Ask Paul: Nervous about retirement - am I worrying for nothing?
Q. I am 54 and am concerned my income over the next 13 years will not continue, as it has severely reduced. I have some funds invested in ETFs and cash totalling $275,000 and own my own home.
I have a total of $547,000 in superannuation, mostly in Hostplus Indexed Balanced Fund and also some in the Public Sector Superannuation Scheme ($178,000), which they tell me will pay a pension of $17,000pa. (I worked for a government department for just shy of 10 years a long time ago.)
I can live on $27,000 net, have another $60,000 in cash, which I can use to live on and would keep me going for a little while, and intend contributing $25,000 to super this financial year.
So when can I officially retire, which I am worried about doing? When can I access my super and can I work, say, on a part-time basis while retired? - Sandra
A. Sandra, I am very pleased you are taking this issue seriously but on the face of it you are over-worrying.
You have given me the key number I need, namely you can live on $27,000 a year. Your Public Sector Super pension would be $17,000, so you need another $10,000.
Putting aside the PSS amount of $178,000, you have $369,000 in super and $275,000 in exchange traded funds and cash and another $60,000 in cash, a total of $704,000.
In a diversified portfolio, it is conservative to estimate that this would earn 2% to 3% above inflation, let's call it 2.5% or an average of some $17,000 a year.
Take that $17,000 and add it to your $17,000 pension and you are at $34,000 already. And remember, this is drawing only 2.5% a year from your savings. I just can't see a problem, which is great for me and even better for you.
As always, if in doubt seek professional personal advice.