WEBVTT - How Much Do We Need to Retire Rich? 0:00:00.160 --> 0:00:02.880 Exactly how much do we really need in order to 0:00:02.960 --> 0:00:07.400 be able to retire rich? Theres seven questions to help 0:00:07.480 --> 0:00:22.799 you out right now. Welcome to Sugar Mama's Fireplay, the 0:00:22.840 --> 0:00:26.400 podcast where we ignite your path to financial independence and 0:00:26.560 --> 0:00:31.400 an early retirement. I am your host financial planner, Canna Campbell, 0:00:31.440 --> 0:00:35.680 and each week we dive deep into the fire lifestyle movement, 0:00:36.159 --> 0:00:40.159 bringing you empowering stories, expert advice, and practical tips to 0:00:40.200 --> 0:00:44.120 help you take control of your financial future. So, whether 0:00:44.159 --> 0:00:47.960 you're just starting out on your financial journey, welcome, or 0:00:48.040 --> 0:00:51.200 if you are well on your way to achieving financial independence. 0:00:51.600 --> 0:00:56.320 This is the place for education, inspiration and motivation. Even 0:00:56.320 --> 0:00:58.760 my dogs are getting a bit excited. And I am 0:00:58.800 --> 0:01:01.200 here for you every Monday mon at five am, so 0:01:01.240 --> 0:01:04.760 please make sure you are following this show. So let's 0:01:04.800 --> 0:01:07.080 set up the heat on your financial goals and light 0:01:07.120 --> 0:01:10.679 the way to a brighter, more secure financial future. And 0:01:10.760 --> 0:01:13.360 as always, please remember that my content is general in 0:01:13.480 --> 0:01:17.959 nature and educationally based only. All right, let's get started. 0:01:18.520 --> 0:01:20.480 So today we're diving into a topic that is on 0:01:20.640 --> 0:01:24.720 everyone's mind right now. Exactly how much money do we 0:01:24.920 --> 0:01:28.959 really need to feel safe? Or even Dare I say 0:01:29.240 --> 0:01:33.640 rich in retirement. It's an age old question, and despite 0:01:33.800 --> 0:01:37.440 various so called financial experts, I am here to tell 0:01:37.480 --> 0:01:40.640 you that there is no one size fits all number. 0:01:41.440 --> 0:01:44.240 Some of these so called financial experts like to state 0:01:44.360 --> 0:01:46.800 numbers like thirty two thousand dollars a year for singles 0:01:46.880 --> 0:01:49.760 and forty six thousand dollars a year for couples, whilst 0:01:49.800 --> 0:01:54.120 other financial experts like to state fifty two thousand dollars 0:01:54.160 --> 0:01:56.560 per rounum for single people and up to seventy three 0:01:56.600 --> 0:01:59.920 thousand dollars pround for couples. And then there are the 0:02:00.000 --> 0:02:04.640 those financial experts who simply recommend aiming for approximately seventy 0:02:04.680 --> 0:02:07.640 percent of your take home pay. Now. I don't know 0:02:07.680 --> 0:02:10.359 about you, but there aren't many people I know right 0:02:10.360 --> 0:02:13.440 now who are actually living a comfortable life and actually 0:02:13.520 --> 0:02:16.519 surviving even on one hundred percent of their take home 0:02:16.560 --> 0:02:19.240 pay right now with the rising cost of living. So 0:02:19.360 --> 0:02:22.400 hearing these numbers ranging between thirty two thousand dollars a 0:02:22.480 --> 0:02:26.320 year and seventy percent of your take home pay really 0:02:26.480 --> 0:02:31.560 leaves alarm bells ringing in my head very very loudly. 0:02:32.840 --> 0:02:37.800 Here is the truth, the cold hard truth. There is 0:02:38.200 --> 0:02:43.600 no absolute number. Financial needs are very personal to your 0:02:43.720 --> 0:02:49.960 circumstances and your spending habits. However, as mentioned, what worries 0:02:50.000 --> 0:02:53.919 me about these financial expert estimates is that they are 0:02:54.400 --> 0:02:58.640 dangerously low and in my opinion, don't leave much or 0:02:58.800 --> 0:03:03.480 any form of comfortable lifestyle. And if you aren't familiar 0:03:03.520 --> 0:03:05.640 with who I am and my content, I am a 0:03:05.639 --> 0:03:10.239 financial planner who is very protective of your financial situation 0:03:10.560 --> 0:03:15.320 and your financial future. To me, these numbers don't spell 0:03:15.320 --> 0:03:20.520 out financial wellness. They spell out poverty. I would much 0:03:20.639 --> 0:03:24.720 rather you overestimate how much you need, allowing you to 0:03:24.760 --> 0:03:28.320 be far more well prepared and retire with greater freedom 0:03:28.360 --> 0:03:32.960 and peace of mind, rather than discover during retirement, in 0:03:33.000 --> 0:03:36.280 the thick of retirement, that you actually don't have enough 0:03:36.320 --> 0:03:38.880 to live the life that you want and you are 0:03:38.960 --> 0:03:43.480 left stuck panicking watching your wealth erode away at a 0:03:43.600 --> 0:03:47.760 rapid speed, where you no longer have the same energy 0:03:47.760 --> 0:03:50.760 that you have today. You no longer feel sharp in 0:03:50.800 --> 0:03:53.520 the brain, you no longer feel like you're up to 0:03:53.520 --> 0:03:58.360 speed with the latest education and training. This potentially leads 0:03:58.400 --> 0:04:03.360 you feeling alone, vulnerable, and to a certain degree, worthless. 0:04:03.880 --> 0:04:07.400 I do not want that for you. So today's episode 0:04:07.760 --> 0:04:11.400 is not about freaking you out, making you stressed, anxious, 0:04:11.480 --> 0:04:15.120 or worried. Far from it. What today's episode is about 0:04:15.120 --> 0:04:18.080 helping you gain a clearer idea as to how much 0:04:18.200 --> 0:04:22.560 money you need for your retirement. You see, once you 0:04:22.680 --> 0:04:24.920 have a defined goal, that is, you know how much 0:04:24.960 --> 0:04:28.800 money you need, you can then start building wealth immediately, 0:04:30.160 --> 0:04:33.960 moving closer to that goal with each step, and ensuring 0:04:34.000 --> 0:04:38.080 that every single dollar that you earn is actually redirected 0:04:38.440 --> 0:04:42.440 towards your financial goals in a far more efficient way 0:04:42.560 --> 0:04:45.640 where you can actually see and feel the shifts and 0:04:45.680 --> 0:04:50.200 breakthroughs as that goal becomes a greater reality for you. 0:04:50.560 --> 0:04:53.680 So that is the purpose of today's episode. And as 0:04:53.720 --> 0:04:56.640 one of my favorite financial quote goes, and this is 0:04:56.640 --> 0:05:01.280 by Denise Stufferphil Thomas, money loves definition and clarity. I 0:05:01.320 --> 0:05:04.000 know for myself personally, when I have a goal, a 0:05:04.040 --> 0:05:08.640 really clearly defined goal with a correct deadline, the game 0:05:08.720 --> 0:05:14.039 plan that is formed shortly after feels so much more durable, manageable, 0:05:14.080 --> 0:05:18.760 and achievable. All right, So this is where we get started. 0:05:19.400 --> 0:05:26.040 Step one. Understand your personal circumstances and your spending needs. 0:05:26.640 --> 0:05:29.960 How much money do you really need to live comfortably? 0:05:30.560 --> 0:05:35.200 The answer is it depends. Financial needs are highly personal 0:05:35.320 --> 0:05:40.440 and they cannot be averaged out. Unfortunately, those financial experts 0:05:40.520 --> 0:05:43.760 are giving you dangerous information and misleading you to a 0:05:43.760 --> 0:05:48.359 certain point. I don't want you to average out your life, 0:05:48.480 --> 0:05:52.839 because you are worthy and deserve so much more. The 0:05:52.920 --> 0:05:57.120 amount of money that you need for your comfortable retirement 0:05:57.279 --> 0:06:03.520 varies greatly depending on your spending levels, your value system, 0:06:03.680 --> 0:06:06.840 and your goals and dreams. So I'm going to give 0:06:06.880 --> 0:06:10.000 you seven lifestyle questions right now to help work out 0:06:10.040 --> 0:06:13.640 how much money you need you want. So, by all means, 0:06:14.000 --> 0:06:16.640 pause this podcast this episode, Grab a piece of paper 0:06:16.640 --> 0:06:19.000 and a pen and just quickly jot down some of 0:06:19.040 --> 0:06:21.640 your answers as I go through these questions with you 0:06:21.800 --> 0:06:25.680 right now. All right. Question one, where do you want 0:06:25.720 --> 0:06:29.080 to live when you retire? Now, this may seem like 0:06:29.200 --> 0:06:32.360 an odd question, but we need to think about it. 0:06:32.880 --> 0:06:34.640 We all know that if you live in a city, 0:06:34.920 --> 0:06:37.000 your cost of living tends to be a lot higher 0:06:37.040 --> 0:06:40.720 than say, someone living in a regional town. However, if 0:06:40.760 --> 0:06:42.600 you live in a regional town, what is the cost 0:06:42.600 --> 0:06:45.120 of living looking like there? And do you need to 0:06:45.160 --> 0:06:48.000 factor and transport so that you can get between the 0:06:48.040 --> 0:06:50.039 regional town and a city to see family and friends, 0:06:50.080 --> 0:06:53.919 or to access certain infrastructures such as hospitals, or perhaps 0:06:54.000 --> 0:06:56.800 you would like to maybe look at retiring and living overseas, 0:06:57.080 --> 0:06:59.240 no problem. What does that cost of living look like? 0:06:59.360 --> 0:07:02.240 And what is a system look like there? These are 0:07:02.279 --> 0:07:04.520 all things you need to just think about, or at 0:07:04.600 --> 0:07:08.599 least start thinking about. Question two. Will you be renting 0:07:09.000 --> 0:07:11.160 or will you still have a mortgage when you retire 0:07:11.680 --> 0:07:17.000 or will you actually own your home outright by retirement date. Now, 0:07:17.280 --> 0:07:19.760 this is an important question because it will obviously impact 0:07:19.840 --> 0:07:22.040 how much money you need. Obviously you've got a factor 0:07:22.080 --> 0:07:24.520 in rent that is going to mean that you need 0:07:24.680 --> 0:07:27.480 a bit more income than someone who owns their home outright. 0:07:27.720 --> 0:07:29.840 But that doesn't mean that you are scot free if 0:07:29.840 --> 0:07:31.760 you own your home outright, or even if you actually 0:07:31.800 --> 0:07:34.280 have a mortgage, because you need to factor in those 0:07:34.400 --> 0:07:38.400 maintenance costs that tend to be attached with property that 0:07:38.520 --> 0:07:41.880 you wouldn't necessarily incur if you're renting. And this is 0:07:41.920 --> 0:07:44.440 not just basic maintenance like a fresh coat of patents 0:07:44.440 --> 0:07:47.600 and new carpet every seven years or so, but what 0:07:47.640 --> 0:07:50.920 potential modifications do you need to make your home so 0:07:50.960 --> 0:07:53.440 that you can continue on living it and it suits 0:07:53.480 --> 0:07:56.520 your needs. All these little things really do add up. 0:07:56.840 --> 0:07:58.440 You need to know this so you can work out 0:07:58.480 --> 0:08:03.000 the correct number, the true number for yourself. Question three, 0:08:03.440 --> 0:08:06.320 what does your current cost of living add up to? 0:08:07.360 --> 0:08:10.840 And are you happy with this same lifestyle quality and 0:08:10.880 --> 0:08:13.560 retirement or do you actually want more? Now? There is 0:08:13.640 --> 0:08:16.360 no wrong or right answer here. I just want you 0:08:16.440 --> 0:08:18.600 to start thinking about these things so that you know 0:08:18.680 --> 0:08:21.200 and understand what you want and we can start working 0:08:21.240 --> 0:08:25.440 towards achieving this. And as sort of things you consider 0:08:25.480 --> 0:08:27.760 here are do you as someone who likes whining and 0:08:27.800 --> 0:08:30.880 dining in a new restaurant each week, or perhaps you're 0:08:30.920 --> 0:08:33.280 someone who knows that they need to replace cars every 0:08:33.679 --> 0:08:37.480 five years or seven years? And what about appliances? You're 0:08:37.480 --> 0:08:40.600 going to need a new fridge, washing a machine. All 0:08:40.600 --> 0:08:43.960 these little things add up. What about shopping clothes, those 0:08:44.000 --> 0:08:47.720 sorts of things, giving money to charity? All these come 0:08:47.880 --> 0:08:51.120 into play. So think about what does your current lifestyle 0:08:51.200 --> 0:08:53.440 look like? Is that the same lifestyle that you want 0:08:53.480 --> 0:08:56.640 for retirement? Is it less? Is it more? Just think 0:08:56.679 --> 0:09:00.440 about it. Question four do you plan to travel during retirement? 0:09:01.080 --> 0:09:07.480 If so, how much and at what cost? International or domestic. Previously, 0:09:07.520 --> 0:09:09.800 when I've sat down with clients to talk about retirement 0:09:09.800 --> 0:09:12.520 income and how much they really need, we would always 0:09:12.720 --> 0:09:15.240 go through the cost of travel. Do you want an 0:09:15.240 --> 0:09:18.160 international holiday one per year or do you want two 0:09:18.280 --> 0:09:21.560 domestic holidays per year? There's no wrong or right answer. 0:09:21.600 --> 0:09:23.679 As I said, you need to think about what does 0:09:23.720 --> 0:09:25.840 that look like? How much will that cost? Will that 0:09:25.880 --> 0:09:29.080 involve traveling on frequent flyer points and staying in youth 0:09:29.080 --> 0:09:33.040 hostels or backpacking, or will that involve business class flights 0:09:33.080 --> 0:09:35.679 and staying in luxurious hotels? Do you want to go 0:09:35.720 --> 0:09:38.040 on a holiday once a year or twice a year? 0:09:38.480 --> 0:09:40.840 Think about the cost of this and think about what 0:09:40.960 --> 0:09:43.960 is important to you and what you would value, especially 0:09:44.040 --> 0:09:48.240 after so many years of working so hard. Question five, 0:09:48.760 --> 0:09:51.679 how much emergency money do you need? Now? This is 0:09:51.720 --> 0:09:54.000 a question not just for people who are approaching retirement 0:09:54.120 --> 0:09:57.199 or in retirement, but absolutely everyone. And I do have 0:09:57.280 --> 0:09:59.839 an older episode that's focused purely on helping you w 0:10:00.000 --> 0:10:02.760 work out how much emergency money you need. But to 0:10:02.880 --> 0:10:05.880 remind everyone, there is no magical formula and there is 0:10:05.960 --> 0:10:09.400 no perfect, one size fits all number. How much money 0:10:09.480 --> 0:10:12.400 you need that is emergency money? You need really does vary, 0:10:12.480 --> 0:10:16.040 and it varies depending on your financial situation, your financial responsibilities, 0:10:16.520 --> 0:10:19.080 what insurance policies you already have in place, and the 0:10:19.160 --> 0:10:22.920 excess attached to those insurance policies, what safety nets you've got, 0:10:23.080 --> 0:10:25.800 All those sorts of things come into play. But for 0:10:25.880 --> 0:10:30.120 anyone that is approaching retirement or in retirement, generally speaking, 0:10:30.280 --> 0:10:34.000 I would recommend using my sleep Well at Night strategy, 0:10:34.360 --> 0:10:37.560 which is where you have two years worth of living 0:10:37.600 --> 0:10:42.280 expenses set aside in a separate savings account for peace 0:10:42.320 --> 0:10:45.680 of mind. Now, the reason why I recommend two years 0:10:45.720 --> 0:10:49.080 worth of living expenses is assuming that your money is 0:10:49.120 --> 0:10:52.320 invested and you're living off, for example, dividends through shares. 0:10:53.000 --> 0:10:57.199 If the market is to have a natural correction pullback 0:10:57.559 --> 0:11:01.400 even a recession, history shows that it takes on average 0:11:01.440 --> 0:11:04.679 eighteen months for the market to recover. Now, by having 0:11:04.720 --> 0:11:08.400 two years worth of living expenses, what that essentially means 0:11:08.440 --> 0:11:10.840 is is you don't need to worry about having to 0:11:11.000 --> 0:11:14.400 seal anything in your portfolio. You can literally leave your 0:11:14.440 --> 0:11:18.360 portfolio as is, let nature take its course and live 0:11:18.400 --> 0:11:22.800 off that hash supply for the next two years, buying 0:11:22.880 --> 0:11:25.880 time for your portfolio to recover and get back to 0:11:25.920 --> 0:11:29.800 what it was previously, so you're never forced to crystallize 0:11:29.840 --> 0:11:33.079 a loss, which is something you always want to avoid doing. 0:11:33.600 --> 0:11:35.520 And not only have we got two years, which is 0:11:35.800 --> 0:11:38.319 six months more. It's a great piece of mind to 0:11:38.360 --> 0:11:41.719 know that you've got that additional buffer, hence sleep well 0:11:41.760 --> 0:11:46.520 at night. Name tag question six. How long do you 0:11:46.600 --> 0:11:49.480 expect your retirement to last? Now? I know this is 0:11:49.520 --> 0:11:53.839 a very morbid question, but it's an important one. So 0:11:54.000 --> 0:11:56.120 people who are retiring now might think that they will 0:11:56.120 --> 0:11:58.600 only need twenty years worth of income, but if medical 0:11:58.640 --> 0:12:02.679 technology continues, they may actually end up living well into 0:12:02.800 --> 0:12:05.600 their nineties. So instead of needing twenty years worth of income, 0:12:05.840 --> 0:12:08.120 they actually need to start thinking about having thirty years 0:12:08.200 --> 0:12:10.600 worth of income. These are the important things to think 0:12:10.600 --> 0:12:14.199 about right now. Also, on that note, are you happy 0:12:14.280 --> 0:12:17.600 for your retirement money to be funded solely from your 0:12:17.640 --> 0:12:21.439 superannuation via say an allocated pension so that you are 0:12:21.440 --> 0:12:23.480 able to make the most of the tax savings that 0:12:23.520 --> 0:12:27.200 are under current legislation. Again, this is an important question 0:12:27.240 --> 0:12:31.320 because this may mean you can actually have less money 0:12:31.600 --> 0:12:35.400 saved up or invested in your superannuation or allocated pension 0:12:35.480 --> 0:12:39.040 because of that tax efficiency that tax savings could save 0:12:39.080 --> 0:12:42.400 you twenty thirty forty thousand dollars a year in income tax, 0:12:42.440 --> 0:12:46.840 which means that money has greater longevity. So this is 0:12:46.880 --> 0:12:49.400 why I always bang on and say SUPER is sexy. 0:12:49.600 --> 0:12:52.800 It is so incredibly tax effective both today and well 0:12:52.800 --> 0:12:55.520 into the long run. But of course, always get personal 0:12:55.520 --> 0:12:59.120 advice because there are art restrictions with SUPER. And then finally, 0:12:59.240 --> 0:13:02.679 question seven, do you want to leave money for your 0:13:02.800 --> 0:13:06.960 estate or loved ones that is an inheritance or are 0:13:07.000 --> 0:13:12.199 you happy to literally spend absolutely everything and leave this planet, 0:13:12.320 --> 0:13:16.720 this universe with nothing. Again, these are important questions, particularly 0:13:16.720 --> 0:13:19.400 when we look at the younger generations coming through and 0:13:19.440 --> 0:13:22.640 the cost of property. A lot of people understand that 0:13:22.679 --> 0:13:24.880 there is no way that their loved ones, their children, 0:13:24.880 --> 0:13:26.760 and their grandchildren are going to be able to get 0:13:27.000 --> 0:13:29.000 their foot in the door of the property market without 0:13:29.120 --> 0:13:33.120 inheriting some money. So for some people this is very important. 0:13:33.160 --> 0:13:34.959 They want to be able to leave a deposit. Or 0:13:35.000 --> 0:13:38.480 perhaps it's not even about property, it's about educational costs. 0:13:39.320 --> 0:13:41.360 This for some people is very important and it may 0:13:41.400 --> 0:13:43.920 be important to you, but it may not be. But 0:13:44.160 --> 0:13:47.520 you need to ask yourself and think about this and 0:13:47.880 --> 0:13:51.200 these lifestyle choices are just starting points to get you thinking. 0:13:51.320 --> 0:13:54.640 You also need to take into consideration things like healthcare needs, 0:13:55.000 --> 0:13:58.400 potential medical expenses. We might have an accident, you might 0:13:58.400 --> 0:14:00.920 get ill, you might need to travel overseas to get 0:14:00.920 --> 0:14:03.199 a certain type of treatment, you may need to invest 0:14:03.200 --> 0:14:07.240 in alternative treatment, and of course where you live. All 0:14:07.320 --> 0:14:12.520 of these things can significantly impact your required retirement savings 0:14:12.760 --> 0:14:17.600 or even better, required retirement investment portfolio. All right, let's 0:14:17.640 --> 0:14:22.520 move on to step two. Grab your calculator. Once you've 0:14:22.520 --> 0:14:25.800 written down your answers, grab a calculator and start adding 0:14:25.840 --> 0:14:28.720 up what the annual cost of this lifestyle would actually 0:14:28.880 --> 0:14:32.280 look like. Don't be afraid to round things up. You 0:14:32.320 --> 0:14:35.200 can use your current living expenses as a baseline. If 0:14:35.240 --> 0:14:37.600 you're struggling a little bit, that's okay, But just remember 0:14:37.640 --> 0:14:40.040 that these are going to be more of estimates and 0:14:40.120 --> 0:14:42.880 just a rough guide than actually exact numbers for you. 0:14:43.480 --> 0:14:45.960 And then from there you can add or subtract from 0:14:45.960 --> 0:14:50.040 that number based on your retirement plans. So, for example, 0:14:50.720 --> 0:14:55.400 if your current lifestyle excluding mortgage repayments, costs say eighty 0:14:55.400 --> 0:14:58.440 thousand dollars per year, and you want to add, say 0:14:58.440 --> 0:15:02.120 an international holiday at SA twenty thousand dollars per anum, 0:15:02.640 --> 0:15:05.440 and your new annual expenses would then be looking at 0:15:05.480 --> 0:15:08.560 around about one hundred thousand dollars. However, if you plan 0:15:08.640 --> 0:15:10.880 on moving to, say a regional town on the coastline 0:15:11.160 --> 0:15:13.800 quite a life where the cost of living might be cheaper, 0:15:13.960 --> 0:15:16.520 you might want to deduct say five thousand dollars a 0:15:16.560 --> 0:15:19.840 year from that number. And if assuming your mortgage is 0:15:19.880 --> 0:15:22.440 paid off, you still might want to allocate, say ten 0:15:22.480 --> 0:15:27.120 thousand dollars per annum for home maintenance. Now, already we're 0:15:27.160 --> 0:15:31.160 sitting at a required annual income of one hundred and 0:15:31.280 --> 0:15:37.000 five thousand dollars per annum after tax. Now for emergency savings. 0:15:37.080 --> 0:15:39.280 If you like my idea of the sleep well at 0:15:39.360 --> 0:15:42.160 night strategy, you might want to allocate two hundred and 0:15:42.200 --> 0:15:45.720 ten thousand in a savings account which covers two years 0:15:45.760 --> 0:15:48.040 worth of those living expenses at one hundred and five 0:15:48.080 --> 0:15:51.760 thousand dollars per annum. And you are aware of medical technology, 0:15:51.760 --> 0:15:53.800 and you're feeling fit and strong and healthy and take 0:15:53.840 --> 0:15:56.240 good care of yourself, you might want to assume that 0:15:56.280 --> 0:15:59.160 life expectancy is probably going to be around about mid 0:15:59.320 --> 0:16:01.760 nineties for your so you're going to need about thirty 0:16:01.800 --> 0:16:06.000 years with a retirement income. And in this example, let's 0:16:06.000 --> 0:16:08.360 say we want to lead one million dollars in today's 0:16:08.400 --> 0:16:12.720 dollars for our children or grandchildren. Now that one million 0:16:12.760 --> 0:16:16.120 dollars in today's terms is actually going to be about 0:16:16.320 --> 0:16:20.000 two point one million dollars in thirty years time, assuming 0:16:20.040 --> 0:16:24.000 an average inflation rate of two point five percent per annum. 0:16:24.800 --> 0:16:28.240 See how we now know numbers. We've got a clearer 0:16:28.280 --> 0:16:31.040 idea as to how much money we really do need. 0:16:32.000 --> 0:16:35.560 Exploring these numbers, that is, investing time. Exploring these numbers 0:16:35.600 --> 0:16:38.760 gives you a much clearer picture of what you really 0:16:38.800 --> 0:16:42.440 need to start planning for. And as I said, it's 0:16:42.480 --> 0:16:45.720 better to discover this sooner rather than later, which is 0:16:45.760 --> 0:16:48.920 exactly why I'm sharing this episode with you right now. 0:16:49.560 --> 0:16:52.520 All right, now we've got some ideas about numbers, let's 0:16:52.600 --> 0:16:56.680 calculate the true number. Step three. All right, now, we 0:16:56.760 --> 0:16:58.920 know in our example that we want one hundred and 0:16:58.920 --> 0:17:02.920 five thousand dollars per ADAM after tax. Again, assuming we're 0:17:02.960 --> 0:17:05.720 using an allocated pension here, which is currently tax free 0:17:05.760 --> 0:17:08.600 under current legislation, we need two hundred and ten thousand 0:17:08.640 --> 0:17:11.480 dollars in emergency money, and we want our money to 0:17:11.560 --> 0:17:14.680 last approximately thirty years and we're happy, as I said, 0:17:14.680 --> 0:17:19.280 to live off superannuation through an allocated pension. Now from 0:17:19.320 --> 0:17:22.200 this we can start to look at actually a net 0:17:22.240 --> 0:17:25.480 figure to work towards as a goal. So the next 0:17:25.480 --> 0:17:29.000 step is now to use a retirement draw down calculator. 0:17:29.600 --> 0:17:32.320 I have linked my favorite one in the podcast notes 0:17:32.359 --> 0:17:34.320 for you, and please know that we will be adding 0:17:34.320 --> 0:17:36.800 one to the Sugar Mama website soon, but for now, 0:17:37.200 --> 0:17:40.840 if we assume an average starting account balance of around 0:17:41.320 --> 0:17:46.040 two point one eight million dollars, drawing an annual income 0:17:46.119 --> 0:17:49.720 of one hundred and five thousand dollars adjusted for inflation 0:17:49.840 --> 0:17:52.600 each year, so that that means that that one hundred 0:17:52.640 --> 0:17:55.320 and five thousand dollars each year will actually increase by 0:17:55.359 --> 0:17:57.919 two point five percent, so you're never going backwards. You 0:17:57.960 --> 0:18:00.399 can keep up with the rising cost of living. And 0:18:00.480 --> 0:18:04.640 assuming an average annual net return of six point five 0:18:04.720 --> 0:18:10.119 percent per annum, these funds should actually last around thirty years. 0:18:10.520 --> 0:18:14.200 But guess what, it actually leaves just over two point 0:18:14.320 --> 0:18:19.280 one million dollars in super for your estate. So there 0:18:19.320 --> 0:18:22.639 you have it, two point one eight million dollars in super. 0:18:22.800 --> 0:18:24.560 If you want one hundred thousand dollars a year or 0:18:24.560 --> 0:18:26.879 one hundred and five thousand dollars per annum, and to 0:18:26.920 --> 0:18:29.680 be able to leave the equivalent of today's one million 0:18:29.720 --> 0:18:32.920 dollars to your estate. Now, if we add back in 0:18:33.520 --> 0:18:36.080 that two hundred and ten thousand dollars for emergency money, 0:18:36.160 --> 0:18:40.240 this means in total you need approximately two million, four 0:18:40.320 --> 0:18:43.240 hundred thousand four retirement. That is two point four million 0:18:43.280 --> 0:18:47.960 dollars for retirement. Interestingly, though, if you didn't actually want 0:18:48.000 --> 0:18:51.240 to lead anything for your estate, you would only need 0:18:51.440 --> 0:18:54.959 one point eight five million dollars in super plus your 0:18:54.960 --> 0:19:00.080 emergency fund. However, here's the interesting part that three one 0:19:00.119 --> 0:19:04.240 hundred and forty thousand dollars difference in retirement balance can 0:19:04.280 --> 0:19:07.639 actually make a huge difference in comfort, wealth, and security, 0:19:08.280 --> 0:19:11.000 as this three hundred and forty thousand dollars can actually 0:19:11.080 --> 0:19:15.040 serve as your two million dollar a state, or as 0:19:15.160 --> 0:19:18.320 a greater sense of comfort and peace of mind. If 0:19:18.640 --> 0:19:21.040 the rising cost of living gets out of hand again, 0:19:21.640 --> 0:19:23.640 or something happens to you and you need to eat 0:19:23.720 --> 0:19:28.240 into your wealth, you've got a safe buffer there for yourself. Now, 0:19:28.280 --> 0:19:32.080 this really highlights the importance of knowing your true correct 0:19:32.720 --> 0:19:35.440 and even best numbers so that you can start preparing 0:19:35.960 --> 0:19:39.720 now and make the most of every single opportunity today. 0:19:40.080 --> 0:19:43.879 Wouldn't you rather know this now, that what you need 0:19:44.119 --> 0:19:47.359 more than discover it when it's too late. As I said, 0:19:47.480 --> 0:19:51.639 we're older, we're slower, we're more tired, we're more achy. 0:19:52.240 --> 0:19:55.399 Know this now. And if you are listening to this 0:19:55.480 --> 0:19:58.040 and thinking, oh, my goodness, I need a lot more 0:19:58.040 --> 0:20:01.520 money in superannuation than I originally thought. Great, I'm glad 0:20:01.520 --> 0:20:04.400 you're listening. I'm glad you're starting to wake up and 0:20:04.440 --> 0:20:08.480 realizing the dangers of those financial experts. So your next 0:20:08.560 --> 0:20:11.720 question is, Okay, great, Canna, I now know, but how 0:20:11.720 --> 0:20:13.760 am I possibly going to get two point four million 0:20:13.800 --> 0:20:16.960 dollars in super? All right, don't panic, don't worry. I've 0:20:16.960 --> 0:20:20.479 got your back. I'm here for you. In next week's episode, 0:20:20.520 --> 0:20:22.520 I'm going to be breaking down all the different ideas 0:20:22.560 --> 0:20:26.920 and strategies to help you make this happen to the 0:20:26.960 --> 0:20:30.240 best of your ability. I'm going to be exploring lots 0:20:30.280 --> 0:20:32.800 of different ideas that you may have never heard about 0:20:33.040 --> 0:20:36.120 or thought about before, so that you actually understand this 0:20:36.359 --> 0:20:41.120 is possible. If you start working on your superannuation goals. 0:20:41.680 --> 0:20:44.119 So again, please make sure that you are following this 0:20:44.160 --> 0:20:46.920 show so that you know when this episode comes out 0:20:47.080 --> 0:20:50.280 next Monday morning. All right, let's move on to the 0:20:50.280 --> 0:20:53.280 final step, step four, and that is the importance of 0:20:53.359 --> 0:20:57.600 professional financial advice. A good starting point for every single 0:20:57.640 --> 0:21:00.439 of Australian, regardless of your financial situation, sure or not, 0:21:00.720 --> 0:21:05.400 is to always seek professional financial advice, not financial experts, 0:21:05.560 --> 0:21:12.280 not financial influencers, financial planners, experienced qualified and licensed financial planners, 0:21:13.160 --> 0:21:18.800 especially regarding retirement spending and understanding how the age pension 0:21:19.280 --> 0:21:24.000 and allocated pension may help you achieving your retirement goals 0:21:24.040 --> 0:21:27.679 and dreams. A financial planner can actually sit down with 0:21:27.720 --> 0:21:31.480 you and help you design and create a personalized financial 0:21:31.520 --> 0:21:35.720 plan that aligns with your goals, your lifestyle, your deadlines, 0:21:36.359 --> 0:21:41.320 and your risk and your longevity expectations. A financial planner 0:21:41.359 --> 0:21:44.440 is not just about helping you pick the right investments. Yes, 0:21:44.480 --> 0:21:46.560 they will help you with that and do that work 0:21:46.600 --> 0:21:49.920 for you, but most of the value from a financial 0:21:49.920 --> 0:21:54.280 planner actually comes in creating the strategy and creating a 0:21:54.320 --> 0:21:58.560 strategy that allows you to efficiently achieve your goals. And 0:21:58.600 --> 0:22:01.440 in fact, I have to say another value of financial 0:22:01.440 --> 0:22:03.719 plan is and the one that is quite often forgotten 0:22:03.720 --> 0:22:06.440 about or not even realized is when a financial planner 0:22:06.480 --> 0:22:10.080 can actually stop you from making a disastrous mistake or 0:22:10.080 --> 0:22:13.760 a decision that's going to come with great regret or consequences. 0:22:14.440 --> 0:22:16.440 This is why you need to see a financial planner. 0:22:16.560 --> 0:22:19.560 And I will say, the legislation does change, it does 0:22:19.560 --> 0:22:22.880 get updated, but also at the same time, different opportunities 0:22:22.880 --> 0:22:26.920 present themselves, different loopholes, that is, legal loopholes will also 0:22:27.000 --> 0:22:30.680 come up where a forward planning, proactive financial planner knows 0:22:30.720 --> 0:22:33.720 your situation, knows your goals and actually can say, hey, 0:22:33.760 --> 0:22:36.560 we need to tweak and change the strategy. This will 0:22:36.560 --> 0:22:39.800 actually help you significantly, make a big difference and save 0:22:39.840 --> 0:22:42.720 you time and money. This is why you need to 0:22:42.760 --> 0:22:46.720 see a financial planner for your retirement planning all right. 0:22:47.320 --> 0:22:50.840 In summary, the amount of money you need to feel 0:22:50.880 --> 0:22:55.680 safe or even rich and retirement is deeply personal. It 0:22:55.720 --> 0:22:59.760 is influenced by your unique circumstances and goals. It is 0:22:59.760 --> 0:23:03.719 a central to prepare well ahead, to start thinking about 0:23:03.760 --> 0:23:06.679 what you want, what you need, and what you value. 0:23:06.720 --> 0:23:09.920 And then, of course, always if you feel ready, seek 0:23:10.320 --> 0:23:14.359 professional financial advice to boost your confidence, make sure that 0:23:14.400 --> 0:23:18.240 you are informed, educated, and have all the information you 0:23:18.280 --> 0:23:21.080 know to make educated decisions that are going to benefit 0:23:21.240 --> 0:23:25.480 yourself your mental health as well as your financial wellness, 0:23:26.000 --> 0:23:30.720 and ensure that you're on the right track. Remember, financial 0:23:30.720 --> 0:23:34.320 empowerment starts with understanding your needs and taking proactive steps 0:23:34.359 --> 0:23:38.639 towards achieving your goals. All right, thank you everyone for 0:23:38.720 --> 0:23:42.440 listening to today's episode on Sugar Mama's Fireplay. If you 0:23:42.480 --> 0:23:44.840