Need Recommendations to My Retirement Plan at 45 Years

yourflights on 11/12/2023 - 15:28
Last edited 14/12/2023 - 16:18

Hello Guys, me again. This is a follow up post after my last post got so many comments and suggestions. Please refer to my post here

https://www.ozbargain.com.au/node/792858

and then consider providing me recommendations for below plan. After reading all comments and doing lot of research, I have done below planning. Please let me know your thoughts regarding this.

Step 1: Next 5 Years (Accumulating Savings)
• Continue working for the next 5 years.
• After 5 years, I will have:
• Home Value: $1.5 million (assuming no change in value)
• Superannuation: $250,000
• Accumulate savings from salary: $300,000

Step 2: Retirement (Starting from Year 6)
• Sell Primary Residence: Receive approximately $1.5 million. I (me and my wife) will use 100K from our savings to make this 1.6 million. Remaining 200K will be kept as emergency fund forever.

Purchase Properties:
• $600,000 Townhouse/Unit in Sydney and live in that with my son.
• 2 Investment Properties ($500,000 each) in other states

Rental Income and Expenses:
• Total Rental Income: $50,000 from both IPs
• Annual Expenses: $2,000 (tax) + $12,000 (SIP in India) + $36,000 (living expenses) = $50,000
• Flexibility to work part-time if additional income is needed.

Investment Strategy:
• Invest additional $12,000 annually in SIP in India. This will come from my son who will be paying me $1,000/month for accommodation, invested in SIPs in his name.

So basically, We will be doing 24K SIP in India for next 5 years (6th to 10th year from today) and living off 36K per year (+ some additional income from freelancing if needed). We can live in Bali, India or Australia from this regular income.

Step 3: After 5 Years (Year 11)
• Sell Sydney Property (PPOR): Estimated value of $700,000-$750,000.
• Give $144,000 (from SIPs) + $200,000 from our property sale to son for his own home. I think 344k will be sufficient to pay for his new home deposit at that time.
• Total assets available for me at that time : $500,000 + $200,000 emergency fund + 2 IPs.

Step 4: Post-Retirement (Starting from Year 12)
• Move to the first Investment Property (in Brisbane) and make it the new PPOR. I always wanted to live in Brisbane so this will help.
• Have $500,000 invested, generating a 7% return.
• Withdraw 5% annually, adjusting for 4% inflation (withdrawing 22K in first year, 23.4k next year and so on.. 67K at 29 years).)
• Supplement income with $25,000 rental income from the second Investment Property.

Step 6: Long-Term Plan (Up to Age 74)
• Monitor and adjust spending based on FIRE (Financial Independence, Retire Early) plan.
• By the age of 74, FIRE corpus may be exhausted, but We'll have the Brisbane home, second IP, $200,000 emergency fund, and potential growth in superannuation.

This will keep us going forever and if and when we die, all will go to my son so he will he happy too.. We haven’t considered aged pension at all in our calculation as we are not sure if this will be available at that time..

We have considered all recommendations provided by OZB community in this post and used them to below advantages to ourselves:

• Living with Son during Uni:
• Assisting Son with Home Purchase:
• Location Flexibility (Australia, Bali, India):
• Lifestyle choices and exposure to diverse cultures.
• Emergency Fund available
• Option to Tap into Super if needed
• Inheritance Planning for Son
• Regular Income from FIRE and Rental Income:
• Financial independence and stability throughout retirement.
• Long-Term Sustainability:
• Adaptable plan for sustaining desired lifestyle over the years.

PLEASE PROVIDE YOUR FEEDBACK TO ABOVE PLAN AS I REALLY APPRECIATE YOUR INPUT. Please note that I am not providing any advice or showcasing any financial advice or skills here. Purpose of posting this it to get feedback from you guys for my own benefit. Please do not try to imitate or copy my plan to your situation as your situation may be different and you should do your own research and get financial advise from a qualified advisor. Thanks

Financial

Comments

  • Duckie2hh on 11/12/2023 - 15:32
    +3

    Don't forget that when you sell your PPOR (current) you have the option of putting $300K into super as part of the government "downsizer" scheme. This is assuming you have been in your current property for more than 10 years.

    Also… What is SIP India?

    • yourflights on 11/12/2023 - 15:39
      +1

      I may not be able to downsize scheme as I will only be 50 years at that particular time.

      • Duckie2hh on 11/12/2023 - 15:44
        +1

        Bummer, but good pick up

      • Thaal Sinestro on 13/12/2023 - 06:51
        +33

        This post is precisely what is wrong with Australia. The obsession with housing, and governments subsidizing investors. Negative gearing and capital gains discounts cost the government 50 billion annually, money that could instead be invested in public housing, healthcare, etc.

        The Australian economy has no innovation, and it is because everyone is sinking their money into unproductive housing. Housing doesn't produce a product or service Australia can export for income; it just sits there. People make huge capital gains through housing even though they have done nothing to deserve it. Capitalism rewards hard work is the great lie ever told. Capitalism rewards rentierism. Passive income like capital gains should be taxed at 75%.

          • yourflights on 13/12/2023 - 07:47
            +2

            @Jaduqimon: So you think I am doing the right thing. Right? Not relying on pension system at all. If I can get it, it’s great. If not, I am fine too.

            • Jaduqimon on 13/12/2023 - 08:47

              @yourflights: Yes that's right I think you're doing it right. Do your best to not rely on pension. Pension is a safety net. Not something one should purposefully plan to use.

              Don't worry about the naysayers. I think you've done well and it shows in your initiative to plan for retirement. It's just a matter of choosing the best portfolio of assets. As many have mentioned, investment property is probably not the best especially in retirement.

              • yourflights on 13/12/2023 - 09:43
                +1

                @Jaduqimon: You made my day. I was thinking why majority criticizing my plan when I am planning my own pathway without relying on govt system. I understand that relying on property may not be the best plan (as mentioned by many OZBs) so I may have to think about only having 2 properties and remaining invested in ETF, Bond etc.

                • CowFrogHorse on 14/12/2023 - 15:17

                  @yourflights: You are relying on the government you just gave the example of contributing to super if you sell a prop etc.

                  • yourflights on 14/12/2023 - 15:19

                    @CowFrogHorse: Can you elaborate? I didnt understand. Am I relying on govt as per this plan? how is that? If I pay in Super, I wont be able to access it until 67 so I dont want to do it.

                • HeWhoKnows on 14/12/2023 - 22:54
                  -1

                  @yourflights: Property should be the backbone of your wealth strategy.
                  Everything else is just gambling with your money

              • HeWhoKnows on 14/12/2023 - 22:52
                -1

                @Jaduqimon: WRONG
                WRONG
                WRONG
                WRONG

                Property is by far the best investment.

                Only people that have no idea say its not.
                No experience.
                No knowledge
                No money either

            • CowFrogHorse on 14/12/2023 - 15:24
              +1

              @yourflights: The true cost of senior citizens is not the pension its the free medical.

              Its not hard to do the maths, it costs thouands a day to stay in hospital, a week or two is more than the pension for the entire year.

              Thats a major expense if you have to pay out of your pocket.. one day this could change, the gov cant afford to pay 100k+ every year for old senior citizens

          • Bluto Mindpretzel on 13/12/2023 - 11:20

            @Jaduqimon:

            doing work

            Rentier behaviour isn't "doing work", it's pyramid scheme behaviour. The people "doing work" are the ones renting and lining the landlord's pockets for doing precisely nothing - not even providing maintenance on property if recent posts in here are anything to go by.

            • Jaduqimon on 13/12/2023 - 11:35
              -1

              @Bluto Mindpretzel: Tell me how I can get a property without doing work. Even if it's inherited, someone previously would have had done the work and used their savings to buy the property.

              It's a free market. People paying the rent are voluntarily doing so. No one holding a gun to their head.

              By your definition no one should receive interest from bank either. There's even less work involved receiving interest.

              • yourflights on 13/12/2023 - 15:42

                @Jaduqimon: I agree completely. How can someone buy a property without sacrificing so many things prior to that.

              • xavster on 14/12/2023 - 12:02

                @Jaduqimon: Ignore that guy, obviously someone who has never owned property. Has never had to do actual work like repairing and maintaining a property, fix plumbing issues, hire electricians to re-do electricals, deal with storm damage and roof repairs.

                Maintaining property is very costly. Don't even get started on council rates.

                • CowFrogHorse on 14/12/2023 - 15:18

                  @xavster: Yeh maintenance is far more than the rent or value increase. God bless owners, they are clearly doing the public a favour and should be tax free. Maybe the gov should have a service to fix rental properties for nothing maybe they could also make payments when your property is out of renters.

        • cameldownunder on 13/12/2023 - 18:03
          +2

          I disagree vehemently. Capital Gains should be staggered:
          Sell within 3 years: 100% Capital gain ( less expenses and fees ) taxed
          After that a reduction of 5% every year lived in it.
          For Investment Properties 2% reduction every year.

          Ideally there should be a model to evaluate a house ( Rooms/Kitchens/bath/livingSize/location….. ) and then only
          2% + Current Interest Rates ( not bank rates but RBA rates ) allpied to the modelled value +1% ( default for maintenance ) should the max allowed.

          House with 3 bedrooms, near Train station, 100M2 living area, 1 bath, medium Garden, built 1960
          Modeled Value $800K —> Rent = 800K * 7.35% ( 2% + 4.35% + 1% ) = 60K / year = 1150 / week. Still a lot, but at least regulated

          • CowFrogHorse on 14/12/2023 - 15:19

            @cameldownunder: THeres a simple solution for property prices.

            Include a GST component ontop for the buyer and seller. That will pull money out of the system and prices will drop.

            If anyone sells their home, they instantly have 10% less to pay for the next home etc… it helps everyone.

            • cameldownunder on 14/12/2023 - 16:28

              @CowFrogHorse: Quite the opposite, they increase the price by the GST value when selling, pushing the prices up.

              • CowFrogHorse on 14/12/2023 - 16:52
                -1

                @cameldownunder: camel: You havent thought it thru….

                say i sell my house for $1M… that means i pay GST which leaves me $900K…

                How much do i now have to buy my next house ?

                if this happens to everyone, if everyone has LESSS money after selling prices MUST come down.

                Prices dont go up if people have less money to spend. the prices match what people have.

                • cheapaschips on 14/12/2023 - 20:40

                  @CowFrogHorse: Stamp duty and agent fees already does something similar today and it has little effect.

                  If you sell a house for 1million for example after paying agent fees you may have 950-975k left.

                  To buy the same house again you need to pay the 1m + stamp duty of 40-50k + conveyancing charges.

                  • CowFrogHorse on 15/12/2023 - 10:24

                    @cheapaschips: cheap:

                    Stamp duty + agents arent enuff, which is why there needs to be more tax.

                    More tax slows down the market, which is good for everyone in the end.

                    The vast majority lose in a market thats constantly changing.

                • cameldownunder on 14/12/2023 - 22:09

                  @CowFrogHorse: I do know what you are trying to explain, but there is this other view:
                  I Have a property, want do downsize, Want to buy Smaller house and put 300K away.
                  The house I want to buy is 1Mio, so I want to have 1.3 Mio in pocket after sales. I price my house at 1440K
                  Sell the house pay144K in GST and have 1.296K in pocket.

                  Id I did not have to pay GST, I would have sold the house for 1.3

                  Which scenario has the house becoming more expensive, the one with GST or the one without GST ?

                  Prices dont go up if people have less money to spend. the prices match what people have.

                  Nope, prices best case stay the same, people just buy less

                  By buying less the manufacturing costs goes up, and prices go up.

                  • CowFrogHorse on 15/12/2023 - 10:23

                    @cameldownunder: @camel

                    I appreciate everybody wants more for their home, im not stupid.

                    camel: The house I want to buy is 1Mio, so I want to have 1.3 Mio in pocket after sales. I price my house at 1440K
                    Sell the house pay144K in GST and have 1.296K in pocket.

                    cow: Lets round figures to make it easier.

                    You may want 1.3M, you can want as much as you like, if nobody has the money or doesnt want to pay you wont get it.

                    Look at it this way… others just sold their 1M home, but they paid GST on the sale so they have 0.9…that means they cant afford your home. Eventually this happens to most or enough people, as the money goes to GST. You are basically forced to lower your price because fewer people have 1M now most have 10% less and this happens everywhere.

                    camel: By buying less the manufacturing costs goes up, and prices go up.

                    cow: there will be people who are forced to sell because cant pay home loans, just want to move somewhere else etc.

                    Like i said they will have to lower their price by the gst amount because their potential buyers now have 10% less of what they had before.

                    Is this sytem perfect, no, nothing is…

                    THe only way gov can control any market is via tax its the only way that works. Giving money away like first home owners grants etc only does the opposite it makes things worse.

                    • cameldownunder on 15/12/2023 - 11:13
                      +1

                      @CowFrogHorse: Hi Cow, I am Camel, nice to meet you.

                      In other times and other places I would be 100% in agreement with you, but in regards to Real Estate, Australia is a totally (profanity) up place, where normal logic ( yours ) does not apply.

                      Agree with you that Taxes is the only way to solve this issue, because with taxes you can steer the behaviour: Currently Houses and

                      Apartments and Houses are seen and accepted as an investment. And that is the basic flaw. Because too many people own more than one.

                      Solution: Tax them, not only at sale, but CONSTANTLY, till they are so sick of paying taxes that they sell.

                      Tax them so high at sales that there is no profit left after, so Reals estate is no longer subject to speculation.

                      And for all those people, just wanting to write "But then nobody builds anymore" .. I say not true. Keep giving Tax exemption for new build developments. First 10 years. No Tax on income. Voila'.

                      But FFS remove the negative gearing !!!

                      • CowFrogHorse on 15/12/2023 - 13:31

                        @cameldownunder: @camel exactly we are talking on the same level.

                        The gov needs to stop the financial incentives in all its forms inc negative gearing etc and introduce more tax and keep increasing it as appropriate until things return to a good level.

                        camel: And for all those people, just wanting to write "But then nobody builds anymore" .. I say not true. Keep giving Tax exemption for new build developments. First 10 years. No Tax on income. Voila'.

                        cow: Thats bollocks, those people always have an agenda, its not a truthful response.

                • CrowReally on 15/12/2023 - 13:08

                  @CowFrogHorse: Why are you paying GST on the sale of your house, CowFrogHorse?

                  Are you talking about something you have literally no idea about?

                  • CowFrogHorse on 15/12/2023 - 13:29

                    @CrowReally: crow: Why are you paying GST on the sale of your house, CowFrogHorse?

                    cow: copy and paste what i said.

                    Learn to READ.

                    ~

                    crow: Are you talking about something you have literally no idea about?

                    cow: You dont know how to comprehend, copy what i said and then reply inline…

                    You are the one who doesnt know what he is talking about because i never said what you claim. Feel free to QUOTE what i said VERBATIM.

                    • CrowReally on 15/12/2023 - 13:49

                      @CowFrogHorse: I'll quote you when you figure out how the quote system works for yourself.

                      You're an adult, you should be able to move beyond

                      crow: that's wrong

                      cow : I never said that do you listen

                    • CrowReally on 15/12/2023 - 13:55

                      @CowFrogHorse: Yet another terrible take.

        • BluebirdV on 13/12/2023 - 19:25
          +1

          This is exactly what is wrong and why Australia is going down the toilet.

        • HeWhoKnows on 14/12/2023 - 22:50

          You poor, poor individual.
          Such a terrible attitude.

          Im sure the 35% of people that rent in Australia and all the current migrants would beg to differ with you

  • 1st-Amendment on 11/12/2023 - 15:33
    +26

    "Everyone Has a Plan Until They Get Punched in the Mouth"

    -Mike Tyson

    • yourflights on 11/12/2023 - 15:34

      Thanks. I agree. Making a plan and sticking to it is totally different things. I am making an assumption here that I will follow. I am usually good to follow my plans until now so hopefully, I will continue doing so.

      • 1st-Amendment on 11/12/2023 - 15:37

        I didn't see anything in there about using tax breaks to your advantage. These can be massive eg PPOR vs CG on investment could be well over $100k+ difference, and income tax vs salary sacrifice on Super can also mean $100k+ differences.

        I'd be seeing a professional financial planner if I were you.

        • yourflights on 11/12/2023 - 16:05
          +1

          I am only selling PPOR and there wont be any CGT.

    • WhyAmICommenting on 14/12/2023 - 13:11
      +1

      I believe the quote is actually “punthed in the mouth”

  • yourflights on 11/12/2023 - 15:33

    SIP is Systemic Investment Plan. Thanks. I will explore downsize scheme as I didnt know about it. Thank you so much.

    • frewer on 13/12/2023 - 07:11
      +1

      There are a few holes in your plans:
      - Assuming the property will not crash in the future.
      - The world's economy isn't great atm ( do some research n see ).
      - If the current aggressive immigration stretches out, it may save your plan.

      • yourflights on 13/12/2023 - 09:57
        +2

        I havent considered major appreciation of property price in my calculation. I have only considered 5% rental yield but seems too much (as per many comments here) so I may have to reconsider that percentage to 4%.

        • frewer on 13/12/2023 - 11:54
          +1

          This man has excellent research on property in Oz. You can even request data on your suburb when he goes live https://youtu.be/IC-rWGaP_Yo?feature=shared&t=556.

          The fact is that big brother keep wasting our money on useless thing AND raising tax, yet importing an unsustainable amount of people is bad.

          Look into taking advantage of volunteer super contribution as others said. Also beware of the unrealize-capital-gain ( they want to implement AFTER the election in 2025, cunning but smart ) tax on super

          • yourflights on 13/12/2023 - 15:43
            +1

            @frewer: Thanks for sharing this link. I will check this video and his channel.

          • CowFrogHorse on 14/12/2023 - 15:32

            @frewer: Are you referring too infrastructure investments ?

            Like building a $3B light rail so a uni can import more foreign students…
            or spending $20B on a metro to keep offices in the Sydney CBD….Ever wonder how much each of these "saved" jobs is costing
            or how about rozelle interchange $4B down the drawin again why pay so much for people togot to the CBD ?
            or how abou tthe new syd airport, $50B .. how much are you gainin from that ? ZERO…how much is anyone you know getting from that ? ZERO, how much are you paying,, your paying your share of the $50B cost for the aiport, roads, trains etc.

            and thats only the start.. i havent even mentioned how much of your life is wasted by these stupid infrastructure projects which make traffic worse.

            • frewer on 18/12/2023 - 13:03
              +1

              @CowFrogHorse: You forgot the 100s million sent to Ukraine. Australian tax money send to Ukrainian who not even want to fight for their country ( they fleed )

              • BigBirdy on 19/12/2023 - 09:07

                @frewer: So who's holding the Russians back, Ben Roberts Smith?

                • frewer on 19/12/2023 - 12:10

                  @BigBirdy: What Russian's business gotta do with Australia and Australians who are struggling to meet daily needs ?!?? Maybe we should keep our nose to ourselves, and short out our lives first b4 attempt at being self-righteous. Btw did you cried injustice when Ethiopia endured the war caused by it neighbour for yearsss ? I guess not

                  • BigBirdy on 19/12/2023 - 16:15

                    @frewer: Russian aggression is not our business, but Eritrea is? You're not even consistent

                    • frewer on 19/12/2023 - 17:32

                      @BigBirdy: You missed the point none of that SHOULD be AU business atm. We should focus on avoiding the upcoming GFC 2.0 good grief …

  • onetwothreefour on 11/12/2023 - 15:39
    +1

    What happened to your wife?

    • yourflights on 11/12/2023 - 15:46
      +5

      When I say 'I", I am referring to me and my wife. We are together and will be together forever.

      • superuser on 12/12/2023 - 21:08
        +1

        I hope so

      • RTX9090Ti on 14/12/2023 - 07:14
        +1

        Until she takes 70% off you soon…

      • CowFrogHorse on 14/12/2023 - 15:20

        then you should say WE

        • yourflights on 14/12/2023 - 16:15

          Yes, correct. I will update it now.

    • jv on 11/12/2023 - 15:58
      +5

      What happened to your wife?

      She eloped with @Muzeeb

      • onetwothreefour on 11/12/2023 - 15:59
        +6

        Sounded like he got rid of her, would certainly help with the budget.

      • Gunnar on 11/12/2023 - 16:03

        I would have thought she’d run off with @Barbados slim, now he’s a human Adonis of a husband

      • TheRealCher on 13/12/2023 - 11:40
        +1

        The old Chapstick in the glovebox trick

      • yourflights on 13/12/2023 - 15:44

        Sorry. who is @Muzeeb ?

        • Muzeeb on 13/12/2023 - 16:12
          +10

          Some random hot dude

    • May4th on 11/12/2023 - 16:56
      +3

      it was step1 of the early retirement plan

      • yourflights on 13/12/2023 - 15:44
        +2

        Ha ha ha.. No it wasnt. She is part of this plan and in fact, plan was developed in consultation with her. Divorce is very rare in my culture and I am surrounded by at least 50 family and friends having very happy and satisfying married life. didnt actually hear about divorce in any of my cousins or friends or relatives so far. BTW, we believe in arranged marriage and not the one which happens as a result of date night.

  • Muzeeb on 11/12/2023 - 15:40
    +14

    PM the 25yo with $1.25m in assets to discuss a strategy.

    /thread

    • Inheritance Planning for Son

    Stuff that. Live large. He can look after himself.

    • brad1-8tsi on 11/12/2023 - 19:38
      +3

      everyone should read "Die with Zero" by Bill Perkins although I want to die with $30k to pay for funeral, solicitors and a gratuity for my executors.

      • yourflights on 13/12/2023 - 15:46

        Will explore this book. Sound interesting though.

    • yourflights on 13/12/2023 - 16:20

      I wish I can do that. In fact, I am only helping him with deposit (that too from his own saving of 12K each year while Uni). Of course, if and when me and my wife die, left over will go to him. This reminds me of a will which I havent done yet. let me start the will application now as it is so important.

    • downhillar on 13/12/2023 - 19:50
      +4

      I will never understand this attitude. You choose to bring a child into this world, they have no say in it. The world has changed dramatically in recent years and without helping your kids get ahead they are going to struggle to keep up with the quality of life we have today.

      I will do everything in my power to give my kids and their families the greatest opportunities in life. I owe it to them, their existence was my choice.

      • yourflights on 13/12/2023 - 20:01
        +1

        I think I am doing lot for my son. He will be staying with me until Uni and also buying his home with 300k deposit I will be giving. After I am gone, he will be acquiring any asset that is left over. Giving him great education and saving habits and will always be available when he needs me. Is that not sufficient ?

        • downhillar on 13/12/2023 - 22:26
          +2

          I was replying to Muzeeb. What you're doing for your son sounds great to me.

      • Muzeeb on 13/12/2023 - 21:31

        Don't get me wrong. Our kids currently do, and will continue to do, very nicely out of us. We're just not going out of our way to make this happen.

        • yourflights on 13/12/2023 - 21:36

          Sorry, that reply wasnt for you. It was for @downhillar

        • downhillar on 13/12/2023 - 22:33

          Fair enough, sounds like you have done your bit then.

          I hope my kids will be able to do well out of me one day. My parents took the easy road at every opportunity and did nothing to help themselves, let alone their children.

          Not only did I start from 0, I've also had to constantly try to bail them along the way, while also trying to put together some funds to give my kids the head start I would I loved.

          My kids are the absolute light of my life and I want nothing more than to create a better world for them. I see some people tout the "die with nothing" line and cannot understand the mindset.

  • Sye on 11/12/2023 - 15:40
    +9

    I would just buy Boost Sims with more than 100% cashback and reinvest into high yield investment.

    • Muzeeb on 11/12/2023 - 15:43
      +13

      Instructions unclear. Now I have 69,420 mobile numbers registered to my name and an appointment with my new lawyer and ASIO next week.

  • Dollar General on 11/12/2023 - 15:45
    +1

    All good unless you live past 74 years old

    • yourflights on 11/12/2023 - 15:51

      By the age of 74, FIRE corpus may be exhausted, but I'll have the Brisbane home, second IP, $200,000 emergency fund, and potential growth in superannuation and access to aged pension (if its available and I am eligible). I could sell this second IP and use at FIRE or just live off the rent from it. That IP may have valued 1 million already at that time. or may be more

      • Duckie2hh on 11/12/2023 - 15:57

        Do you need to live in Brisbane or will you be in Bali/ India permanently?

        • yourflights on 11/12/2023 - 16:16

          I have flexibility in my planning above. That was my main goal for doing this exercise. As far as I have enough income ($36k + Freelancing), I can live in my own home in Sydney or in rented place in Bali or India.

  • Fergy1987 on 11/12/2023 - 15:48
    +8

    Nice flex post

    • yourflights on 11/12/2023 - 15:53

      Believe me its not. I really value OZB recommendations and if you read my original post and this one, you will realise that I have implemented majority of suggestions from the OZB community.

      • Fergy1987 on 11/12/2023 - 15:56
        +5

        Im sure im just jealous that i live pay cheque to pay cheque and can barely afford food lol.

        Retirement is just waiting for death for some.

        • onetwothreefour on 11/12/2023 - 16:00
          +3

          Compared to the 25yo this is just an average life.

      • AustriaBargain on 11/12/2023 - 16:22
        +8

        I wouldn't trust the average OZBargainer to babysit my quarter chicken and chips while I go to the bathroom. Let alone organise my entire asset portfolio and my son's birthright inheritance.

        • yourflights on 11/12/2023 - 16:30
          +2

          Thanks. I think OZB community and some members have better understanding of savings and financial than many experts that I met.

        • Fergy1987 on 11/12/2023 - 16:56
          +3

          All i would trust them with is when the remote runs out of batteries, they will have some eneloops spare.

        • SlickMick on 12/12/2023 - 11:16
          +2

          There aren't many people I would trust with my quarter chicken and chips, but I prefer to pick through mass Ozbargain advice than paying a single "expert" that there is no way I could trust.

          It's like Wikipedia: you can post crap here, but someone will correct you.

  • freefall101 on 11/12/2023 - 15:57
    +7

    Best of luck. But to play devil's advocate (I'm not going to beat around the bush, just questioning the riskier parts)

    Rental Income and Expenses:
    • Total Rental Income: $50,000 from both IPs
    • Annual Expenses: $2,000 (tax) + $12,000 (SIP in India) + $36,000 (living expenses) = $50,000
    • Flexibility to work part-time if additional income is needed.

    $50k income from two $500k investment properties is pretty unrealistic. Rents have gone bonkers but not that bonkers, particularly once you remember that you have a whole pile of costs associated with the properties (tax, water costs, real estate agent costs, repairs. Plus is the $500k including stamp duty?)

    • Accumulate savings from salary: $300,000

    Do you already have this? $100k loan paid off, $300k saved in 5 years is quite a lot.

    Has good web/freelancing skills and easily earn $500-$1000 per month by working remotely (few hours a week) from anywhere in the World

    Considering how easy it is to generate code via AI I don't expect this will be a high value skill in 10 years. I'd make sure you factor in some education spending in there too.

    Sell Sydney Property (PPOR): Estimated value of $700,000-$750,000.

    Double check the PPOR tests, you won't be a resident for tax purposes while living overseas, new rules came in in 2020 around this.

    • Have $500,000 invested, generating a 7% return.
    • Withdraw 5% annually, adjusting for 4% inflation (withdrawing 22K in first year, 23.4k next year and so on.. 67K at 29 years).)

    That's incredibly optimistic. But even with that, living off $47k a year (if you clear $25k with the rental) in 2035 will be awful.

    Talk to an accountant and put a LOT of thought into tax structuring and planning so income can be evenly divided, kid can get assets without triggering gains, what your tax rates will look like while living overseas, foreign tax residence ownership laws, etc.

      • freefall101 on 11/12/2023 - 17:24

        Rental yield is not the same as rental profit, make sure to factor in costs. Units will have strata fees, you need insurance, there are taxes, property management costs. You’ll clear $40k if you’re lucky and that makes a huge difference to your plan of living on $36k a year.

        5% is still optimistic, even as a yield. Clearing 5% is likely impossible. And you’re talking about owning places for decades, they will need repairs and renovations.

        As per my FIRE calculator, I will be withdrawing lot more than first year.. withdrawing 22K in first year, 23.4k next year and so on.

        Gotcha, I thought you were just taking interest. It’s still hugely risky to expect 7% for that to work. I’d be more scared of the medical costs in old age too eating everything you have.

        When I sell my PPOR in Sydney, I will be living in Australia. My Bali/India residency (for few months a year) will only kick in after I sell that PPOR

        Makes sense, I read your old post (hadn’t read it before now) and thought you mostly planned to be overseas. In that case, remember there is a 183 day rule, but owning a home might get you around that.

        Living on $36k a year seems tight with flights, health insurance, property costs and such to deal with. But I guess that’s what the supplemental income is for.

        • yourflights on 13/12/2023 - 15:51
          +1

          Thanks mate. I am reconsidering my calculations based on 4% clear return. I am sure that my plan will then want me to do more freelancing to substantiate missing 10K due to less 1% than originally expected (5%)

          Inflation is well considered in my FIRE calculator. I developed one myself and validated by at least 100 people (on another FIRE FB group) and they all liked it. Happy to share with you for personal use with a disclaimer that its my personal calculator and I am not a financial advisor (surely not based on this post!!) so use it at your own risk

          Actually, I will be getting more than 36K. I mentioned about substainign income by freelancing and adding 10K by freelancing or casual job is not difficult at all and I am confident that we can survive on 46K in initial years. After 10th year, you can see that I will be getting lot more (22+25=47 in first year and 150K per year in 30th year as per FIRE)

          • freefall101 on 13/12/2023 - 20:11

            @yourflights: That'd be awesome, thanks! I'll ping you a message. To be honest I don't know anything about FIRE, I'm an accountant in data analytics and do a lot of investing but I tend to go completely on the side of caution. My targets are somewhere around $1m super, house and $1m investments by 65 and figuring out the numbers to retire earlier make more and more sense the older I get!

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