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How to Adjust to a new reality?


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I'm 57, my wife 59.  We are looking to semi-retire in the next 2-5 years.

 

We started running a family budget on Excel back in about 1996 when we went off salaries and had our own businesses.  Best thing I ever did, still run it today even though the kids are off our hands and we have way more $'s to play with.

 

We also set up a Superannuation model in that spreadsheet which predicts how much in income-earning assets we will have to retire on and at a very conservative 3% earning rate, how much that will give us per year to live on in retirement (as I'd like to leave all our capital to our girls).

 

We need about $1.5-$2.0M of income earning assets to live on by my calcs.  And still have an equivalent lifestyle to now.  The main discretionary expense will be holidays/travel, but we'll wind those back too.

 

Consequently, we've both been salary sacrificing to the max for the past 5-10yrs into Superannuation to achieve this, plus through a good financial adviser (finally found one who was not a complete idiotic commission-chasing shonk), invest in shares, managed funds etc.

 

Real estate price in Oz have gone crazy during Covid, and we expect to have to pay close to $1M to buy our next and last 'retirement house' - which scares me.

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1 hour ago, Thommo said:

I'm 57, my wife 59.  We are looking to semi-retire in the next 2-5 years.

 

We started running a family budget on Excel back in about 1996 when we went off salaries and had our own businesses.  Best thing I ever did, still run it today even though the kids are off our hands and we have way more $'s to play with.

 

We also set up a Superannuation model in that spreadsheet which predicts how much in income-earning assets we will have to retire on and at a very conservative 3% earning rate, how much that will give us per year to live on in retirement (as I'd like to leave all our capital to our girls).

 

We need about $1.5-$2.0M of income earning assets to live on by my calcs.  And still have an equivalent lifestyle to now.  The main discretionary expense will be holidays/travel, but we'll wind those back too.

 

Consequently, we've both been salary sacrificing to the max for the past 5-10yrs into Superannuation to achieve this, plus through a good financial adviser (finally found one who was not a complete idiotic commission-chasing shonk), invest in shares, managed funds etc.

 

Real estate price in Oz have gone crazy during Covid, and we expect to have to pay close to $1M to buy our next and last 'retirement house' - which scares me.

Thommo, that is an impressive amount of capital you have achieved!!!  I understand what you're doing, and how to calculate what you'll need going forward.  My biggest concern, like yours, is capital preservation.  We need to consider that I might live another 30 years, and my wife another 38.  That's a long time to live off of investments unless you're talking $10 or $12 million USD of income producing money.  I wish I was even a tiny bit close to that...  

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1 hour ago, Curt B said:

Thommo, that is an impressive amount of capital you have achieved!!!  I understand what you're doing, and how to calculate what you'll need going forward.  My biggest concern, like yours, is capital preservation.  We need to consider that I might live another 30 years, and my wife another 38.  That's a long time to live off of investments unless you're talking $10 or $12 million USD of income producing money.  I wish I was even a tiny bit close to that...  

 

To be fair, we received some inheritances which instead of peeing up the wall on sports cars etc. we used to pay off our mortgage, so by the ages of about 48, we were debt free & owned a house.  After that, we concentrated on saving into Super, shares, managed funds.

 

Many of our friends invested in residential properties to rent, as has my brother (who is much wealthier than us, but also has a lot of debt).  We tried that once and frankly it did not suit our temperament (tenants were dickheads too often, damaged the property).  If you buy in a place that has stupidly high capital gain (e.g. Sydney), residential property is a good investment, but the transactions costs getting in and out (e.g. stamp duty) are ridiculous in Oz (e.g. when you buy a property, on top of the property price you pay another 3.5% in stamp duty to the state govt = tens of thousands of $'s extra cost).

 

Out superannuation returns have averaged 8-9% over the last 20 years (24% last year!) and the transaction costs are almost zero (maybe $100 per year) - and it is hassle free.  Then when you retire, you can either take it all as a lump sum (bad idea IMO), or set it up as a product which pays you a regular 'pension', still earns income & it is all tax free!

 

So, if we had $2M in Super/investments and it earned 3% (it should earn more - probably 5-8%, but worst case), that is income of $60,000 to live on, and the $2M capital is preserved for our girls when we cash in our chips.  We currently live on about that.  Of course, inflation may erode that, but we will own our house & still do a little part-time work, so it should be OK.

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  • 3 weeks later...

Almost ready to retire myself on Feb. 14th of 2023, but eligible now.  I just want to do 30 years before retiring. We made the decision to step up to our retirement home on a lake, spent one inheritance to get us here and made sure we based the investment on my retirement income and the wife putting in 10 more years of work.    We did divert from the well stocked 401k to the mortgage to pay it down. But I have a year to stock up on supplies for my huge stash of kits. 

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Well, we have made our final decision, and I have put in for retirement.  My last day at work will be January 3.  We have worked things out, and I think we'll be able to live reasonably well without worrying about money too much.  I am planning to limit any nonessential purchases for an undetermined time, until I feel we have a solid feel for how things are going.  It's both frightening, and a relief.  I've had enough of the BS of the workplace.  Despite some level of concern, I think I've made the right choice.  The alternative was not an option for me.

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13 hours ago, Curt B said:

Well, we have made our final decision, and I have put in for retirement.  My last day at work will be January 3.  We have worked things out, and I think we'll be able to live reasonably well without worrying about money too much.  I am planning to limit any nonessential purchases for an undetermined time, until I feel we have a solid feel for how things are going.  It's both frightening, and a relief.  I've had enough of the BS of the workplace.  Despite some level of concern, I think I've made the right choice.  The alternative was not an option for me.

 

Welcome to the club "old man" 😉

 

Obviously you have the hobby part of retirement down, take morning walks or some other form of exercise.

Enjoy life.

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On 11/8/2021 at 8:33 PM, Curt B said:

Thommo, that is an impressive amount of capital you have achieved!!!  I understand what you're doing, and how to calculate what you'll need going forward.  My biggest concern, like yours, is capital preservation.  We need to consider that I might live another 30 years, and my wife another 38.  That's a long time to live off of investments unless you're talking $10 or $12 million USD of income producing money.  I wish I was even a tiny bit close to that...  

 

Earlier I mentioned spreadsheets, and I have done basically what Thommo did.  I have a section where I can plug in an estimated annual rate of return on my investments and an estimated inflation rate, then the sheet takes my SS income, pension and current savings/investments.  It then calculates how much I can expect to have each year for the next (another variable) years. Using this I can see that, if (a big if) I had ~$1.1 M saved up for retirement, averaged a conservative 5% growth against an average 3% inflation, I could "withdraw" ~$100,000/yr (in today's $$$, not adjusted for inflation) until I turn 99.  I haven't included the value of my house, thinking that when the time comes I could sell it and use the $$$ for a retirement home or assisted living, whatever life throws at me.  So, while it would be nice to have $10-$12 M to retire on, you can do with much less.  Planning and a realistic outlook is essential IMO.

 

Another thought on that 2 yr gap before you are eligible Medicare, it might be worth looking into another type of employment, a job with (medical insurance) benefits, and low stress in exchange for a lower) salary for a couple of years.  It would keep you from spending down your retirement funds on insurance premiums, and also have a little extra "beer money".  🙂

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What's just as important for a long healthy retirement as walks/aerobic exercise is regular strength work 2x or more per week.


Wife & I compete in duathlons/triathlons which is great for aerobic fitness (a bit extreme really) but I noticed I got physically quite weak over the years.  After my knees put me out of triathlons for about 7 years, I got back into the gym and found the strength I gained made everyday household tasks so much easier.  Back into short tris now, but still try to get in my strength work 2x/week.

You don't even really need a gym, a lot of the stuff we do is just body-weight exercises - e.g. pushups, planks, side-planks, half supermans, calf raises, wall squats with a ball at your back, belgian squats, chinups, pullups (need a bar for those last 2), dumbell side raises/curls (can buy cheap dumbells), turning over a big tractor tyre numerous times (15 turns does me in).

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40 minutes ago, habu2 said:

 

Another thought on that 2 yr gap before you are eligible Medicare, 

 

Luckily in Australia, everyone gets free Medicare.  Though if the surgery is 'elective' not critical, you can wait up to 12 months for surgery, though it is free.  We pay for our own private health insurance which means you can get the doctor of your choice, and get surgery done fast, but you will pay again for having it done in the private system.

 

Health access is also a consideration for us - how far will we be from medical specialists, can you access a regular doctor in the town.  Many smaller towns in Oz are short on doctors, with some doctors not taking on new patients so that is something we will have to consider.

 

Also, we want close access to a regional airport so we can fly to see the kids, go on holidays etc.

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Thanks for your comments and good wishes, guys.  We have relied on the calculations and financial models of one of the biggest investment firms in the US, and I have great confidence in their projections, hence, I don't have a need for an independent spreadsheet to work out our future spending and investment income plans and limitations.  We were told that a few years down the road, if things move the way the projects predict, they recommend that we start spending more money than we are planning to, at least at the moment.  I'll be thrilled if that eventuality comes to pass, obviously, but I figure at least a few years of conservative spending should do us some good, both in terms of getting used to a lesser spending paradigm, and to see how well the model shows us what the future will bring.  If it does that well, maybe a Porsche 911 variant instead of the C8 Corvette Z06 that I've hoped for will be in the cards.  For the interim, driving my wife's 12 year old Honda CRV, and her driving her 2 year old CRV, will be fine for both of us.  I'll need to drive for monthly medical appointments, and other similar errands.  Plus, I'm happy to limit myself to purchases of worn out or expended model consumables (paints, thinner, sanding materials, etc.)

 

Frankly, it's like a dream to me that is just over 5 weeks, I'll be a truly free person!!!

 

Oh...and one last thing for now...I have made arrangements to be able to return to work as a contractor, if I begin to be bored by retirement, or, God forbid, the projections are sufficiently wrong that I'll actually need to go back to work to make ends meet.  What a horrible thought!  That is one thing I simply cannot envision as taking place, either case, bored or short of needed cash flow.  

Edited by Curt B
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We have been on a budget since marriage.  We each got 50 bucks every 2 weeks for hobby, light restaurants and toiletries. Only this year did we jump it to 60 for inflation. Only extra model money is from building for others.

Going to retire in 19 months. Desperate to get the he'll out. 31 years in a maximum  security  prison is far too long. Wrestling 20 year Olds in your 60s is not fun.

All ready lining up potential  new jobs. Mostly just to keep busy.

Not overly  worried  on money. Our house has more then tripled in value since we bought just 13 years ago. Hard part will be the downsize, for all my built stuff.

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On 11/26/2021 at 1:53 PM, habu2 said:

A friend recently advised another friend about his reluctance to spend money, "you don't want to be the richest man in the graveyard".  :thumbsup:

 

You've got that right my friend! My father always told me the same thing. "I Fred K., being of sound mind and body spent every last nickel!" That will be my epitaph 😆Fred K.

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My wife and I are in a similar boat to a lot of folks chiming in on this thread by being close to retirement. I am 56 and work as a locomotive engineer. I can retire at age 60 with 30 years of service. I currently have 33 years in with about 3 1/2 to go to my 60th birthday. She is a postal clerk with 27 years in and can retire at age 57, which she intends to do in just shy of 3 years. We both had planned to work a little beyond our retirement dates, but things have gotten so bad with our employers that we literally have to force ourselves to go to work for one more day, everyday. It used to be fun, but now it's just a grind.

 

Fortunately both of us have been good with our money over the years and now it's paying off. We have zero debt on paper, though I do owe her for a loan that she gave me for my new fishing boat. That will be paid off in a few years before I retire. Other than that, we have no debt at all.

 

Her pension is reasonable enough, though not nearly as much as a lot of people think that a pension from the Federal Government would be. My pension is where we're going to do well. I don't pay into Social Security. I pay into Railroad Retirement, which costs myself and my employer about 10% more than SS. However, once I retire, between the both of us, we'll receive 80% of the average of my top five wage earning years. I'll receive two thirds of that 80%, while my wife will get one third. Should I croak before her then she'll get the two thirds per month until she drops. It's a pretty good gig, and makes me feel like the 37 years (that I'll have in when I retire) of grinding away on the railroad, the endless 12 hour shifts, no set schedule, missing the holidays, birthdays, kids school events, ect... has been worth it. Our health is good, so hopefully we'll be around to enjoy it for awhile 😆

 

As for model kits, I have about 800, mostly 72nd scale, kits in my stash. With me building about 12 a year, there's no way that I'll get even close to putting a dent in it. No problem though...... I already have it set up in my trust fund that four of my buddies get to go through and pick what they want and then help my wife ebay the rest. If I make it to age 75, then I'll start selling them off. So many projects and not nearly enough time! Fred K.

Edited by f5guy
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On 11/26/2021 at 1:35 PM, Thommo said:

 

Luckily in Australia, everyone gets free Medicare.

That is certainly a nice feature of your government's structure.  It looks like you have the best of both worlds, in that you can pay and get a level of private medical care.  Honestly, the absolute number one consideration I've ever had when thinking about retirement has ALWAYS been medical insurance coverage.  I already know I will need to make monthly trips to the doctor for the rest of my life for an existing condition, and who knows what the future may bring.  As long as we are covered medically, that goes a long way toward relieving a lot of stress.  Even if the cost, for the next 9 years or so, will be pretty high.  If we have the means to pay for it, that's all I am concerned about.  Maybe that will be my goal for taking some short term work in retirement...make enough to pay for the medical insurance each year, which shouldn't take too long to do, and keep my 'hand in the game', so to speak.  It's too soon to predict if I'll find retirement sufficiently boring to want to do that.  I've often said that I'm lazy enough that I'd rather stay home and contemplate my navel than torture myself at work.  I guess I'll see if I really meant what I said.  

Edited by Curt B
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Quite an interesting topic! I'm only 35, no plans to retire in the near future, but my current modelling budget was sort of suddenly transformed into that of a retired person. 

Think about getting one of the latest kits worth US$ 100+, when the local exchange rate has gone $210 every each US Dollar... Getting just one bottle of paint which costs US$ 7 might get to be a royal pain in the arse when there's an allowed spending limit of US$ 50 a month (including postage), above which you've got to pay Custom fees of the 50% rate. Can no longer use PayPal freely as a paying method. 

This kind of puts into another very different perspective what you guys have stated above with regard to getting the hottest kits popping up recently (e.g., Minibase 1/48 upgraded version of the Su-33 kit with resin, J-15, Su-30 kits; GWH Su-27 and UB kits; Revell SR-71 Sled kit, and they just seem to keep up coming endlessly!). Not to mention aftermarket, decals and tools.

While there's nothing readily available at the local hobby stores, you'll occasionally find one which has got a bottle of Tamiya Extra Thin, and you're literally going to get robbed by the vendor charging you four, five or six times the price in US Dollars which the frigging thing normally costs in the States. That hard it is.

So it's really worth thinking whether you really need to get this new kit which just got released, when there's a lot other older ones that are sitting in the stash unopened.

Then there's the pandemic, of course, which made the easiest of things complicated. They've kept us hiding inside our caves for nearly nine months - nothing was coming in - so the little which started getting in is so scarce and expensive it just doesn't make sense.

But it does make you think about the whole matter. I found out that I can adapt to this new reality whether I like it or not; it's not such a big deal after all (or at least wait until the new Hypersonic/GasPatch 1/48 SR-71 kit is released, then I'll tell you for sure). Much more important things in life than modelling.

Economically tho, everyone keeps saying it's going to get worse. Had better get away from the computer not to be aware of the new releases until then?  

Or Aussieland, here I come!

Cheers,

 

Gwen

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2 hours ago, Scott Smith said:

If you don't mind me asking, what country are you in?

 

Argieland, in Buenos Aires. I dwell in Recoleta, the swankiest town in the city capital, but ooohh... Everyone should be filthy rich in this country, yet somehow they let the very same crooks *coughs*rob*coughs* - rule them year after year. :hmmm:I for my life will never understand why.

So sad; such a beautiful country, full of human and natural resources. Pity you, Argies.

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  • 1 month later...

Well, all, I started this thread on November 2, and I just worked my last full work day today.  I have only a few hours left on Monday, 01/03, to check out, address some details, and then I'm officially retired.  This thread turned out to be better than I had anticipated, and many thanks to all who posted here.  Though technically, my retirement doesn't begin until next week, I think I'm going to be working on completing my first build as a retiree, one of the many Eduard 1/48 P-51D kits that I have in my stash.  I'm almost done with the build, now doing the painting as it the build progresses.  This is going to be not only my first 'retired' plane, but my first natural metal finish plane, too!  I hope this is the beginning of a very long time to build lots and lots of models!!!!

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Congrats!  I just finished all my Medicare sign-up paperwork ($$$) and got a new phone for Xmas as my current work-supplied phone will go away when I retire next month.  Got my old truck running again as my company vehicle will also go away.  Bring on the kit stash !!!  :clap2:

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8 hours ago, Ichitoe said:

Congrats to you Curt and what a great way to start the New Year! 
 

 

Agreed!  Thank you, sir!

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15 hours ago, habu2 said:

Congrats!  I just finished all my Medicare sign-up paperwork ($$$) and got a new phone for Xmas as my current work-supplied phone will go away when I retire next month.  Got my old truck running again as my company vehicle will also go away.  Bring on the kit stash !!!  :clap2:

Thanks...and best of luck to you, too!

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