Bankai wrote: ↑
Sat Aug 31, 2019 10:11 pm
Quite a lot of assumptions. You don't need paid of house to retire, and you certainly don't need 1.4m house to retire. With 1.4m you can retire very comfortably in many places in the world with housing cost being fraction of that. As for any recommended by government spending level - it's tailored for average consumer. One can do much, much better than that and we have many examples here of people spending below so called poverty line.
Australia is certainly not cheap, although salaries are good. Its great place to accumulate assets for sure. Are you thinking of staying forever or is it just a chapter in your lives?
Yes, I'm only in the beginning of figuring things out, so making a lot of assumptions. Some are:
- I'll stay in Australia. Unless one or both of my children move to another country when they grow up, I won't leave. I was an adventurous child myself, and left my birth country at 20 (my poor parents!) so all adult life was spent far away from my parents and siblings... now my mother lives in Bulgaria, my parents-in-law live in UK, they see grandkids once a year at best and I don't want the same for myself.
- Having a paid-off, almost paid-off, or at least half-paid-off house in retirement is a must for me. I worry a lot, about all things in life, and the idea of paying rent when retired and knowing the rents can grow unpredictably in the next 5-10-20 years would be too stressful.
- $1.4m house, on the other hand, is not a must. In fact, it is not even an option. I'll have to save $40K per year for 35 years to get that. Retiring at 75? - hope not!
- Now we are paying $700 per week rent close to CBD. In retirement, I would look to reduce it a lot. The cheapest but still livable places within 200-300 km are around $350 per week. This requires $455,000 invested, with 4% swr. If I had this much, I'd rather buy and not worry about rent increasing every year or landlord kicking me out. $455K gets you nothing in Sydney and suburbs of course, maybe a studio apartment. So I'll need to aim for somewhere rural, ideally within 2-3 hours drive from Sydney so I can still see my children regularly (assuming they'll live in Sydney).