Ask Paul: I'm 39, will I be able to retire at 50?

Q. I am 39 and single with no dependants. I own my home and acreage in Maldon, Victoria, worth $370,000, and have an investment property worth $290,000, owing $290,000 and getting $290 a week in rent. I chip in $65pw to meet the mortgage.

I'm pre-approved for another loan of $320,000 and am looking to buy a second investment property in Bendigo.

I make $80,000pa and have $60,000 in super, $40,000 in cash and $3000 in Medibank shares. I'm putting $500 a week into a separate account and am salary sacrificing $50 a fortnight and live easily within my means.

In a perfect world I'd like to retire at 50 and focus on my fruit trees, vegetable gardens and chickens but this seems unlikely. As we all are, I'm trying to get the most out of wage. Any advice on how I can get more bang for my buck? - Glen

A. G'day Glen. As I suspect you will have noticed, I do love the informal nature of Australia's own language. I fear I use terms such as "banging on" about whatever is the latest issue that interests me far too often. But self-deprecating humour really amuses me.

So well done on your last line, "How can I get more bang for my buck?" - a classic laconic comment. But it really resonates with me. We all want to "do well with our money" or get "good value". Getting a decent "bang for my buck" sums up the issue beautifully.

I am also pleased that you can give me a clear long-term goal. You want to retire at 50 and focus on your trees, vegies and chooks. As a country guy (I grew up in Griffith), I do get this dream.

In fact, I might come and give you a hand. But let's get the money sorted.

You haven't said what income you need but I'll take a punt on about $30,000 a year.

I appreciate that if you plan to live on chicken and vegetable soup it may be less but you demonstrate a strong level of financial literacy, so I am guessing you also may like some overseas travel and a broader diet than just what you can grow or breed.

To have $30,000 a year at 50, I think you will need around $400,000. Yes, you would need to earn nearly 8% on this to generate that amount and, with inflation at around 3%, your earnings target becomes 11%, which is historically ridiculous.

I can't see why you would work longer to build up enough capital to leave a large estate, so I will assume building your capital in line with inflation to leave a big estate is not one of your goals. This, of course, is a personal issue and is dependent on your views on leaving money to beneficiaries via your will. If from age 50 your money did not quite keep pace with inflation, it may not be an issue for you. Your call.

Even so, you may be thinking $400,000 is a bit skinny - and it is. The age pension will cut in for you at 67 - this would in all likelihood be a part-pension. It would take pressure off your capital and the amount you must have to get to $30,000.

So with $370,000 in your property and $103,000 in investments, you are over your target. But only the $103,000 is producing income.

With 11 years to age 50, this is a low-stress issue. You have your investment property, which in a growth area like Bendigo is likely to grow at 5% to 7% a year, on average. You plan to buy another, which should do well over 11 years. You are saving $25,000pa and popping $1300pa into super.

Frankly, I am not worried you will fail to hit my target over the next 11 years. In fact, I think you'll overshoot. This is hardly a brilliant analysis as I have made up $30,000 as your desired income, which may be wildly out.

I'll do you a deal. If I get a box of your home-grown vegetables (my wife would not be too keen on chooks), I'll shout you an hour or two with a Bendigo adviser I have known for years.

They will give you an accurate financial model to show exactly how you should be placed financially at 50. If you want to take me up, just let me know via this magazine. Now I think about it, how about two boxes? The adviser may like one as well.

Get stories like this in our newsletters.