Mid 30's Saving for Retirement. Advice Needed

Fergy1987 on 05/02/2024 - 14:52

So I'm in my mid 30's and basically ever since I started full time work my goal has been to save to not do that anymore lol

I've been doing the same thing financially for the last 10years or so with my investments, but I am wondering as I get older do I need to start changing what I am doing?

Current situation.
- Have a few Blue Chip shares paying me around 4K in dividends a year (reinvested)
- Have a mortgage (fully offset - so those savings become actual interest making savings once the mortgage is paid off in around 13 years I believe)
- Currently putting about 30% of my wage per fortnight into Vanguard High Growth Managed Fund
- Putting 17.5% into Super (12.5% from employer 5% contributed)

I was thinking on the weekend though…..What do I do with that managed Fund as I get older, surely I don't want it in High Growth as I start hitting 45-50?

So should I be looking at changing that in the future. Either
a) Stop investing into the High Growth and move future investments to something more balanced
b) Take all of the High Growth funds and move them to another more balanced option
c) Just leave it in High Growth and let it ride

I'm not the most financially savvy person but I think I've done alright so far, but I am kind of at a point where I am wondering…..what is the next step?

Then I'm wondering once I finally kick the job to the curb whats the best tactic to fund your life?

Do I just take the cash savings and just live off those until they drop to 0 and then start taking from the managed fund/s on a particular frequency.

Sorry if I am just rambling here, my head is a spinning mess of too much research.

Any advice would be great!

Financial

Comments

  • Duckie2hh on 05/02/2024 - 14:58

    fully offset - so those savings become actual interest making savings once the mortgage is paid off in around 13 years I believe

    So you mean you have an offset account but your loan is not fully offsetted? Otherwise why is your mortgage "paid off in around 13 years"?

    surely I don't want it in High Growth as I start hitting 45-50?

    When you "retire" at 60-65, you still have 30-40 years of living left. You want growth in your portfolio.

    Putting 17.5% into Super (12.5% from employer 5% contributed)

    Are you utilizing the full amount of your concessional contribution limit each financial year?

    • Fergy1987 on 05/02/2024 - 15:05

      Fully offset as in I still owe on the mortgage, but have 100% of the total in cash offsetting it so pay no interest, but still make mortgage repayments to pay off the principal. Which I will be paying for the next 13 years.

      Yes I understand that I want growth in the portfolio, but would I change products as I age or leave as is is probably more the question I'm asking.

      I don't know anything about the Concessional Contribution Limit lol - Will need to read up on it.

      • Duckie2hh on 05/02/2024 - 15:12
        +5

        concessional limit of $27,500 this FY^. Suggest you max out this first, ahead of putting money into external investment vehicles. Then you can also catch up on previous years worth of super.

        ^Ref: https://www.ato.gov.au/individuals-and-families/super-for-in…

        I don't know how much you have invested, but you just need to ensure your passive income after retirement, is sufficient to fund your lifestyle. Drawing down assets is always an option, but you are still young, so why not plan for it.

    • El cheepo on 05/02/2024 - 16:30
      +1

      When you "retire" at 60-65, you still have 30-40 years of living left.

      insert surprised pikachu meme
      - me not imagining life past 70

  • soan papdi on 05/02/2024 - 14:58
    +5

    Start here: https://passiveinvestingaustralia.com/

  • AustriaBargain on 05/02/2024 - 15:07
    +2

    Probably not too late to join the property bubble. Most politicians are deeply invested in it too and they ultimately control housing supply and immigration. Even if the amount of rent you can get off the average person has a ceiling, house values can still keep going up based on the assumption that house values can still keep going up. Will probably be decades before the Greens get a majority so you can probably count on the bubble existing and growing until then.

    • Duckie2hh on 05/02/2024 - 15:14
      +2

      Definitely not too late. OP is young. Mid 30's is the new 20's.

  • Trying2SaveABuck on 05/02/2024 - 15:20

    nothing wrong with that you're doing the big question is 'what kind of retirement do you want to have?'

    • Fergy1987 on 05/02/2024 - 15:22
      +6

      Well I have no kids or plans to have kids - there's no one left after me.

      So basically party/travel until on my death bed I spend my last $1 lol

      • AustriaBargain on 05/02/2024 - 15:36
        -7

        Sounds like a good plan. I bet a lot of parents often regret having kids. The constant companionship must be nice, but you can’t undo the decision and turn them back into a sperm and egg.

        • CyberMurning on 05/02/2024 - 15:39
          -2

          totally. a very bad investment (children)

        • onetwothreefour on 05/02/2024 - 15:53
          +20

          I bet a lot of parents often regret having kids.

          Bet it's not as many as you think.

        • SBOB on 05/02/2024 - 19:00
          +11

          I bet a lot of parents often regret having kids.

          This some kind of inner monologue thought?

          • AustriaBargain on 05/02/2024 - 19:21
            +2

            @SBOB: According to one survey, 18% of American parents are willing to admit that they regret having a child. The number that do regret but won't admit it on a survey could be even higher than 18%. And the number that have regretted it at some point in their life is likely even higher still.

      • ThithLord on 05/02/2024 - 15:36
        -1

        All I can say (censored, of course) is **** yeah mate

      • Fredfloresjr on 05/02/2024 - 16:01
        +11

        I just can't imagine life without kids. They changed my life completely.

        But good luck OP.

        • AustriaBargain on 05/02/2024 - 19:22

          I just can't imagine life without kids.

          https://youtu.be/uG3uea-Hvy4?si=I-oSNa_ozo3w8u6n&t=13

          • Fredfloresjr on 06/02/2024 - 08:59
            -2

            @AustriaBargain: You can have your opinion but having KIDS make everything better.

            Feel sorry for my friends who claim to have "everything", pretend to be "happy" but always quiet when we all talk about kids and their success.

            • AustriaBargain on 06/02/2024 - 09:07
              +1

              @Fredfloresjr: Maybe he's quiet because he knows you can't turn your kids back into sperms and eggs so he doesn't want to offend you.

            • try2bhelpful on 06/02/2024 - 18:44
              +1

              @Fredfloresjr: As someone who chose not to have kids I suspect your friends are trying to find a way to not offend you and stifle their yawning. I'm a great supporter of breeders but it isn't something we all aspire to.

              • Fredfloresjr on 07/02/2024 - 09:22
                -3

                @try2bhelpful: Totally agree with you, but unfortunately, the face reactions every time tell another thing.

                That's okay, we have to move forward and see life without kids. We have to act like we are happy for the life. Life must goes on.

                "I don't like to have kids, I want to do a lot of things", of course, do you have any other options lol. You failed to have it not because you chose not to have it.

                BUT again, I have kids and that's all that matters. Happy days.

                • try2bhelpful on 07/02/2024 - 10:29
                  +2

                  @Fredfloresjr: You have no idea what they are thinking. You are projecting your ideas onto them and putting your own interpreting of the expression on their faces. Pretty arrogant IMHO. They may well be disappointed because they are stuck listening to this stuff, again.

                  More than happy for you to choose a different path to others but you have no right to denigrate their choices. However, I do wonder what values you are passing into your kids.

                  My personal view is that you should only have kids if you really want them and are willing to make the sacrifice. There are too many bad parents out there who think having children is the default then neglect and abuse them. Other people who project onto kids what they’ve sacrificed to bring them up.

                  I don’t hate children I just didn’t want any of my own. I probably would’ve been a reasonable parent but it wasn’t what I was interested in it. Happier to channel my time and effort into my career and life.

                  More than happy for my tax dollars to be used to make it easier on those who do want to make the commitment. I do believe it takes a village to raise a child. It just won’t be my child.

      • billdsl on 06/02/2024 - 08:59
        +1

        Well no matter what you do you'll be so far in front just with this decision you probably dont need to be that bothered given how well you are already doing

        Running 3 later teenage kids in the current world is f***'n expensive, but thankfully the government keep doing absolutely nothing to help, which is very much appreciated!

        • AustriaBargain on 06/02/2024 - 09:08
          +1

          And not having to be the bank of mum and dad for those kids when they finally want a home but don't have two million apiece to buy one.

  • CyberMurning on 05/02/2024 - 15:39

    stop checking ozb

  • foursaken on 05/02/2024 - 15:41

    There are people who give such advice for a living.

    • dust on 06/02/2024 - 16:08

      And some of those people continued giving that advice to their non-living clients.

      • foursaken on 07/02/2024 - 13:59

        And some of those people were humans.

  • ESEMCE on 05/02/2024 - 16:01

    30's is not getting "older". Not in the terms of "getting old" anyway.. I mean, we're all getting older, even a newborn is.
    Even your 40s isn't old.
    Start thinking about getting conservative in your 50s at the earliest.

    I guess unless you really are in the lucky position of looking at retiring at 40 or 50, in which case, yeah, maybe you do need to start thinking about how to stretch what you have long term.

  • hentabara on 05/02/2024 - 16:37
    +3

    Is it humble brag post?

    • Stuj on 05/02/2024 - 18:49
      +3

      Yes it is indeed, if you do the math on what they have, enough shares for 4K dividend, fully paid off house (with cash - yes in offset ) and extra super contributions. I’d say they know exactly what they are doing…. If i had that in my 30s id be doing well and just want to share their “burden”

  • mrdean on 05/02/2024 - 16:40
    +1

    Buy Buy Buy! Vanguard, State Street, Blackrock. You can't lose.

    • brad1-8tsi on 05/02/2024 - 16:55

      You can lose, even with ETFs

  • skid on 05/02/2024 - 16:51

    I also do not see anything wrong with your strategy. I wouldn't change anything.

    Before retirement, max out your concessional contribution into super. Anything left over, put into the Vanguard High Growth Managed Fund.

    After retirement, you'll have super, some dividends from the blue chips and distributions from the Vanguard Managed Fund. If you need more than that, sell off some of the Vanguard Managed Fund.

  • brad1-8tsi on 05/02/2024 - 16:54
    +2

    What do I do with that managed Fund as I get older, surely I don't want it in High Growth as I start hitting 45-50?

    It depends what your risk profile is.

    I retired 2 years ago. It's quite likely I'll live another 20-40 years with at least 10-15yrs being quite active and spending on travel, cars, mountain bikes and home improvements (spent $100k on the townhouse in 2022 & will spend another $100k on the property this year plus $30k-$40k on a wedding) and whatever else I want to do.

    I've still got a large portion of investments in high growth equities as well as some "conservative balanced" equities. You get used to seeing the bottom drop out of it for a few months.
    After 2 years of (almost) not working I still haven't eaten into capital, in fact it's grown.

    Unless you are a really nervous investor I'd recommend you stick on the roller coaster as long as possible. It was only in the last 10 years of work that compounding really took off for me.

    Suggest you read Barefoot Investor or a few of Noel Whitaker's books and have a look at Aussie Firebug's website and Smart Money Australia.

    • Duckie2hh on 05/02/2024 - 17:00

      It was only in the last 10 years of work that compounding really took off for me.

      please provide an example.

      • brad1-8tsi on 05/02/2024 - 17:03

        I'm not about to pull out all my statements to satisfy your curiosity

        • Duckie2hh on 05/02/2024 - 17:03

          Just ball park it (i.e., my $10 csl stock became $20)

          • brad1-8tsi on 05/02/2024 - 17:20

            @Duckie2hh: 160% increase over 10 years due to capital gain and distributions. It's not earth shattering on a per year basis.

            Add in ongoing regular investments and it adds up. It's not rocket surgery

    • ihbh on 05/02/2024 - 17:17
      +1

      on a wedding

      Congrats. Same yoga instructor?

      • brad1-8tsi on 05/02/2024 - 17:22

        Yep, that's the one. Teaches Pilates as well these days.

        I figured after 7 years the time had come.

  • ihbh on 05/02/2024 - 17:18

    surely I don't want it in High Growth as I start hitting 45-50?

    Life expectancy is increasing all the time. Are you in good health?

    Should be fine as long as you have some other income buffer to tide you over say 5 years.

    • Gdsamp on 05/02/2024 - 17:46
      +1

      Life expectancy is increasing all the time.

      life expectancy decreased in the United States recently.
      I expect it will top out in AUS too the way govts keep gutting medicare, people skipping GP visits due to no bulk-billing, microplastics in everyone, viruses leaking from chinese labs etc.

      !RemindMe 25 years

      • ihbh on 05/02/2024 - 17:53

        You forgot the trend to eating more processed crap. That's why I asked OP if he was in good health.

  • JIMB0 on 05/02/2024 - 19:40
    +2

    Why not take on a lower paid job that you enjoy more?

    • Fergy1987 on 05/02/2024 - 20:36

      Its already low paid

      • 2esc on 06/02/2024 - 09:58

        Depends on your definition of low paid. Low paid is $24 an hour.

  • ForkSnorter on 05/02/2024 - 20:36
    -1

    The new capitalism: planning for retirement at age 30, investing all your money and living frugally so you can start enjoying life at 90, yay.

  • dtc on 05/02/2024 - 21:01

    Google ‘sequencing risk FIRE’ and ‘bond tent’. That will give you a heap of well researched and detailed answers. Maybe also ‘FIRE portfolio’

  • screensaver on 06/02/2024 - 02:32
    -2

    My advice is to not take any risks, even now. Better to get a slightly lower return and lose nothing (eg term deposit with compounding interest) and aim for investment property. Let their rent pay it off for you with all the tax advantages

    • onetwothreefour on 06/02/2024 - 06:13
      +2

      Investment properties are risk free?

    • skid on 06/02/2024 - 09:21
      +2

      This is what I did in my 20s. In hindsight, this strategy is too safe and I am way behind.

  • ukulele on 06/02/2024 - 08:29
    +1

    this dude be killing it. Congrats.

  • ValueBob on 06/02/2024 - 10:59

    Firstly, well done on your finances and thinking, planning ahead (many don't, at least, not in their 30's). You are the 1% of population. I've been there, done that. I'd suggest to keep it simple and

    • Pay off your mortgage ASAP (try 8-10 years); dump the lot in it. There is nothing better than to be debt free. Many mortgage allows you to redraw the extras that you already put it (so, there is no reason to have one of those mortgage offset accounts that tempts you to use it for something else… )

    • Super is basically a managed fund; pre-tax to the maximum super concessional limit of $27,500. Be more active in your super choices.

    Do you really need another managed fund outside of super? It is returning a lot better than the compounded mortgage interest? Every $1 extra paid into your mortgage is compounded over the remaining life of the mortgage; in your case 13 years. If you put this in a speadsheet and compound this, you will be horrified). Is having the managed fund worth while? Are you enjoying dabbling in it? Is the net return better (after tax, dividend is income, capital gains is taxed) than paying off your mortgage.

    • Terbo on 12/03/2024 - 19:20

      Interesting view but a bit simple and not accurate in this case
      1. The mortgage is already offset, it costs him nothing, he could just have the offset pay down the loan, there is no more saving to be had.
      2. The asset in this case is the house, not the debt, so putting more towards it is not going to increase his wealth in any way, he needs more/different growth assets
      3. Super is awesome but you cant access it until age 60, why wouldnt he want additional savings 'just like his Super' in his personal name with earlier access
      4. A mortgage offset account is so much better than paying down the loan for a person like him that has shown he is a 'saver'. He can use the bank's money for other things eg pay down and then redraw a sub account loan to purchase his non super investments, using the investment income to cover the loan interest, or claim a tax deduction on the loan interest
      The end result should be a paid off house with an offset account of cash for emergencies or living costs, a hefty personal investment account that he can sell down as required and a likely tax free Super account due from age 60. He can then sell off the house to fund supported care in his later years.
      If he takes some action now he should be able to consider retirement or at least 'work optional' within 10 years.

  • Daniel Plainview on 07/02/2024 - 14:48

    As already recommended - read passiveinvestingaustralia.com - I think you'd benefit from refining your existing knowledge & no info given here will assist you as much as you can yourself as you will know the critical variables to the RIGHT choices.

    I always recommend folks do the 'low hanging fruit' first e.g make sure you are with a top performing super fund (low fees, index options, go all high growth options - you cannot touch it until atleast 60, so you can be aggressive), control your outgoing expenditure.

    I think it's great you're putting more into super etc - but be mindful that getting that mortgage paid off is a guaranteed return - many folks might find that the 'sweet spot' for their super (pension + super) is lower than they thought - you need to know if you're going to aim for a high super but if this isn't feasible no sense plowing too much $$$ into it.

    Whatever you do try and put a lot of work into the initial plan and stick with it - do not chop and change when the market changes - as that shows your planning sucked! You imply you're at the lower end of wage earning, which is fine - I am too nowadays - but thats why reading up on the super/pension sweet spot is critical so you can plan ahead NOW.
    https://www.smh.com.au/money/super-and-retirement/the-sweet-…

  • transplanted on 07/02/2024 - 20:56

    I would not save for retirement, life is short, we're all gonna die soon, maybe tonight, maybe tomorrow, who knows, you might not even be alive to use it. Just enjoy the money and travel, buy the stuff you're longing for. YOLO

    • DIYcharcat on 09/03/2024 - 20:46
      +1

      I lost my brother earlier this week who was only 27 years old . Work and saving is important but so is enjoying life. OP You seem like your doing well just make sure you enjoy the time in the middle

      • try2bhelpful on 09/03/2024 - 23:08

        My deepest condolences to you. When I lost my oldest brother to a motor bike accident it was appalling. You expect to lose your parents but not a sibling, particularly not that young. I won’t tell you how to grieve but in my case it brought the surviving siblings, and his widow, closer together.

        People, definitely, need to find a balance in their lives.

  • branners on 12/03/2024 - 19:24

    Good to see that you are leaning into your Super. High yield is better in the long-term, there will be glitches but it will come back more strongly over the long-term. Industry funds have lower fees and, IMO, better (and independent) advice. Make an appointment to see an adviser and see if there is anything more you can be doing. Good luck to you

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