Does Lorraine have enough to retire?

Lorraine* is 64 and wants to ensure she gets to enjoy a retirement. She asks Noel Whittaker for his assessment.

Does Lorraine have enough to retire?

Lorraine* is 64 and wants to ensure she gets to enjoy a retirement. She describes her financial situation and asks Noel Whittaker whether she can quit work.

Q. Lorraine

I’m 64 and have been working full time for the last 16 years. I own my home and car and I have no debts. I have about $250,000 in super and if I leave work I will get long service leave etc adding round $30,000. My mum is 92 so I will eventually inherit half her property, which has a median price of about $1 million.

I’m so scared of leaving work, but my brother never got a retirement, and I’m weighing up spending time with grandchildren and enjoying life, compared to sitting in this office day in and day out.  Do you think I would manage? By the way, I love your book.

A. From the information provided, it would appear you will qualify for the Age Pension at age 66. That's just two years away. If you qualified for the Age Pension today, and we assume your assessable assets are $300,000, you would be tested under the assets test and qualify for a pension of around $933 a fortnight or $24,000 a year. Once you retire from your job, you will be eligible to access your superannuation, so it’s just a matter of doing the sums to confirm that you can live quite happily on the $280,000 you will have when you finish work until you qualify for a pension or receive a bequest from your mother's estate.

Obviously you will need to draw on capital, but that should not be a problem in your present circumstances. My advice is to follow your dream and stop work.

* Not her real name.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    inextratime
    30th Oct 2019
    10:27am
    How did the person accumulates $250,000 in super in 16 years ?.
    Even earning a $100k per year and taking into account the GFC in 2007 the stats don't add up.
    Anonymous
    30th Oct 2019
    10:45am
    Easy that's less than $15,000 a year compounding it's a lot less.
    leek
    30th Oct 2019
    10:46am
    inextratime. She might have worked part time before that. Also she might be a divorcee and got a pay out from her husbands super, which has to be put into her own super account.
    I more than doubled my super when my husband chose to break up with me. I only worked part time for some years whilst raising our kids, and pretty much gave up my career to be home for the kids. I was actually earning way more money than my husband when we first met.
    Anonymous
    30th Oct 2019
    11:10am
    Easy said when you've not been thrown on the scrapheap at 45..... after asset stripping through divorce etc... each situation is different....
    inextratime
    30th Oct 2019
    1:05pm
    Must have earnt around 100k per year and paid no fees.
    Anonymous
    30th Oct 2019
    1:57pm
    BB has $400k and pulls $80k a year - 20% - shares in Mafia Cash Loans Inc ...
    Greg
    30th Oct 2019
    3:53pm
    You know you can add extra to super don't you, doesn't have to be only the employer.
    Anonymous
    30th Oct 2019
    8:00pm
    She was allowed to salary sacrifice, easy possible if the employer is willing. I was not allowed to but my wife was.
    Tzuki
    30th Oct 2019
    10:39am
    Noel doesn't mention that after she turns 66 and if her inheritance comes through as well, she may not qualify for the pension - maybe I am thinking too far ahead....
    leek
    30th Oct 2019
    10:48am
    Yep Tzuki, I thought the same thing.
    Anonymous
    30th Oct 2019
    11:11am
    You lucky bastard! You absolute jailer's pet! Awrrrrr, what I'd give for one little inheritance! They must think the sun shines out your ass, sonny! Wonderful race, the parents......
    Tzuki
    30th Oct 2019
    1:00pm
    Trebor who are you talking to? Me or ?
    Anonymous
    30th Oct 2019
    1:16pm
    Tzuki, I was thinking the same thing too - Noel hasn't thought too far ahead or he doesn't care to tell her she will lose her age pension once the inheritance comes through.

    Maybe she should consider moving to NZ now, apply for citizenship there, and then get BOTH the age pension (even before 66 if she gets citizenship in time) and inheritance there!
    KSS
    30th Oct 2019
    1:22pm
    TREBOR you also had parents once!
    Tzuki
    30th Oct 2019
    1:25pm
    GeorgeM, wow that sounds pretty fair! WTH is the Aust Govt trying to do to older people? Why don't they understand we will show them what we think about their policies at the next election - we just have to find a party that has respect and empathy for the generation that made Australia better for them! Soylent Green is looking more and more a possibility in the future :(
    Anonymous
    30th Oct 2019
    1:58pm
    You call those parents? Jeez, KSS - you need to get out more...

    Tzuki - I meant the lady under scrutiny... regular jailer's pet she is...
    Greg
    30th Oct 2019
    3:55pm
    So she starts drawing down on the inheritance and becomes eligible for the pension again in the years to come.
    Anonymous
    30th Oct 2019
    8:05pm
    Might be living in a modest home now but with the inheritance could move straight up to a modern more expensive house and then still get the pension. Greg is right as well with drawing down on the inheritance as you can spend a lot more money when you stop work and have some travels in mind.
    Anonymous
    30th Oct 2019
    8:22pm
    Moving to NZ will not help if she is not an NZer already, GeorgeM, she would have to claim the pension from Australia and it will not be given as the assets will be known thru the international exchange agreement. 10 years ago it might have been different. Computers have stuffed us up, eh?
    Anonymous
    30th Oct 2019
    10:23pm
    CJ, my understanding was that in NZ you just need to be a citizen to get the Age Pension at 65? That was the basis for my comment - that she will need to get the citizenship first. However, I am happy to be corrected if someone knows the NZ system better.
    day dreamer
    31st Oct 2019
    2:00pm
    George I don't think you need to correct it. If you are an Australian, you don't need to have NZ citizenship to receive NZ pension.
    Anonymous
    2nd Nov 2019
    5:53pm
    Thanks, day dreamer, even I didn't know that it was that simple!

    Maybe it should be publicised more - all Aussies who want an Age Pension, and are not getting it / getting too little, MOVE TO NZ!
    (As long as you won't miss family here of course).

    30th Oct 2019
    11:08am
    The reality is that, given superannuation has only had a half-life to run for most, and that costs of living under a 'business model efficiency' structure are constantly rising faster than the official rate, and that costs of such things as renting for the many who have been forced to endure decades of social engineering and thus have lost time and again their own home and assets are getting out of control due to out of control housing prices fueled by poor decades old policy of feeding vultures first and lions last - mean that more than half will not retire with anything near enough.

    What more need I say?
    Anonymous
    30th Oct 2019
    11:13am
    revamp...

    "and thus have lost time and again their own home and assets, are getting out of control due to out of uncontrolled housing prices fueled by poor decades of poor policy of feeding vultures first and lions last - mean that more than half will not retire with anything near enough."

    I suppose I could have formed it better - off the top of the head.... the smart ones know what I mean...
    Happy
    30th Oct 2019
    1:20pm
    I wonder why so many people scared going to retire.I did 2 weeks before 65 and said bye to the boss. Still have mortgage 225 a week.receive full pension.no problems.drive car paid all bills.
    Some people ask a bit much and Complain and complain.
    Happy
    30th Oct 2019
    2:36pm
    And want more & more. Never happy what they have.
    Anonymous
    30th Oct 2019
    11:07pm
    Eeenie-meenie, mineee- mo.... um .... could it be because the 'government' constantly moves the goal posts, and because costs of living are raging out of control and are well outside the limits of 'CPI' and 'inflation' officially recognised, and no 'government' either extant or in-waiting is prepared toa ddress the real issues for this nation, since they are all globalists and are so well-padded that it means nothing to them personally?

    Hello!!?

    This handling of the 'economy' is like Hitler shuffling phantom divisions and armies around when there were few left....Downfall is long overdue....
    Just me.
    30th Oct 2019
    1:44pm
    She could also qualify for Newstart as long as she did a couple of days volunteering and draw a small amount via income stream through her superannuation. She should see the FIS person at Centrelink to ascertain how much to put into her income stream. At 66 she can also take lump sum from her super, but not as much as she would without Newstart.
    sunnyOz
    30th Oct 2019
    7:04pm
    Not with payout of LSL before going on Aged Pension. I got around $11,000 paid out when I retired (forced to) before reaching Aged Pension eligibility. I was ineligible for Newstart for nearly 5.5 months.
    Anonymous
    30th Oct 2019
    8:13pm
    With that amount in my kick I would not worry about the job, I would get out but then I was not in love with working but did it because I never wanted to be on the dole (maybe my mistake). I spent a few years on my superannuation and then applied for the AP at 65 without bothering about New Start, was given the Health Care Card though; after 60 that is possible.
    MimTas
    30th Oct 2019
    3:51pm
    Under the assets test a single person loses $30 a fortnight for every $10,000 over $263,200 or so. If ‘L’ was receiving a pension today she would not be eligible for a full pension, and would lose at least $100 a fortnight pension. This is without including other declarable assets: furniture, vehicles, cash, savings in the bank which would incur further pension reductions at $30 a fortnight for every additional $10,000 in assets. The saving grace for ‘L’ is the very substantial projected inheritance! Maybe ‘L’ was able to contribute to super over the employer contribution!
    Anonymous
    30th Oct 2019
    8:17pm
    With that inheritance she would have to up-size to keep the pension entitlement for sure,
    might be able to keep the card but not much pension - better start spending lady!
    Chris B T
    30th Oct 2019
    8:18pm
    A lot could happen in 2 years, change of rules for one and life expectancy.
    Retire now and Draw Down Supper, most allow 4 withdrawals a year. Modest interest would cover withdrawals so capital not greatly effected. Plus $30k long service leave.
    Very limited information about home ownership, proximity to mother's home.
    A lot of what Ifs.
    Mariner
    2nd Nov 2019
    9:36am
    Toss up between the job and time with grandchildren - at that age should an easy decision to make. Go for the latter.
    Dancer
    3rd Nov 2019
    2:36pm
    I would question the pension sum. I have assets of $300000 being a little super, my own home and car and shares and I only get $743 per fortnight and I am assessed on the asset test.





















































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