I spotted this interesting article last year on an investment site, where some 48 experts have been asked the question: “How much money do you need to retire ?”, and for our accounting brains that are used to answers down to 2 decimal places, the answers are pretty shocking.
The short answer is “it depends”, and the range of amounts ran from annual income from $50,000 to $200,000 coming from savings amounts of $800,000 up to $10 million.
Given that Financial planners and Australian accountants are both involved in SMSF’s, it seems something that warrants further research. If you’ve taken a small break over the new year, then you’ll probably have seen plenty of January news on how much you need to retire, or how much you need in your superannuation to retire. Surprisingly to some, the numbers are modest income of $24,270 up to comfortable income of $43,695. And that has to be after tax income. So at a modest level, it works out to $66 a day.
And if you want to have $100,000 annual income you’ll need $2.5 million, and this at 4% return, which certainly isn’t where the banks are at the moment.
The hard reality is that things get more expensive. I spoke to a lady selling her terrace in Sydney back at the turn of the century and she was hoping for around $250,000 and was going to move up the coast to buy something for around $60,000 and live off the rest. Here we are 20 years later and I wonder how long that $190,000 lasted.
And for those looking to retire in their 20’s or 30’s then think about the price of a bus fare 50 years ago (around 5 cents) back in 1970 versus a bus fare today which can set you back almost $6.00. That’s a 120 multiple!
The real hard reality is that you have one of two choices:
- Make a truckload more money than anyone else, hence keeping ahead of inflation. This is called the “winning the lottery” option, “creating the next Uber/AirBnb <insert relevant stock of your choice>, or getting in early to the next Bitcoin craze
- Recognising that life continues, and you need to be engaged personally and professionally, over a longer period of time.
For those that recognise life is a journey and not a race, then the obvious need is to continue to contribute to the retirement, to manage your expectations, to ensure you have a little fun on the way, and to keep up to date with the latest trends and knowledge. (Remaining relevant)
In this ever changing world, Australian compliance continues to change with impacts by software houses, automation, world competition, outsourcing, offshoring, digitization etc. To remain in an advantageous position Australian compliance firm owners need to continually hone their skills, and use all the resources available to maintain their position in the market.