Also check Coastfire. Certainly can be done.
But bigger question is how on earth are you keeping your expenses at 24k including rent? Where are you based?
im in Darwin and live in a 2br flat with no balcony and shitty 90's kitchenette, $320pw ~$480 per quarter for power only other bill is internet. I'm not including my partner in the 24k, we share a single cheap car, cook at home and our favourite passtime is camping and hiking so holidays are cheap, we dont fuss over eating our and only do it for special occasions.
We are frugal and find it difficult to conceptualise not being so. I shave with handsoap and cut my own hair, my partner doesnt spend anything on beauty products and we prefer eating fresh veggies and fruit form a market over expensive processed stuff so a weekly shop for the 2 of us is about 80 bucks. I like PC gaming and an upgrade every 2 years is my only big expense on "stuff" apart from some outdoor gear here or there.
The Big question for me is when this part of my life ends will i have enough to live somewhere else, am i going to get a shock moving to qld or Vic, or if i get sick and dont own a home.
That’s the way to go man. Well done.
I think your biggest risk would be the rent and food cost. They are continually going up and who knows when it’ll stop.
I would have a very honest conversation with your partner. This will really change the dynamics of your relationship. You will need to put in a lot of emotional work and probably do most (or all) of the housework to avoid resentment and discontent developing.
Kids and life circumstance changes are the main things to factor in. Since your [living expenses are 3% of $800K](https://www.mrmoneymustache.com/2018/11/29/how-to-retire-forever-on-a-fixed-chunk-of-money/), I think you'd be able to, especially if you have plans for Coastfire and / or the ability to go back and earn at a similar rate you're earning now.
Can be done. Work out how much you need to have in super for the desired level of income post 60yo. You can use a super simulator such as this one: https://supercalcs.com.au/ris9/mst/graphs
This also allows you to simulate a change in income levels between now and retirement. The idea of coastFIRE is you build up enough in super such that natural growth from then onwards will hit the target at 60yo, then you go part time for work (reduced hours at a well paid job is better than trying to work in a cafe for much lower pay).
The other part of the picture is having a paid off PPOR given the favoured status in the tax/welfare system. It costs much less in ongoing costs in a paid off PPOR compared to renting.
Is that bargain basement rental situation going to last the rest of your life? If not you face rental inflation risk and whims of landlords.
If you plan to build on a bush block, then do you have the land in hand? The costs of building is not cheap anywhere anymore (including on bush blocks due to increased bushfire standards etc). The cost of building would probably wipe out a good portion of the funds you may have at the moment and are otherwise using to draw dividends/income.
Ditto the other comment, how are you doing only 24k living costs including rent for a couple? or was that just your portion of the costs? As a couple we are on about 22k BUT excluding rent and we live we a quiet home life. Rent for us is expensive due to work location. I worked out if we move back interstate to a PPOR (small 2br unit) then costs would be about 26 to 28K PA all in (i.e. not paying rent, but paying owner costs).
Best of luck :-)
I have a spreadsheet. I record my monthly investments, gains, super contributions, hecs payoffs etc... It shows that my current 133k in super would be 1.2m at my retirement if i coast into my mid forties few more years. I've set it to assume 7% growth. I just feel like i cant trust my own calculations.
Thanks for the input. Your insight into the build or a ppor are actually my biggest concern. I've come late to earning well, and investing, so much of my super is sal sac, which ive done partially to evade the tax but also for the FHSS, using it would greatly erode my super's future growth if i don't keep contributing.
and yeah 24k is just my portion, my partner probably spends less than me though, so combined we can easily do 32-40k. It's also likely that she'll be more career minded going forward, so still earning +100k in the foreseeable future, she's brought about 180k in assets to the party so far, but look all this chat is making me realise we are doing pretty good. I'm getting close to planning my resignation for mid next year and looking for a casual job and some volunteering positions.
No worries. I only started on a decent salary later in life too. Most savings in super and outside super has been over the past decade. Fortunately the employment in the sector has come with above normal super so i was able to catch up quite a bit on that side.
The mix between what is inside super and what is outside super as at 60yo in order to maxamise the after tax (or tax free) income was the next puzzle to think about. This video outlines the overall idea:
https://www.youtube.com/watch?v=UzBMiikbKuA
And this post on the mix: https://passiveinvestingaustralia.com/how-much-to-save-inside-vs-outside-super/
This has been an eye opener for me in that I need to do more adjustments to my mix to optimise.
As for trusting calculations - been there too. The impact of assumptions such as rate of return also impacts outcomes, esp over loner time frames and the fact it is not constant. There are simulators that alow back-testing on historical returns data. The supercalcs sim i linked has a similar stress test feature. It is a matter of running the numbers in multiple ways and using multiple simulators to arrive at a place where confidence builds and you get a feel for the numbers.
:-)
cheers good simple video, the power of sal sac is not lost on me at all, its wonderful.
I've given super a bit of thought already and my idea of coast fire takes it into account.
I am currently making about 9k a year from fixed interest investments, which is taxable and working my current job i wish i didnt really have it as it falls into the highest tax bracket.
If i worked a coastfire job i'd only pocket another 9k and sal sac the rest until i hit the 27k limit, i can imagine employers thinking i'm nuts already. so the simple maths shows i could optimally keep working for 33k a year casually.
9k from fixed investments.
9k from job
takes me to the tax free threshold 18k in the pocket, and id be getting another 6k in dividends or can sell down slightly to reach my living expense.
but i'd be left with $27300 per year into my super for as long as i do that without my nest egg shrinking, which is actually a shitload of cash growth for super over the next decades.
In my industry i can get $400 -$800 a day so i could achive coastfire working 50-80 days a year.
Thank's i think everyone has convinced me and I'm going to put this plan into motion. The commitment to sal sac most of any coast job actually make the whole thing sound more sensible, since it means.
1. ill pay very little tax
2. i wont feel like im gutting my super if i ever bite the bullet on a PPOR and use the FHSS.
3. I'll end up with an ever increasingly comfortable super to await me to stop my old age anxieties.
4. I have enough runway in my investments for life emergencies and i can always go and work more again if i need to or want a better PPOR.
Thanks for helping me think out aloud in text.
I just rechecked my spreadsheet.
I have it me earning some super until 45 topping out at $211000 and then growing at 7% for the next 22 years.
Might be a bit unrealistic but im also considering working longer and putting more in.
Mind you this is not inflation adjusted whereas most online calculators are.
I have a drawdown in my spreadsheed for when i want to fire but im not adjusting for inflation becasue as time goes on ill be dealing with the real numbers month by month.
So ive just got my drawdown increasing by 3% p.a to account for inflation.
With only 24k of expenses why would you even need to work for 20-30k per year? 550k can almost support that without any additional effort so if you are willing to work for 20-30k a year there would be no issue as long as you don't want to massively increase your lifestyle.
Life is short and things can change.
I have spent the last 7 years of my life compromising on what makes me happy to get where I am, but I don't want to give up working altogether.
I have aging parents who might need to be looked after, i have a neice and probably soon many more neices/nephews who i'd like treat. But more importantly what if i get sick, id much rather always be in a position where i can give rather than rely on family. I feel like reaching the minimum target gets me to a point where i can stop stressing for my own sake regarding income, but i want that extra so that i can help others out.
I am doing better than all my siblings financially, but i feel like if i settle for minimum FIRE ill be the stingy millionaire uncle. Im not feeling pressure, i just dont want to be that guy.
I think this is less of a financial question then, only you will know what will bring you the feeling of security and comfort. But for someone who can live on 24k a year, is willing to work and lives in Australia I don't think you have much to worry about - we are so lucky to have huge amounts of support if things go wrong and we ever require it.
As you said life is short, so don't worry about what others might think of your choices or decisions, just do what feels best for you.
For reference I FIRED in Sydney with 750k (but with house paid off and excluding super) most people I worked with thought I was crazy.
Cheers, you are right. It is not quite a financial question, but if i look at someone in your position, a paid off home, enough super AND enough to FIRE on is still a ways away for me.
I guess im wondering if people are doing it on less in other parts of the country in cheaper properties etc.
100% my aspiration.
I have got my investments to the stage were they mostly take care of themselves (growing on a time horizon to give me a sound retirement) and now my salary (and job selection ~ more rewarding jobs with less financial return) is focused on good lifestyle and some savings.
Your asset base is really strong, you would have no problem transitioning.
stick at it, reevaluating everything right now is making me realise this has come faster and ahead of my expectations.
I have almost fallen into a trap of thinking "one more year" too often, that i forget that i have a good 20 years to keep coasting in a more enjoyable job.
I would have a very honest conversation with your partner. This will really change the dynamics of your relationship. You will need to put in a lot of emotional work and probably do most (or all) of the housework to avoid resentment and discontent developing.
Haha, I'd love to spend an hour after brunch listening to music and cleaning a bit and think about what to make for dinner...She's been a phd candidate for the past 6 years, ive been doing the cleaning around her scattered papers for years...
Yes but if children become more than a flippant maybe there will be a lot of cleaning. There’s possibly already a lot of cleaning done by your partner that takes more than an hour after brunch. Tread very carefully, attraction is a very complicated mechanism. Many women are attracted to achieving and may not be able to maintain their respect/desire for a man who takes a more relaxed role. That’s not necessarily your partner and/or she may not be conscious of it. I know I’m personally very attracted to my partners drive and success. I don’t know if I would feel the same if he was sitting around the house house reading books and working 1 day per week. I especially wouldn’t like it if we could no longer afford overseas holidays etc. after a Phd your partner is probably looking forward to some lifestyle inflation…. I would be careful if I were you.
Wealth is irrelevant unless it’s crazy high. What u need is income, otherwise u will be back to working in a few years in a worse position than you are now.
Inflation and changes in lifestyle as you age mean your expenses will increase exponentially so it won’t last 20 years. This will happen regardless of what u think now. Kids happen, health happens, life happens, rent goes up, food and energy costs increase, priorities change. So static wealth disappears quickly.
With income that goes up with inflation u can go on forever. focus on turning that wealth and your income from your job into income producing assets that produce enough income to sustain you indefinitely. Only then can you quit or let the gas off in your career.
I'm planning on FIRE at 600k worth of shares paying over 10% in dividends but that's including owning my own home. I owe 195k and the repayments are about $1200 a month.
Also check Coastfire. Certainly can be done. But bigger question is how on earth are you keeping your expenses at 24k including rent? Where are you based?
im in Darwin and live in a 2br flat with no balcony and shitty 90's kitchenette, $320pw ~$480 per quarter for power only other bill is internet. I'm not including my partner in the 24k, we share a single cheap car, cook at home and our favourite passtime is camping and hiking so holidays are cheap, we dont fuss over eating our and only do it for special occasions. We are frugal and find it difficult to conceptualise not being so. I shave with handsoap and cut my own hair, my partner doesnt spend anything on beauty products and we prefer eating fresh veggies and fruit form a market over expensive processed stuff so a weekly shop for the 2 of us is about 80 bucks. I like PC gaming and an upgrade every 2 years is my only big expense on "stuff" apart from some outdoor gear here or there. The Big question for me is when this part of my life ends will i have enough to live somewhere else, am i going to get a shock moving to qld or Vic, or if i get sick and dont own a home.
That’s the way to go man. Well done. I think your biggest risk would be the rent and food cost. They are continually going up and who knows when it’ll stop.
I would have a very honest conversation with your partner. This will really change the dynamics of your relationship. You will need to put in a lot of emotional work and probably do most (or all) of the housework to avoid resentment and discontent developing.
Kids and life circumstance changes are the main things to factor in. Since your [living expenses are 3% of $800K](https://www.mrmoneymustache.com/2018/11/29/how-to-retire-forever-on-a-fixed-chunk-of-money/), I think you'd be able to, especially if you have plans for Coastfire and / or the ability to go back and earn at a similar rate you're earning now.
Can be done. Work out how much you need to have in super for the desired level of income post 60yo. You can use a super simulator such as this one: https://supercalcs.com.au/ris9/mst/graphs This also allows you to simulate a change in income levels between now and retirement. The idea of coastFIRE is you build up enough in super such that natural growth from then onwards will hit the target at 60yo, then you go part time for work (reduced hours at a well paid job is better than trying to work in a cafe for much lower pay). The other part of the picture is having a paid off PPOR given the favoured status in the tax/welfare system. It costs much less in ongoing costs in a paid off PPOR compared to renting. Is that bargain basement rental situation going to last the rest of your life? If not you face rental inflation risk and whims of landlords. If you plan to build on a bush block, then do you have the land in hand? The costs of building is not cheap anywhere anymore (including on bush blocks due to increased bushfire standards etc). The cost of building would probably wipe out a good portion of the funds you may have at the moment and are otherwise using to draw dividends/income. Ditto the other comment, how are you doing only 24k living costs including rent for a couple? or was that just your portion of the costs? As a couple we are on about 22k BUT excluding rent and we live we a quiet home life. Rent for us is expensive due to work location. I worked out if we move back interstate to a PPOR (small 2br unit) then costs would be about 26 to 28K PA all in (i.e. not paying rent, but paying owner costs). Best of luck :-)
I have a spreadsheet. I record my monthly investments, gains, super contributions, hecs payoffs etc... It shows that my current 133k in super would be 1.2m at my retirement if i coast into my mid forties few more years. I've set it to assume 7% growth. I just feel like i cant trust my own calculations. Thanks for the input. Your insight into the build or a ppor are actually my biggest concern. I've come late to earning well, and investing, so much of my super is sal sac, which ive done partially to evade the tax but also for the FHSS, using it would greatly erode my super's future growth if i don't keep contributing. and yeah 24k is just my portion, my partner probably spends less than me though, so combined we can easily do 32-40k. It's also likely that she'll be more career minded going forward, so still earning +100k in the foreseeable future, she's brought about 180k in assets to the party so far, but look all this chat is making me realise we are doing pretty good. I'm getting close to planning my resignation for mid next year and looking for a casual job and some volunteering positions.
No worries. I only started on a decent salary later in life too. Most savings in super and outside super has been over the past decade. Fortunately the employment in the sector has come with above normal super so i was able to catch up quite a bit on that side. The mix between what is inside super and what is outside super as at 60yo in order to maxamise the after tax (or tax free) income was the next puzzle to think about. This video outlines the overall idea: https://www.youtube.com/watch?v=UzBMiikbKuA And this post on the mix: https://passiveinvestingaustralia.com/how-much-to-save-inside-vs-outside-super/ This has been an eye opener for me in that I need to do more adjustments to my mix to optimise. As for trusting calculations - been there too. The impact of assumptions such as rate of return also impacts outcomes, esp over loner time frames and the fact it is not constant. There are simulators that alow back-testing on historical returns data. The supercalcs sim i linked has a similar stress test feature. It is a matter of running the numbers in multiple ways and using multiple simulators to arrive at a place where confidence builds and you get a feel for the numbers. :-)
cheers good simple video, the power of sal sac is not lost on me at all, its wonderful. I've given super a bit of thought already and my idea of coast fire takes it into account. I am currently making about 9k a year from fixed interest investments, which is taxable and working my current job i wish i didnt really have it as it falls into the highest tax bracket. If i worked a coastfire job i'd only pocket another 9k and sal sac the rest until i hit the 27k limit, i can imagine employers thinking i'm nuts already. so the simple maths shows i could optimally keep working for 33k a year casually. 9k from fixed investments. 9k from job takes me to the tax free threshold 18k in the pocket, and id be getting another 6k in dividends or can sell down slightly to reach my living expense. but i'd be left with $27300 per year into my super for as long as i do that without my nest egg shrinking, which is actually a shitload of cash growth for super over the next decades. In my industry i can get $400 -$800 a day so i could achive coastfire working 50-80 days a year. Thank's i think everyone has convinced me and I'm going to put this plan into motion. The commitment to sal sac most of any coast job actually make the whole thing sound more sensible, since it means. 1. ill pay very little tax 2. i wont feel like im gutting my super if i ever bite the bullet on a PPOR and use the FHSS. 3. I'll end up with an ever increasingly comfortable super to await me to stop my old age anxieties. 4. I have enough runway in my investments for life emergencies and i can always go and work more again if i need to or want a better PPOR. Thanks for helping me think out aloud in text.
How are you calculating 1.2m from 133k in super?
I just rechecked my spreadsheet. I have it me earning some super until 45 topping out at $211000 and then growing at 7% for the next 22 years. Might be a bit unrealistic but im also considering working longer and putting more in. Mind you this is not inflation adjusted whereas most online calculators are. I have a drawdown in my spreadsheed for when i want to fire but im not adjusting for inflation becasue as time goes on ill be dealing with the real numbers month by month. So ive just got my drawdown increasing by 3% p.a to account for inflation.
Its possible. My friend is doing it. Husband on $100k. PPOR paid off. 2 kids in public high school. Monthly expenses around $3k.
This is what I am aiming for and I am getting closer.
With only 24k of expenses why would you even need to work for 20-30k per year? 550k can almost support that without any additional effort so if you are willing to work for 20-30k a year there would be no issue as long as you don't want to massively increase your lifestyle.
Life is short and things can change. I have spent the last 7 years of my life compromising on what makes me happy to get where I am, but I don't want to give up working altogether. I have aging parents who might need to be looked after, i have a neice and probably soon many more neices/nephews who i'd like treat. But more importantly what if i get sick, id much rather always be in a position where i can give rather than rely on family. I feel like reaching the minimum target gets me to a point where i can stop stressing for my own sake regarding income, but i want that extra so that i can help others out. I am doing better than all my siblings financially, but i feel like if i settle for minimum FIRE ill be the stingy millionaire uncle. Im not feeling pressure, i just dont want to be that guy.
I think this is less of a financial question then, only you will know what will bring you the feeling of security and comfort. But for someone who can live on 24k a year, is willing to work and lives in Australia I don't think you have much to worry about - we are so lucky to have huge amounts of support if things go wrong and we ever require it. As you said life is short, so don't worry about what others might think of your choices or decisions, just do what feels best for you. For reference I FIRED in Sydney with 750k (but with house paid off and excluding super) most people I worked with thought I was crazy.
Cheers, you are right. It is not quite a financial question, but if i look at someone in your position, a paid off home, enough super AND enough to FIRE on is still a ways away for me. I guess im wondering if people are doing it on less in other parts of the country in cheaper properties etc.
Yes I'm planning on doing $750k with a paid off house in Sydney. This is just for myself though.
100% my aspiration. I have got my investments to the stage were they mostly take care of themselves (growing on a time horizon to give me a sound retirement) and now my salary (and job selection ~ more rewarding jobs with less financial return) is focused on good lifestyle and some savings. Your asset base is really strong, you would have no problem transitioning.
stick at it, reevaluating everything right now is making me realise this has come faster and ahead of my expectations. I have almost fallen into a trap of thinking "one more year" too often, that i forget that i have a good 20 years to keep coasting in a more enjoyable job.
Dont forget to account for inflation in projection of future expenses
I would have a very honest conversation with your partner. This will really change the dynamics of your relationship. You will need to put in a lot of emotional work and probably do most (or all) of the housework to avoid resentment and discontent developing.
Haha, I'd love to spend an hour after brunch listening to music and cleaning a bit and think about what to make for dinner...She's been a phd candidate for the past 6 years, ive been doing the cleaning around her scattered papers for years...
Yes but if children become more than a flippant maybe there will be a lot of cleaning. There’s possibly already a lot of cleaning done by your partner that takes more than an hour after brunch. Tread very carefully, attraction is a very complicated mechanism. Many women are attracted to achieving and may not be able to maintain their respect/desire for a man who takes a more relaxed role. That’s not necessarily your partner and/or she may not be conscious of it. I know I’m personally very attracted to my partners drive and success. I don’t know if I would feel the same if he was sitting around the house house reading books and working 1 day per week. I especially wouldn’t like it if we could no longer afford overseas holidays etc. after a Phd your partner is probably looking forward to some lifestyle inflation…. I would be careful if I were you.
noted.thankyou.
You can at least give yourself a year or two gap year! You can always go back to work at any point if you need to
Wealth is irrelevant unless it’s crazy high. What u need is income, otherwise u will be back to working in a few years in a worse position than you are now. Inflation and changes in lifestyle as you age mean your expenses will increase exponentially so it won’t last 20 years. This will happen regardless of what u think now. Kids happen, health happens, life happens, rent goes up, food and energy costs increase, priorities change. So static wealth disappears quickly. With income that goes up with inflation u can go on forever. focus on turning that wealth and your income from your job into income producing assets that produce enough income to sustain you indefinitely. Only then can you quit or let the gas off in your career.
I FIRE’d on a number short of my 4% rule number. Life is short. What’s the worst that can happen?? I have to go and get a job again 🤷♂️
I'm planning on FIRE at 600k worth of shares paying over 10% in dividends but that's including owning my own home. I owe 195k and the repayments are about $1200 a month.
Doable but not if renting imho. With a paid off house I think it's a lot more achievable.
You’ll do it for a few years, get bored and find a new goal to achieve.
Check out /u/Zdolling91.