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Ben Kingsley Blog post by Ben Kingsley

How Much Money is Enough?

If you stopped work today, how much money would you have to live off before it all ran out?

If you stopped work today, how much income would your investments generate?  Would it be enough to live off?  Would you eventually have to sell down on your investments to ensure you had enough money to live off?

How much is enough?

If you have read some of my past comments, you would know I’m very big on the idea of planning to achieve what you set out to achieve.  The best example I give of this is – You wouldn’t just jump in your car and try to drive to the top of Australia without a road map or signage along the way.  You will most likely get there but it would be a hell of trip with many poor decisions and mistakes on the way……….

Planning for your financial future is all about getting some idea of what it is you are trying to achieve and plotting the most effective and efficient course to give it your best shot.  However for most of us it’s hard to look too far into the future.  Plus who knows how much things are going to cost.

To assist you in getting some idea about future finances, Westpac in conjunction with Association of Super Funds Australia (ASFA) supply a regular future costs and retirement income standard.

There are two standards:

  1. Modest Retirement Lifestyle: Better than the Age Pension, but still only able to afford fairly basic activities
  2. Comfortable Retirement Lifestyle: Enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as: household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.


Now the figures:

The most recent national figures released for the ASFA Retirement Standard show that, in general, a couple looking to achieve a comfortable retirement needs to spend $55,249 a year, while those seeking a ‘modest’ retirement lifestyle need to spend $31,675 a year.  For a single person – Modest is $21,930 and Comfortable is $40,407.

I want you to think about these numbers in two ways.  Firstly, think of the income you are currently on and the quality of life and standard of living you currently enjoy.  The second thing I want you to think about is: does the Comfortable Retirement Lifestyle description appeal to you? If so, you are going to need around $1 million dollars in investment by the time you retire. Yes that much!

If you ask me the question of how much money is enough, I would answer that my plan and goal is for a far superior lifestyle than even the Comfortable Retirement Lifestyle they are quoting.  I am planning to build my passive wealth position through our property investment portfolio, so that by the age of 50 our passive income from property and other investments will be in excess of $150,000 per year and growing. This is the amount my wife and I have set for ourselves to be in a financially independent position to travel, coach my boys sporting teams, travel, continue to teach others how to manage money and build wealth, play golf, fish, snow ski, provide the very best health care money can buy if we need it, insure everything we own, including ourselves to protect our wealth position and, did I mention serious travel.  So I know how much I’m going to need each year.

So sit down, think of the things that are important to you, then give it a best guess as your starting point to working out how much is going to be enough to give you the lifestyle you aspire to, and not the lifestyle you settle for.

My greatest fear is that I know that unless you choose to make a change, the true reality for the vast majority of Australians is that they will end up living off significantly less income in retirement than they current live on and enjoy today, so they will work far longer than they needed to, and even still you physically can’t work forever, so make a change.  Let us help you achieve a better tomorrow.  Start by investing some time in your own education – come along to our Private Circle Property Wealth Forum.

Knowledge is empowering – if you act on it!

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