- Aug 8, 2010
- 750
- 712
- AFL Club
- West Coast
Just speaking here as a layman, but having putting some thought into this, the biggest factor affecting when/if you retire is your living costs. The size of your nest egg, while important, is a secondary consideration.
Its good news because our living costs largely fall within our control. A lot of people when thinking about retirement jump straight into their current expenses and other potential costs down the road (kids, schooling, mortgages etc). The most important step, however, is to first work out what you are spending and how you can reduce it if possible. This will exponentially speed things up because (1) you need less to retire and live on, but also (2) your nest-egg will build quicker as you're spending less while having the same/greater level of income.
There is no way 99% of people would need $3 million to retire (if you're thinking about inflation etc, well that's more than offset by even the gains you'll get in an interest-bearing cash account). Even if your prediction is based on current expenditure and you have no intention of cutting down, you are unlikely to be blowing cash like that in your 60s, 70s, 80s (and even your 50s if your kids are grown up by then). Plus if you get married, it makes your job half as easy because you then have two people pooling their resources while sharing costs (plus someone to nag you about said blowing of cash).
As for me, when I was in my 20s, my plan was to save/invest as much as possible for an early retirement (at like 35). That's probably not going to happen now...my wife ain't happy for example with the idea of living in a shoe box or renting half of our rooms out for cash, and when we have kids she'll want to send them to good schools and so on. But I still try to plan for an early retirement nonetheless. For example, I make the maximum voluntary super contributions given its tax free. Even though its only accessible at 60, I can always then retire early and then draw on another source of principle (e.g. downsizing house) while the super fund compounds in a Vanguard ETF / index fund.
Its good news because our living costs largely fall within our control. A lot of people when thinking about retirement jump straight into their current expenses and other potential costs down the road (kids, schooling, mortgages etc). The most important step, however, is to first work out what you are spending and how you can reduce it if possible. This will exponentially speed things up because (1) you need less to retire and live on, but also (2) your nest-egg will build quicker as you're spending less while having the same/greater level of income.
There is no way 99% of people would need $3 million to retire (if you're thinking about inflation etc, well that's more than offset by even the gains you'll get in an interest-bearing cash account). Even if your prediction is based on current expenditure and you have no intention of cutting down, you are unlikely to be blowing cash like that in your 60s, 70s, 80s (and even your 50s if your kids are grown up by then). Plus if you get married, it makes your job half as easy because you then have two people pooling their resources while sharing costs (plus someone to nag you about said blowing of cash).
As for me, when I was in my 20s, my plan was to save/invest as much as possible for an early retirement (at like 35). That's probably not going to happen now...my wife ain't happy for example with the idea of living in a shoe box or renting half of our rooms out for cash, and when we have kids she'll want to send them to good schools and so on. But I still try to plan for an early retirement nonetheless. For example, I make the maximum voluntary super contributions given its tax free. Even though its only accessible at 60, I can always then retire early and then draw on another source of principle (e.g. downsizing house) while the super fund compounds in a Vanguard ETF / index fund.
