I read an article from the Epoch Times in Australia recently.

Apparently, Australia is the country most people around the world would like to live in 20 years time (presumably, this means when they retire).

So, how well does the typical Aussie live in retirement?

AXA (the big French multinational insurance giant) questioned workers in 26 countries and here is how the Aussies perform:

The average retired Australian EARNS $1917 a month.
The average retired Australian SPENDS $1437 a month.

By my reckoning, that means that the average Aussie is living an idyllic retirement lifestyle of $17,000 a year (I couldn’t buy much more than a Big Mac and a Starbucks Latte a day for that!) …

… and, for the really big yearly shindig, they have a whopping $5,800 a year spare to spend on holidays, cars, boats, cigars! By the way, these are Aussie dollars, so take off 20% to convert to US.

The concept of an ‘idyllic retirement’ in Australia (or the US, or most Western countries) takes a lot more money than that … unless, your only passion is surfing every day!

So how do financially astute Americans compare?


… pretty similar: living off $27,000 a year in retirement, and somehow ’saving’ $11,000 for all those fine things the Aussies are also chasing!

My question is this?

When you calculated your Number, was it anything like $30,000 or $40,000 a year? I bet it was MUCH MORE. And, that’s the problem with these surveys …

... they assume that you can (or want to) live off just 70% (or even 100% or 120%) of your current salary when you retire.

Do you?

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AJ Cartwood
http://7million7years.com/ - How to make money shouldn't be kept a secret!

7 million I believe from the context of your post you are perplexed as to "how" retired persons live and get along just fine with so little income?

Let use your number of $27,000 per year or $2,250 per month.

First one must understand their house is generally paid for so there isn't any mortgage payment nut to crack each and every month. Typical payments today of $1,200 per month is not uncommon.

Next their car is paid for so they don't generally have a car payment nut to crack each and every month. $400 per month is average.

Additionally, generally they are NOT in credit card debt up to their eyeballs. I don't know what the average is but I don't think $500 per month would be unreasonable.

Finally, on average, most Seniors generally have about $250,000 in cash.
You would NEVER know this however because they generally live well below their means. One of my all time favorite client's lives in a double wide with $1,000,000 dollars in cash and drives an old used car. That's not a typo, $1 million dollars in cash!

The only bills that have to be paid from their $2,250 monthly income are relatively inexpensive basic cost of living items, i.e. food, utilities, car/home insurance.

The $250,000 cash generates on average about an additional $17,500 per year that if structured correctly will only be taxed if and when they use it. Now their total disposable "available" income is an average of $44,500.

Most persons if debt free could live quite comfortably on $44,500 per yr.

That's it in a nut shell.

Persons 60 years old and above control the vast majority of wealth in the USA.

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Gary Spicuzza, *SAFE
Copyright 1956
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*Self Appointed Financial Expert

Gary, I agree with you, to a point.

First off, all that is correct, but is it really what people want in retirement?
I don't know about you, but I want to spend money on my family. Also, I want to travel to places I don't have time to get to today while I'm working. My wife and I would like to the best options in healthcare, just in case. Lastly, I want to make sure I'm taken care of in my elder years.

These goals will not be accomplished at 50-70% of pre-retirement income, even with no mortgage payment, no car payment, etc. Also, most of the families today are concerned they won't have social security and most already do not have any type of pension. So their primary savings has to not only generate an income for them, in retirement, but also provide emergency savings, healthcare, home improvements, etc. And if you don't have permanent life insurance, you may even wish this money to be your Legacy.

The retirees I've worked with over the years have significantly higher expenses in retirement than you'd expect.
1. Cost of health insurance is increasing, and Medicare/Supplements are not cheap. Aside from teachers, none of the retirees I've worked with have healthcare provided by their former employer in retirement. The cost of these plans can rival a car payment, sometimes two.
2. Cost of healthcare is increasing, including prescription drugs. Some of these prescriptions can run $100+ per month even WITH partial insurance coverage.
3. Most of those I've worked with have purchased Long-Term Care insurance. The cost of these plans, since many wait until their 60's to purchase them, are considerable. They work very well, but a quality policy is not cheap.
4. People are living longer, which means longer-term wealth erosion. Inflation is only going to make living on a fixed income that much tougher. Living off fixed interest of investments works just fine over the short-term, but can be deadly over longer periods, like 20-25 years.

I agree that, if appropriate planning is done ahead of time, and effective strategies are implemented, then it is possible to live a good life in retirement on less than you think. But, honestly, those that I've seen cannot afford to take a significant paycut in retirement. And since most people today are not even saving *that* much, let alone what they will probably need, we'll be lucky if they can live comfortably on what they will have. And, if they bet their entire future on the stock market, they could be in for an even bigger awakening.

Most people fail financially, not because their dreams are too big, but because their dreams are TOO SMALL.

For example, conventional thinking says to look at your current salary then it says that in retirement you need some larger-or-smaller percentage of that salary to live on (hence you need a certain lump sum invested in a certain way to produce that weekly or monthly withdrawal).

Now, this may produce the RIGHT result for SOME people, but I believe that any resemblance to what MOST PEOPLE would want to retire on is purely coincidental.

Here are two examples - obviously extreme - to illustrate:

1. Less is more

Let's say that you like surfing ... in fact, to surf every day and just 'be one with the waves' is your Life's Dream. Cash in your 401k and other assets now, move to Byron Bay (Australia) and you can pretty much live the rest of your life on the beach, living off government handouts. Plenty of people are happily living this 'dream' right now ...

Requirement: 0% (give or take) of your current salary

2. More is more

In 1998 I had the audacity to imagine a life where I could be 'free' to travel physically, mentally, and spiritually ... I costed this life in terms of (a) time (I would need to retire within 10 years so that I would be free to travel), and (b) money (I would need about $250k a year in PASSIVE INCOME, indexed for life).

The only problem, in 1998 I was running a struggling business employing 5 people, losing $5k a month, $30k in debt, drawing only $50k a year, and my wife still had to work ... what's more the business had been running that way for 5 years!

Requirement: 500% (give or take) of my (then) current salary

The point here is that your LIFE should dictate your finances, not the other way around ... dream first, financially plan accordingly.

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AJ Cartwood
http://7million7years.com/ - How to make money shouldn't be kept a secret!

I agree that your life should dictate your finances. The majority are a slave to their money when they should really be the master of their money.

It is really simple to accomplish that (not easy but very simple) but regardles the majority will always fail to capitalize on opportunities presented to them.

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It is not smart to play it safe but it is safe to play it smart.

Click HERE for an in depth understanding of how a retired couple living on $2,250 per month has more money and disposable income than a younger couple netting $6,000 per month.

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Gary Spicuzza, *SAFE
Copyright 1956
No Rights Reserved
*Self Appointed Financial Expert

IMO, the reason behind the fail is lack of time or busy schedule as a result of which the majority always fail.

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