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Boomer Views from the Cockpit

Using the recently released FinDem Retirement Simulator, we have checked out the view from the cockpit for the average “baby boomer”. The Picture view of the results was included in this week's NewsEmail (Contact Us if you are not on the mailing list and we will send you a copy of the Picture).

First we will give the data we used. It was sourced from HILDA report 2002, Tax Statistics 2002 and ASFA budget guides – we updated the 2002 data to the end of 2004. We assumed a husband and wife couple aged 52 and 50 now, with a combined financial position of: total taxable income $91,650pa, employer super contributions of $7,710pa (9%), property valued at $550,000, super account balances now of $91,650 and other financial assets now of $93,780. As the simulator doesn’t currently allow for non-super investments, we added these in with the super balance to give a total “in super” assumed at $185,430. We also assumed winding back from full time work at age 60 to 50% of hours worked now.

So the big question we put to the simulator was “When can they afford to retire if they want to have income from super and investments (before tax) of $43,550pa (the ASFA target for “Comfortable” retirement lifestyle) and have at least $400,000 left (after selling all property) to buy into a retirement home at age 75. One answer is to retire at 64 and take a 17% reverse mortgage on the home (all figures in today's dollars). But there are lots more assumptions and answers you can experiment with on the simulator at the FinDem Research Centre.

Posted Saturday, 5 February 2005

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