulness of such a model. I have not modeled investment properties as I currently don't have any, but if I did this would add further complexity.

Nonetheless, I use my model to make broad projections of portfolio survive-ability when changing one key variable and keeping all others set to historical norms. I am specifically interested in whether my pre-super stash will survive until I can access my super, because that is lowest point that my portfolio tends to get to in the model across my ER time span. This tells me that I should probably have put more into non-super than super before retiring, but I do have the contingency that I can withdraw nearly half of my super before preservation age as it is categorised unrestricted non-preserved, so it turns out that it doesn't really matter.

In short, while finding or making a complex model tailored to your circumstance seems like it will give you a more accurate projection, its very complexity can give such a broad range of results that you end up questioning the usefulness of it. There's a lot to be said for keeping it simple IMO.

Thank you. I dont really need something SUPER complex, just a bit more advanced. Something that lets me put in this is how much income I will be getting from rent, this is how much I can extract from my investments to reach my wage. 20 years after I retire I will get a lump sum from super so now I will be getting x amount etc.

I think I will do my own basic spreadsheet as you mentioned. As after that, I really need to start looking at how I can realistically get there.

[stashgrower]

Hi KittyZero - I used some of the other calculators just to get a "guide" for things, even if they weren't necessarily Australian.

This would be too simple for you, but I used the Oz gov calculators too:
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps#super

And in the end I made my own spreadsheet. I made a number of simplifications, as I wanted a guide rather than exacting precision. I think it's also easier to see the bigger picture that way.

[Astatine]

Posting to follow.

[deborah]

Hi KittyZero - I used some of the other calculators just to get a "guide" for things, even if they weren't necessarily Australian.

This would be too simple for you, but I used the Oz gov calculators too:
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps#super

And in the end I made my own spreadsheet. I made a number of simplifications, as I wanted a guide rather than exacting precision. I think it's also easier to see the bigger picture that way.

Yes, I was going to steer you to the moneysmart retirement calculator because it can remove the old age pension (using the "how it works" button which is really the "change default settings" button). Retire at 60 and put in that you are paying 0% superannuation (because if you are self-employed, it allows you to do this) and make your "income" your passive income. If you will continue to receive this passive income after retirement, just mentally add it on to the calculations after taking out the OAP with the "how it works" button.

[Aussiegirl]

KittyZero - There isn't a good resource that will model your whole investing life.  I have made my own spreadsheet that covers property, shares, super and cash.   It allows different tax rates for income, capital gains, super, different growth rates for shares and property, interest rates, dividends and inflation.  And withdrawal rate of course.   It then brings the summary of Net Worth per asset class back to todays dollars.   It wasn't easy to build, but it gives a really good indication of what buckets of money are available. 

[stashgrower]

KittyZero - One more thought... The other plus of making your own spreadsheet is you know exactly what assumptions you've made and can customise it to suit your needs. And you will start to see why people make certain assumptions. I felt a shift when I went from using other people's simulators to making my own. So maybe that will shift your sense of "control" and peace of mind too?

[KittyZero]

KittyZero - One more thought... The other plus of making your own spreadsheet is you know exactly what assumptions you've made and can customise it to suit your needs. And you will start to see why people make certain assumptions. I felt a shift when I went from using other people's simulators to making my own. So maybe that will shift your sense of "control" and peace of mind too?

Hey stashgrower, your right...it certainly has. I'm pretty good with excel, and I have something happening, but I need to understand a bit more about interest rates etc - I dont understand exactly how this works mathematically so I dont know what calculations to use. BUT im coming up with some really basic ballparks! And I am confident because I know what assumptions I have made and wether I am happy with them. Like I know I havent taken in to account additional payments each year to mortgage, but I also havent taken in to account interest rate increases so Im happy it will (oh so roughly) even out. But I can combine multiple calculators for individual investments. I am actually coupling suggestions/tips from multiple posts and slowly understanding how my plan can come together. I guess this is what the learning curve is. Feel silly all along then suddenly little things start to fall in to place.

Once I start learning more about tax, interest rates I can continue to modify my basic rough plan - but for now, its motivating me and giving me some solid foundations to work from.

I just still for the life of me cant figure out how much investment I need outside super to last my early retirement years through to when my super is available! SO FRUSTRATING!!!!!!

[stashgrower]

You're on the right track! Once you have the bare bones you can get into the nitty gritty of tweaking details, setting up scenarios etc.

For your ex-super question ask yourself how many years you need between the time you retire and the time you access your super. If it's a low number, the simple way is to multiply your number of years by your desired income. Save that much. If it's a higher number, set up a spreadsheet to include the compound interest you'll earn and then figure out what savings you need to generate your desired income as a combo of capital and yield.

[Ozstache]

I just still for the life of me cant figure out how much investment I need outside super to last my early retirement years through to when my super is available! SO FRUSTRATING!!!!!!

We have discussed super/non-super balance in this forum in the past. If you are looking at retiring 20 years before you can access your super, as you suggest above, then the following post I made during such discussions may be relevant: http://forum.mrmoneymustache.com/post-fire/australian-superannuation-post-fire/msg956270/#msg956270.

In short, for a 20 year+ pre-super access early retirement, you end up needing most (>80%) of your stash on the non-super side to have a high probability of making it through to preservation age without running out of money beforehand. The irony is that concentrating too much on building your traditional "retirement" savings (ie. super) at the expense of readily accessible savings actually puts the "early" part of a long ER at greater risk of failure.

[steveo]

I just still for the life of me cant figure out how much investment I need outside super to last my early retirement years through to when my super is available! SO FRUSTRATING!!!!!!

We have discussed super/non-super balance in this forum in the past. If you are looking at retiring 20 years before you can access your super, as you suggest above, then the following post I made during such discussions may be relevant: http://forum.mrmoneymustache.com/post-fire/australian-superannuation-post-fire/msg956270/#msg956270.

In short, for a 20 year+ pre-super access early retirement, you end up needing most (>80%) of your stash on the non-super side to have a high probability of making it through to preservation age without running out of money beforehand. The irony is that concentrating too much on building your traditional "retirement" savings (ie. super) at the expense of readily accessible savings actually puts the "early" part of a long ER at greater risk of failure.

This is my thoughts on the topic as well. Basically you need more of your assets outside of Super than in despite Super having tax benefits if you are looking to RE. I think I will stop work completely at 50 and even in this situation I will probably need more outside of Super than in however 50/50 will probably be okay.

[Adventures With Poopsie]

I was put onto the cFIRESim by Deborah and arebelspy. It allows you to run some simulations and include certain amounts of money at certain points.

For example, you could put your retirement at age 40 as the year 2020... then say at age 60 in 2040, you'll get the inject of your super.

This worked better for me as I have a defined benefit pension, but I think it would work for a regular super as well. I don't think it will tell you how much you need out of super, but if you input the amount you think you will need and just keep adjusting until you get a high enough success rate that you're comfortable with, then this will give you an idea.

I am sure there are others who use cFIRESim much more in depth than I did, so perhaps they can provide some advice. I just kept running scenarios with different savings rates until I was able to figure out what age I am able to retire. I thought it was a really excellent tool.

I hope this helps.

[Grogounet]

Got a good one. It took me ages to find it.
I'm at work right now and it's on my personal PC, if you PM me to remind me, I'll post it tonight

Takes into account inflation, different return scenario, super (401k actually) and tax related to each pre and post FIRE
It's a SW but not need to purchase the license to use the most of it.

[itchyfeet]

I love spreadsheets and build all sorts of massive spreadsheets to model scenarios, but ultimately I know only one truth, and that is that my detailed assumptions will be wrong.

I have no idea what future inflation, share market return, real estate returns , interest rates, economic growth etc will be. I couldn't forecast next year with any certainty, much less 40 years+.

So for me, despite all my spreadsheeting, i am attracted to simplified goals like save 25x what you need to spend. And then  maybe add  a bit more to address the fact that I might not be able to be perfectly  efficient in my money management, and to err on the side of caution a tad since I have many years to finance.

I have tested this simple assumption against my detailed spreadsheets, and I don't have any way to say one will be more accurate than the other. In the end it's easier to explain to my wife that I want us to target a simple NW target before we fire, The mix of investment vehicles we hold today is not so important, as it will evolve with time.

We prob do have too high a percentage in super (about 40%), and towards the end of the 15 years before I can access super, there is a risk we will have to draw against our home. Again, a lot can happen in 15 years so I am not particularly nervous about this issue. I suspect we may do some part time work to mitigate this risk.

[stashgrower]

Good point, Itchyfeet. I made a spreadsheet...but actually I'm more drawn to use the ballpark figures.

[Grogounet]

It s actually even better if you consider working or producing another source of income than your passive income anyways.
Work means health to me.

Saying all this, these calculators, as wrong as they can be, give you to good aspects:
- A goal
- Motivation

And that's enough for me to use them