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Can i semi retire and LOE from property?.

Discussion in 'Money Management' started by Bluegum, 17th Apr, 2008.

  1. Bluegum

    Bluegum Member

    Joined:
    19th Jun, 2006
    Posts:
    7
    Location:
    Albany
    I'm 56 yrs old,currently earn 110k per annum and have the opportunity to job share with a fellow employee in a similar situation. The plan would be to work 6 months of the year ( monthly,quarterly not yet decided) on half salary and draw 50k per year from equity. My property situation is as follows:

    Fully owned ppor value 620K
    Fully owned block value 250K
    Super 100K
    IP value 440k, debt 316K, Rent 360/week.
    IP value380K, debt 275K, Rent 270/week.

    let's assume an average 8% increase per year on property.

    Will i have enough equity to continue this plan until i'm 65?.
    and will i be able to LOE permanently after 65 at say 60K per year.

    Your ideas and alternatives would be greatly appreciated, thank you in advance.
     
  2. crc_error

    crc_error The Rule of 72

    Joined:
    1st May, 2007
    Posts:
    1,367
    Location:
    Melbourne, VIC
    only $100k in super? What went wrong? doesnt your employer pay super?
     
  3. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Bluegum,

    Read this earlier post:

    http://www.invested.com.au/80/scary-statistics-1045/index3.html

    I notice that your properties are negatively geared, that's going to hurt in retirement unless they are positively geared by then.

    Who want's to pay tax anyway???

    Cheers,

    Dan

    PS Before making an investment decision speak to an FPA registered Financial Planner.
     
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Bluegum,

    I'd probably sell the block of land to reduce the IP loans.
    That reduction combined with the tax refund should make the IP's +ve geared and you wouldn't need to draw down much from your equity.
    If you didn't sell the block of land the IP's will be costing you an extra $22.5K pa (before tax).
    Also, at your age you should be able to pull out your super although I believe it will be taxed at 15%

    Remember that when you get to 60 years of age withdrawing super money becomes tax free and so do your super contributions, so you could sallary sacrifice and put that amount into your super and at the same time withdraw money from your super and avoid paying income tax.

    After selling the block of land you will have a portfolio of $1.4mil and no interest costs.
    A growth rate of 8%pa will give you a yearly equity increase of $110K so if you only pull $50K out you will never run out of equity.
    If you didn't sell the block of land, it's annual growth @8% should be around $20K but selling it will give you greater flexibility.

    Cheers
     
    Last edited by a moderator: 18th Apr, 2008
  5. Redwing

    Redwing Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    476
    Location:
    PERTH..WA
    Retirement Planning
    If you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00.

    With Enron, you would have had $16.50 left of the original $1000.00.

    With WorldCom, you would have had less than $5.00 left.

    If you had purchased $1000 of Delta Air Lines stock you would have $49.00 left.

    But, if you had purchased $1,000.00 worth of beer/wine
    one year ago, drank all the beer/wine, then turned in the cans/bottlesfor the aluminium recycling REFUND, you would have had $214.00.

    Based on the above, the best current investment advice is to :
    Drink heavily and recycle
    .


    [​IMG]
     
  6. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
    "Based on the above, the best current investment advice is to :

    Drink heavily and recycle"



    Good one !! :p:D
     
  7. TryHard

    TryHard Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    863
    Hi Bluegum

    That's a lot of money tied up in a block of land that's generating no benefit other than the CG. I assume if you sell it, there will be CGT. Don't suppose you feel like moving ? I guess you could keep the full time job for a year or 2, build on the block if you can access some funds, sell the PPOR CGT free and move to the house on the block (assuming it's in a place you want to live :p), and use the $300K or so balance to reduce the debt on the IPs, then maybe maximise some super contributions.

    Probably best to see an FP with some experience in property to see which of the many options would have best likely end result.

    Best of luck