Contents

*Note:** The Coalition government has introduced a super pension transfer balance cap of $1.6 million, per individual, which takes effect from 1 July 2017. As a couple, it is possible to have 2 separate pension accounts of up to $1.6 million each (a combined total of $3.2 million in super pension accounts). This article illustrates what a starting retirement sum of $1.6 million can deliver in retirement, in today’s dollars. In relation to couples, for this article, we assume a couple has $1.6 million in super, rather than $3.2 million in super. Latest article update is January 2017.*

*How the tables work:** The figures in this article already take into account the harsher Age Pension assets test, which took effect from 1 January 2017. This article is periodically updated with new figures to allow readers to compare what a $1.6 million retirement can deliver if retirement savings are invested with returns of 7% a year, or if invested on retirement with returns of 5% each year. If you opt for a 5% investment return, rather than, say, 7% return, during retirement, then you will need to accept a lower annual income for the same lump sum on retirement. *

I am often asked the question ‘how much super is enough for a worry-free retirement?’, and we regularly update our special *SuperGuide *articles on this topic for our readers. In this article however, I’m tackling the issue from a very different perspective. I’m answering the following question: what does a $1.6 million retirement look like?

The majority of Australians won’t need $1.6 million in today’s dollars to have a comfortable retirement, but a significant minority of Australians have planned for, are planning for (or at least hoping for) such a retirement lifestyle. For those who have more than $1.6 million in super, and what the government wants you to do with your excess super savings, see *SuperGuide* article Burden for retirees: Monitoring $1.6 million transfer balance cap .

**Note:** In related *SuperGuide* articles, I also do the numbers for those readers who aspire to a $1 million retirement in Crunching the numbers: $1 million retirement and in Low yields: A $1 million retirement on 3% or 2% returns.

*Important: The calculations contained in this article are merely a conversation-starter for your retirement plans. The assumptions used for the calculations appear at the end of the article.*

## …but you don’t need $1.6 million for a ‘comfortable’ retirement

If $1 million or $1.6 million in retirement is beyond your wildest dreams then check out our other *SuperGuide* articles dealing with the topic of how much super do I need?

Even when you have a small amount of super savings, you may be pleasantly surprised by what your retirement savings can deliver, especially if you’re entitled to a FULL or PART Age Pension.

According to ASFA, you can live a modest life in retirement on around **$34,560** a year as a couple, and a comfortable life on nearly **$60,000** a year, and the lump sums you need for $60,000 a year (indexed) is nowhere near $1 million, assuming an annual investment return of 5% on retirement savings, and taking into account the Age Pension, and assuming you don’t want the money to last until your turn 100.

For example, assuming Age Pension age is 65 years, a couple can secure a modest lifestyle ($34,560 a year) with hardly any private savings, because the FULL Age Pension for a couple is now **$34,382** (applicable until 19 March 2017). Without the Age Pension, a couple would need a lump sum of **$640,000** to deliver the equivalent annual retirement income of $34,560 (assuming retirement assets are generating a 5% return).

**In comparison:** With a PART Age Pension, a lump sum of around **$535,000 **can deliver a couple **$60,000** (indexed) a year in retirement until the age of 87, and roughly **$51,500** (indexed) a year until the age of 100, according to the ASIC MoneySmart Retirement Planner, and assuming the money is invested in assets that return 5% a year. (If your retirement savings generated a 7% return each year, you would only need a lump sum on retirement of **$400,000** to generate **$60,000** (indexed) a year until age 87).

*Note:** If your money is returning 7% a year (rather than 5%), then you will need $135,000 less as a couple to finance $60,000 a year (indexed) for 22 years, that is, until age 87 (including Age Pension entitlements). If your money is returning only 3% a year (rather than 7%), then you will need $320,000 more as a couple to finance $60,000 a year (indexed) for 22 years, that is, until age 87 (including Age Pension entitlements).*

For more information on how to achieve a comfortable retirement without $1.6 million, or even without $1 million, read the *SuperGuide* article How much super do you need to retire comfortably?

**Tip:** If you’re aspiring to a $1.6 million retirement then it may be worthwhile having a chat with a financial adviser or an accountant about the most tax-effective, and ‘risk appropriate’ way to get there.

## What can $1.6 million generate in terms of an annual tax-free income in retirement?

Continue reading to find out what $1.6 million in today’s dollars can deliver you if you want your lifestyle to last until the age of 87, or if you want your lifestyle to last until the age of 100, or somewhere in between. The average life expectancy for a 65-year-old woman is 87 years, while average life expectancy for a 65-year-old man is 84.22 years. I provide figures for a couple, or a single person, and where relevant, I include any Age Pension entitlements.

Even so, not everyone plans to retire at age 65 (or whatever your Age Pension age is: to find out your Age Pension age see *SuperGuide* article Age Pension age increasing to 67 years (not 70 years)).

Everyone has different retirement plans, and if you are intending to accumulate $1.6 million in assets for your retirement, then there is a much higher likelihood that you will retire earlier than someone without that type of cash – because you can afford to!

The tables and text below outline the annual incomes you can expect if you retire with $1.6 million, and you retire at age 56, 61, 65, 67 or age 70. You can also see the different incomes you can expect depending on whether you invest your retirement money generating a return of 7% or 5%, and whether you want your money to last until you are 87, or until age 100.

**Summary point, for a COUPLE:** A couple retiring today at age 65 with **$1.6 million** can expect an indexed annual retirement income of between **$72,023** (from age 65 until age 100, and 5% return) and **$110,845** (from aged 65 until age 87, and 7% return). See following text and Table 1 (later in the article) for further explanation.

**Summary point, for SINGLE PERSON:** A single person retiring today at age 65 with **$1.6 million** can expect an indexed annual retirement income of between **$64,205** (from age 65 until age 100, and based on 5% return) and **$105,488** (from aged 65 until age 87, and based on 7% return). See text later in the article and Table 2 for further explanation.

**Important:** The assumptions we use for this article and for Tables 1 and 2 appear at the end of this article.

I have created a table for couples (Table 1) and a table for singles (Table 2) due to the different Age Pension treatment for singles and couples. If you have $1.6 million when you retire, you will not receive any Age Pension entitlements but couples may be entitled to a small PART Age Pension in the later years of retirement. Although a couple can potentially have $3.2 million in super pension accounts under the $1.6 million transfer balance cap rules, Table 1 only deals with a $1.6 million retirement balance for a couple.

- Table 1: If you’re part of a COUPLE and retire with $1.6 million
- Table 2: If you’re SINGLE and retire with $1.6 million

**Note:** The $1.6 million scenarios referred to in this article allow for 3% inflation when working out annual incomes, so the figures in these features automatically allow for the annual adjustment in retirement incomes. For further explanation of why planning for retirement using today’s dollars is more helpful than retirement planning using tomorrow’s dollars, see *SuperGuide* article Retirement: Today’s dollars, and why $1 million can’t last forever.

## If you’re part of a COUPLE, and retire with $1.6 million

Due to a stricter Age Pension assets test, which took effect from January 2017, a couple with $1.6 million in super on retirement will not be eligible for a PART Age Pension, although retirees may receive a PART Age Pension in the later years of retirement.

**Note: **Also, due to the more generous treatment of assets for a couple when determining eligibility for the Age Pension (compared with a single person), a couple who retire with **$1.6 million** in super on retirement, are more likely to receive a PART Age Pension, when eventually they become eligible for a PART Age Pension in the later years of retirement. Within Table 1, we indicate when a PART Age Pension starts, using ‘part AP’.

The scenarios for a couple are divided into five timeframes (also see Table 1 and supporting text):

- Couple – retiring at age 56 (current minimum age for accessing super)
- Couple – retiring at age 61
- Couple – retiring at age 65
- Couple – retiring at age 67
- Couple – retiring at age 70

### Table 1: A $1.6 MILLION retirement (in today’s dollars) for a COUPLE

Investment return during retirement | 7% return on savings | 5% return on savings | ||
---|---|---|---|---|

Money lasts until: | Age 87 | Age 100 | Age 87 | Age 100 |

Annual income (indexed) when RETIRE at: | ||||

Age 56* | $88,519 | $69,676 | $79,658 | $61,355 |

Part AP | from age 73 | from age 76 | from age 72 | from age 74 |

Age 61 | $99,385 | $76,815 | $88,286 | $66,141 |

Part AP | from age 76 | from age 81 | from age 75 | from age 78 |

Age 65 | $110,845 | $86,897 | $95,981 | $72,023 |

Part AP | from age 78 | from age 85 | from age 76 | from age 81 |

Age 67 | $117,181 | $89,373 | $102,362 | $74,467 |

Part AP | from age 79 | from age 86 | from age 77 | from age 83 |

Age 70 | $129,456 | $93,679 | $114,571 | $78,791 |

Part AP | from age 80 | from age 87 | from age 79 | from age 85 |

**Tax may be payable on income when retiring before the age of 60, and the figures for age 56, assume your preservation age for accessing super is 56 years or younger. *

*Table note:** See end of article for assumptions. ‘Part AP’ means Part Age Pension. Figures calculated using ASIC MoneySmart retirement planner calculator (www.moneysmart.gov.au)*

### Couple – retiring at age 56

If you want to retire before the age of 60, for example age 56, then your super savings will have to finance a longer life in retirement, and you can expect to pay some tax on your pension income.

You must have reached your preservation age to access your super benefits. The minimum preservation age increased to 56 years, and anyone born on or after 1 July 1961 has a preservation age of at least 57 years, and preservation age increases to age 60 for those born on or after 1 July 1964 (for more information about your preservation age, see *SuperGuide* article Accessing super: What is my preservation age?)

*Ignoring tax and assuming your retirement savings are invested at 7%,* if you retire today at age 56 with **$1.6 million** in super, as a couple, your savings can deliver you:

- A retirement income of
**$88,519**(indexed) a year until the age of 87 (which includes a PART Age Pension from age 73), and potentially this income could be taxed until you reach the age of 60. **$69,676**(indexed) a year until the age of 100 (with a PART Age Pension from age 76), and income potentially taxed until the age of 60.

*Ignoring tax and assuming your retirement savings are invested at 5%,* if you retire today at age 56 with **$1.6 million** in super, as a couple, your savings can deliver you:

- A retirement income of
**$79,658**(indexed) a year until the age of 87 (including a PART Age Pension from the age of 72) and potentially this income could be taxed until you reach the age of 60. **$61,355**(indexed) a year until the age of 100 (including a PART Age Pension from the age of 74) and income potentially taxed until the age of 60.

### Couple – retiring at age 61

If you retire before the age of 65 but after the age of 60, for example age 61, you can still expect tax-free pension income, and the issue of retiring before Age Pension age is irrelevant in the early years of your retirement, as a couple, because your assets and income preclude you from claiming the Age Pension.

*Assuming your retirement savings are invested at 7%,* if you retire today at age 61 with **$1.6 million** in super, as a couple, your savings can deliver you:

- A retirement income of
**$99,385**(indexed) a year until the age of 87 (which includes a PART Age Pension from the age of 76). **$76,815**(indexed) a year until the age of 100 (with a PART Age Pension from the age of 81).

*Assuming your retirement savings are invested at 5%,* if you retire today at age 61 with **$1.6 million** in super, as a couple, your savings can deliver you:

- A retirement income of
**$88,286**(indexed) a year until the age of 87 (including a PART Age Pension from the age of 75). **$66,141**(indexed) a year until the age of 100 (including a PART Age Pension entitlement from the age of 78).

### Couple – retiring at age 65

*Assuming your retirement savings are invested at 7%,* if you retire today, at the age of 65 with **$1.6 million** in super, as a couple, your savings can deliver you:

- a retirement income of
**$110,845**(indexed) a year until the age of 87 (which includes a PART Age Pension from the age 78). - around
**$86,897**(indexed) a year until the age of 100 (which includes a PART Age Pension from the age of 85).

*Assuming your retirement savings are invested at 5%,* if you retire today, at the age of 65 with **$1.6 million** in super, as a couple, your savings can deliver you:

- a retirement income of
**$95,981**(indexed) a year until the age of 87 (which includes a PART Age Pension from the age of 76). - around
**$72,023**(indexed) a year until the age of 100 (which includes a PART Age Pension from age 81).

### Couple – retiring at age 67

*Assuming your retirement savings are invested at 7%,* if you retire today, at the age of 67 with **$1.6 million** in super, as a couple, your savings can deliver you:

- a retirement income of
**$117,181**(indexed) a year until the age of 87 (which includes a PART Age Pension from the age 79). - around
**$89,376**(indexed) a year until the age of 100 (which includes a PART Age Pension from the age of 86).

*Assuming your retirement savings are invested at 5%,* if you retire today, at the age of 67 with **$1.6 million** in super, as a couple, your savings can deliver you:

- a retirement income of
**$102,362**(indexed) a year until the age of 87 (which includes a PART Age Pension from the age of 77). - around
**$74,467**(indexed) a year until the age of 100 (which includes a PART Age Pension from age 83).

### Couple – retiring at age 70

*Assuming your retirement savings are invested at 7%,* if you retire today, at the age of 70 with **$1.6 million** in super, as a couple, your savings can deliver you:

- a retirement income of
**$129,456**(indexed) a year until the age of 87 (which includes a PART Age Pension from age 80). - around
**$93,679**(indexed) a year until the age of 100 (which includes a PART Age Pension from the age of 87).

*Assuming your retirement savings are invested at 5%,* if you retire today, at the age of 70 with **$1.6 million** in super, as a couple, your savings can deliver you:

- a retirement income of
**$114,571**(indexed) a year until the age of 87 (which includes a PART Age Pension from the age of 79). - around
**$78,791**(indexed) a year until the age of 100 (which includes a PART Age Pension from age 85).

**Important:** The $1.6 million scenarios referred to in this article allow for 3% inflation when working out annual incomes, so the figures in these features automatically allow for the annual adjustment in retirement incomes. For further explanation of why planning for retirement using today’s dollars is more helpful than retirement planning using tomorrow’s dollars, see *SuperGuide* article Retirement: Today’s dollars, and why $1 million can’t last forever.

**Note: ** In related articles, I also crunch the numbers for those readers who are working towards, or dreaming of, a $1 million retirement (see *SuperGuide* articles Crunching the numbers: a $1 million retirement (7% and 5% returns) and Low yields: A $1 million retirement on 3% or 2% returns.

## If you’re SINGLE and retire with $1.6 million

If you’re a single person retiring with $1.6 million you will not be eligible for a PART Age Pension on retirement. If you do become eligible for a PART Age Pension it will be a small amount in the later stage of your retirement.

The scenarios for a single person are divided into five timeframes (also see text and Table 2 below):

- Single person – retiring at age 56 (current minimum age for accessing super)
- Single person – retiring at age 61
- Single person – retiring at age 65
- Single person – retiring at age 67
- Single person – retiring at age 70

### Table 2: A $1.6 MILLION retirement (in today’s dollars) for a SINGLE PERSON

Investment return during retirement | 7% return on savings | 5% return on savings | ||
---|---|---|---|---|

Money lasts until: | Age 87 | Age 100 | Age 87 | Age 100 |

Annual income (indexed) when RETIRE at: | ||||

Age 56* | $87,860 | $75,530 | $70,320 | $56,325 |

Part AP | from age 81 | from age 92 | from age 79 | from age 87 |

Age 61 | $97,560 | $79,940 | $80,030 | $60,910 |

Part AP | from age 82 | from age 93 | from age 80 | from age 89 |

Age 65 | $107,415 | $83,895 | $90,155 | $65,160 |

Part AP | from age 83 | from age 93 | from age 81 | from age 90 |

Age 67 | $113,770 | $86,260 | $96,730 | $67,800 |

Part AP | from age 83 | from age 94 | from age 82 | from age 91 |

Age 70 | $126,030 | $90,450 | $109,255 | $72,370 |

Part AP | from age 84 | from age 87 | from age 83 | from age 92 |

**Tax may be payable on income when retiring before the age of 60, and the figures for age 56, assume your preservation age for accessing super is 56 years or younger.*

*Table note:** See end of article for assumptions. ‘Part AP’ means part Age Pension. Figures calculated using ASIC MoneySmart retirement planner calculator (www.moneysmart.gov.au)*

### Single person – retiring at age 56

If you want to retire before the age of 60, for example age 56, then you can expect to pay some tax on your pension income.

*Assuming your retirement savings are invested at 7%,* if you retire today at age 56 with **$1.6 million** in super, as a single person, your savings can deliver you:

- A retirement income of
**$86,517**(indexed) a year until the age of 87 (which includes a PART Age Pension from age 80). Potentially this income could be taxed until you reach the age of 60. **$74,252**(indexed) a year until the age of 100, with a PART Age Pension from age 91. Potentially, this income could be taxed until you reach the age of 60.

*Assuming your retirement savings are invested at 5%,* if you retire today at age 56 with **$1.6 million** in super, as a single person, your savings can deliver you:

- A retirement income of
**$69,357**(indexed) a year until the age of 87 (with a PART Age Pension from age 78). Potentially, this income could be taxed until you reach the age of 60. **$55,556**(indexed) a year until the age of 100 (including a PART Age Pension from the age of 87). Potentially, income taxed until the age of 60.

### Single person – retiring at age 61

If you retire before the age of 65 but after the age of 60, for example age 61, you can still expect tax-free pension income, and the issue of retiring before **Age Pension age** is irrelevant because your assets preclude you from claiming the Age Pension (in most cases, and if eligible, only in the later years of retirement).

*Assuming your retirement savings are invested at 7%,* if you retire today at age 61 with **$1.6 million** in super, as a single person, your savings can deliver you:

- A retirement income of
**$95,848**(indexed) a year until the age of 87 (including a PART Age Pension from age 81). **$78,455**(indexed) a year until the age of 100 (including a PART Age Pension from age 92).

*Assuming your retirement savings are invested at 5%,* if you retire today at age 61 with **$1.6 million** in super, as a single person, your savings can deliver you:

- A retirement income of
**$78,776**(indexed) a year until the age of 87 (including a PART Age Pension from age 80). **$60,061**(indexed) a year until the age of 100 (including a PART Age Pension from the age of 88).

### Single person – retiring at age 65

*Assuming your retirement savings are invested at 7%,* if you retire today at the age of 65 with **$1.6 million** in super, as a single person, your savings can deliver you:

- a retirement income of
**$105,488**(indexed) a year until the age of 87 (including a PART Age Pension from age 82). **$82,356**(indexed) a year until the age of 100 (including a PART Age Pension from age 93).

*Assuming your retirement savings are invested at 5%,* if you retire today at the age of 65 with **$1.6 million** in super, as a single person, your savings can deliver you:

- a retirement income of
**$88,780**(indexed) a year until the age of 87 (including a PART Age Pension from age 81). **$64,205**(indexed) a year until the age of 100 (including a PART Age Pension from the age of 89).

### Single person – retiring at age 67

*Assuming your retirement savings are invested at 7%,* if you retire today at the age of 67 with **$1.6 million** in super, as a single person, your savings can deliver you:

- a retirement income of
**$111,682**(indexed) a year until the age of 87 (including a PART Age Pension from age 83). **$84,678**(indexed) a year until the age of 100 (including a PART Age Pension from age 93).

*Assuming your retirement savings are invested at 5%,* if you retire today at the age of 67 with **$1.6 million** in super, as a single person, your savings can deliver you:

- a retirement income of
**$95,239**(indexed) a year until the age of 87 (including a PART Age Pension from age 82). **$66,797**(indexed) a year until the age of 100 (with a PART Age Pension from the age of 90).

### Single person – retiring at age 70

*Assuming your retirement savings are invested at 7%,* if you retire today at the age of 70 with **$1.6 million** in super, as a single person, your savings can deliver you:

- a retirement income of
**$123,780**(indexed) a year until the age of 87 (including a PART Age Pension from age 83). **$88,790**(indexed) a year until the age of 100 (including a PART Age Pension from age 94).

*Assuming your retirement savings are invested at 5%,* if you retire today at the age of 70 with **$1.6 million** in super, as a single person, your savings can deliver you:

- a retirement income of
**$107,567**(indexed) a year until the age of 87 (including a PART Age Pension from age 83). **$71,295**(indexed) a year until the age of 100 (with a small PART Age Pension from the age of 91).

$1.6 million retirement: Assumptions for text and Tables 1 and 2

Assumptions:The amounts listed in Tables 1 and 2 assume that the money is retained in the super system and that you pay yourself a super pension (from a pension provider or from your self-managed super fund). By retaining your money in the super system, the earnings on your savings are exempt from tax, and the income payments that you receive from your super pension are tax-free.

The amounts quoted in this article were calculated with the ASIC MoneySmart Retirement Planner using the following assumptions:

- investment returns are 5 per cent after fees and taxes (that is, re-invested), or investment returns are 3 per cent after fees and taxes (that is, re-invested), on the account balance of a superannuation pension, which means the fees boxes are set at zero in the calculator.
- the investment return is manually set under ‘other’ at 5% or 7% respectively, when using the Retirement Planner.
- Inflation and cost of living adjustments are set at 3 per cent rather than 4.0 per cent (which is the standard assumption).
- Money lasts until age 87, or age 100, In the calculator, I set the age at 88 and 101 respectively, to ensure the money lasts for the full year of being 87 and 100.
- No money is spent in year one before commencing retirement income stream, and assume holds $25,000 in personal assets (including car), and that you have paid off home.
- Age Pension entitlements are included in annual retirement incomes.
- Individual retirement age is specified in the text, and covers age 56, 61, 65, 67 and age 70.

Scott says

Interesting to note the trinity study research explains at a roughly 4% (or 3% for certain) withdrawal rate ie 80k on 2mm, your money will never run out based on all retirement starting points in the last 100years of returns. Hence can retire much earlier if keep to this spending level. Why not run scenarios at 40yrs age etc.

Bruce Hawkins says

Hi Trish

Great article, thanks for making it easy to understand!!

I have two questions; How do you get an investment return of 5% or 7% in this environment where interest rates are at record lows (2.75% RBA cash rate and may fall further)?

With the RBA setting the target inflation band at 2% to 3%, would it make more sense to adopt 2.5% rather than 3% inflation?

Regards

Bruce

KS says

I do not understand the folloing part: “For example, a humble lump sum of $35,000 can deliver a couple a retirement income of more than $31,000 a year (when taking into account the couple’s full Age Pension entitlements). A lump sum of $480,000 can deliver a couple $55,000 (indexed) a year in retirement (including the couple’s Age Pension entitlements) until the age of 87, and nearly $50,000 (indexed) a year until the age of 100, according to the ASIC MoneySmart Retirement Planner.” How is that possible? Can you please explain.

Bruce Hawkins says

Hi Trish

Thanks for your articles, I think they are great. – I love the easy to read and independent view that you provide – they are mandatory reading for me!!.

I am looking at your figures for retiring at age 65 (for a couple) and I am interested in your broad view (not specific financial advice). To reach the income that you have shown above for a $2m retirement (ie income of $82kpa to $135kpa ) what is your view about asset allocation to achieve the 5% and 7% return on savings. Do you have a broad asset allocation breakdown (eg % of cash, bonds, equities, property etc) that you use to get these numbers?.

Regards

Bruce

Allan Hopkins says

Trish

A great article however, isn’t 7% investment return a little optimistic over a long time, especially considering the present circumstances and long term averages not anywhere near this return

regards

Allan Hopkins

Bill says

I just don’t get it. If I have $2mil @ 7% I generate $140,000 pa so how can my super run out at 87 or 100 if I only withdraw $100,000 pa?

Will my super not keep growing ? or is it to do with the minimum WDL increases?

TrueBlue says

Bill the reason is the author makes the assumption that you can only make either 4% o 2% real return (7% return minus 3% inflation). Frankly this is misleading and defies history. The average real return on the Australian stock market over the last 80 years is 8.2% and then add franking credits of 1.3% (30% of 4.2% dividend payout) giving a real return of 9.5%. To be conservative 7.5% should be used and with $2m the annual payout on average will be $150K and it will never run out. The issue is this is the reality long term but over shorter periods ie the late 70s to 80’s a period of 13 years showed high inflation and stagnant share prices your investments can go down but eevn during this period the decline was about 1.5% pa with franking credits it was basically zero return.

So if you have a horizon of 20 years or more equities are your best bet and wil return 7.5 to 9% real return, so you have to hope that when you start isn’t the beginning of an unusual period.

Paul says

trueblue this is not correct, the real reason is because it is indexed so the amount withdrawn every year increases in line with inflation so that income is constant in real terms. if you invest $2 million at 7% and withdraw an income of $140,000 in the first year then assuming CPI is 2.5% then the following year you need an income of $143,500 for the same income in real terms, so now your capital has reduced by $3,500 and the following year not only do you need another increase in income but you have less capital to generate it. As this process continues you can see why the money runs out. the time it takes to run out depends on the starting income you choose, hence in the examples used if you choose a smaller income it will last to age 100 instead of 87.

Jim says

Yes the way it has been calculated (money runs out, indexed) is very mathematical, and correct, however I suspect most people would try to preserve the starting capital, and restrict income to that end, even add to the capital to try to offset the ‘time devaluation’ of money in later years. Health problems later in life are obvious unknowns, but would I be right in saying that you need less money generally as you get on in years and you slow down? again helping preserve that hard earned starting capital. I’m not much of a risk taker (unfortunately I think) and I see real property as a safe vehicle for super investment/income stream. 5% is achievable (costs bite into this obviously, but I’m getting up to 8%, they are out there if you look), and you get some benefit from rent increases with CPI, and obviously longer term capital gains. For those who want to ‘spend the kids’ inheritance’, the presented calculations are for you!….I’m still on the fence on this one…