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, $200,000 emergency fund, and potential growth in superannuation.
This will keep us going forever and if and when we die, all will go to my son so he will he happy too.. We haven’t considered aged pension at all in our calculation as we are not sure if this will be available at that time..
We have considered all recommendations provided by OZB community in this post and used them to below advantages to ourselves:
• Living with Son during Uni:
• Assisting Son with Home Purchase:
• Location Flexibility (Australia, Bali, India):
• Lifestyle choices and exposure to diverse cultures.
• Emergency Fund available
• Option to Tap into Super if needed
• Inheritance Planning for Son
• Regular Income from FIRE and Rental Income:
• Financial independence and stability throughout retirement.
• Long-Term Sustainability:
• Adaptable plan for sustaining desired lifestyle over the years.
PLEASE PROVIDE YOUR FEEDBACK TO ABOVE PLAN AS I REALLY APPRECIATE YOUR INPUT. Please note that I am not providing any advice or showcasing any financial advice or skills here. Purpose of posting this it to get feedback from you guys for my own benefit. Please do not try to imitate or copy my plan to your situation as your situation may be different and you should do your own research and get financial advise from a qualified advisor. Thanks
@freefall101: I didnt see this message until now. thats a good plan. 1m$ super and house and $1m investment. Perfect amount. I am sure if I keep working until 65 and continue to save/invest wisely, I may be in similar situation. however, I do not have patience though so I am thinking different approach (may be less lavish retirement but for longer period than you as I am starting early). However as per your advice, I should be getting some professional advice to structure it properly to avoid paying lot of tax. Thanks