AVOID ANY RELIANCE ON GOVERNMENT WELFARE

The consultation paper on retirement incomes – as part of the Henry review into the tax system – notes that there are now five people of working age for each person over 65.

However by 2047, this ratio will fall to only 2.4 persons.

The consequence of having relatively more of us retired and less of us in the workforce will mean that the cost of the age pension will increase from 2.5% of the gross domestic product to 4.4%.

In addition there will be larger demands by the health sector to pay for the ever increasing cost of caring for an increasingly older population and ever increasingly costly medical equipment and drugs.

The economy will simply not be able to sustain the pension as we currently know it.

A likely scenario is that we will only have access to the pension, and the Pharmaceutical Benefits scheme etc., once we have exhausted our super.

So plan now to avoid any reliance on government welfare, as it may not be there when you’ll need it.

If you would like me to help you explore your options for 20-25 years of dignified retirement, contact me – Bernard Kelly – any time on admin@retirelaughing.com

PRESERVE YOUR NEST EGG

How long will your savings last?

By Robert Brokamp of The Motley Fool

There you sit with a finite pile of savings from which you will need to take all or most of the money to support your retirement spending.

The accumulation phase of life is nearing an end.

How much of that stash can you safely take each year to ensure it lasts your lifetime? Will you take the same amount annually? Or will you just buy all the cool toys and vacations you've always really wanted, and let your slightly older self deal with the fallout a few years later?

All of these questions boil down to one over-arching theme that we've thoughtfully put into this question: How long will your money last?

The "70% to 80%" rule of thumb is based on the assumption that many of your current expenses will go away in the golden years.

For the most part, this is true. Once you kiss the boss goodbye, you'll no longer endure the following:
Work-related expenses,
Social Security taxes
Contributions to retirement plans
Mortgage payments, (if your house will be paid off)

There are two other ways your expenses might decline.

First, retirees tend to downsize – but the savings might not be there.

With no need to keep the four-bedroom house now that the kids are grown, for example, some pensioners flee the big house for the something smaller. However the cost to move into – and maintain – a new home or retirement village can still be quite expensive.

However, some require the same level of income in retirement they enjoyed while working.

How? It comes down to this: If you're not making money, you're spending money, particularly in the early retirement years.

Another big expense is health care.

A survey in the Journal of Gerontology found that 61% of couples age 70 and older and 54% of single adults spent at least 10% of their retirement savings on health care. A startling 45% of couples spent more than half of their savings to medical bills.

Medical insurance is not free (there are on-going premiums), and it doesn't cover everything (e.g., most long-term care).

The real price of leisure

So what will retirement cost you?

The best research we've come across concludes the following:

A "safe" withdrawal rate ranges between 4% to 6% of a retiree's starting portfolio.

The accuracy of that approximation depends on your age. If you're 65, then that estimate is quite accurate; if you're 25, thankfully you have many decades to improve your lot.

CONCLUSION

But the simple answer to all of this is – if you want an income of $50,000, this equates to 5% of $1,000,000. And only a portfolio of residential real estate is inflation protected.

Let us help you calculate what you can expect (and what you'll need!) when you retire.

Contact me – Bernard Kelly - anytime at admin@retirelaughing.com

IPSWICH TO REVIVE INNER CITY

The good news for my private clients – and other residential real estate investors who target Ipswich – just keeps getting better.

Now the Ipswich City Council has purchased the major – but outdated – Ipswich City Square Shopping Centre and will guide its redevelopment.

Built over 30 years ago, the Centre has been neglected by its owners, and has suffered badly with competition from the new RiverLink shopping centre, just across the Bremer River.

The Council will plan the redevelopment, and will call for tenders to complete the works. It will not become the developer itself.

When completed in four years, the site will be able to accommodate 10,000 workers in high rise buildings, as well as both retail and commercial space.

Ipswich has 43% of all industrial land in south east Queensland, and experts predict that the surging support sector will ensure that this development will be a success.

If you want me to help you explore options to expand your investment portfolio, contact me anytime via email: admin@retirelaughing.com