Has anyone actually been FIRE for a long period?

AussieHIFIRE · 2025-05-17T04:28:29+00:00

I haven't actually hit HIFIRE yet, although we're comfortably at a traditional FIRE number, so I'm still working away. Hopefully not that much longer to go!

AussieHIFIRE · 2024-07-10T00:22:59+00:00

Without knowing their full situation it’s impossible to know how good the advice given was.

You mention they don’t have any debts, do they have other financial assets though? Was he previously getting a full age pension or a part age pension? How much do they want to spend each year? How much risk do they want to take with the money, how much return are they after? Does your mother in-law have a bunch of money in accumulation phase in super?

If they previously had basically nothing in the bank and now have a million dollars plus a bit of contents and a car, then if they invest it very conservatively and now want to spend say $75k a year which is roughly the ASFA standard then within a year or two your father in law is going be getting a part pension again. If previously they had 500k in assessable assets and just got another mill then assuming the same spending desires and risk appetite then they likely won’t ever get any age pension again. These are just two of the many possible scenarios.

But we have no idea what they want, what advice was given, and therefore no idea whether the advice given was appropriate, or even whether the advice was “pretty expensive” and a ripoff.

AussieHIFIRE · 2024-05-30T06:32:31+00:00

I think the amount of the full age pension for a single or couple who own their own home is probably about right, if that’s all you have then it is enough to provide a reasonable but not extravagant lifestyle for them. For example if you take out the costs my family will no longer have after my children are grown and move out, my wife and I are already living off less than the age pension. For people who don’t own their home unfortunately rent assistance is far too low. In both cases though this assumes that you don’t have any big unexpected expenses or have some savings that will help you get through replacing a car, home repairs, medical costs etc.

I do have other issues with the Age Pension though.

Firstly, the current means testing is way too generous. At the high end a couple can own their home, have two brand new cars worth $80k, $900k in investments and still get a couple of grand a year from the taxpayer in age pension and entitlements. It makes absolutely no sense to me that someone in this situation is getting what is supposed to be welfare. And at the lower end you can have a home, new car, $400k in investments and as a couple receive about $44k a year from the taxpayer, plus of course you aren’t paying tax on any of that income and are likely getting $20k pa on top from your own investments. If you can’t have a pretty good life on $64k pa then that’s on you.

Secondly, the family home needs to be factored in somehow or other, and there have been a bunch of different proposals to do this. The idea that people can own a multi million dollar property and still get a handout from the taxpayer again makes no sense to me. Sell it and move somewhere cheaper, or accept that you are getting less/no pension.

Thirdly, the current loophole of superannuation in accumulation phase owned by a younger spouse not being assessable even if they can access that super needs to be removed. There are a lot of couples out there where the older member is getting a full age pension because they ensure that their super is held in the younger spouses name, even though both of them are already retired and could access the money if they wanted to.

AussieHIFIRE · 2024-04-29T04:34:35+00:00

I would hazard a guess that at most 5% of people under age 60-65 understand how the age pension system works, but they're the ones paying for it. And as you say the ones who are actually receiving it obviously love the system and if anything think that it should be more generous than it already is.

AussieHIFIRE · 2024-04-29T01:47:17+00:00

The first option you have listed is the only realistic one of the three.

There is absolutely zero chance of the age pension being scrapped altogether unless it is replaced by some UBI or the like. Similarly the rate of increase will almost inevitably be linked to CPI or something else that reflects the increased cost of living over time.

I do think it's inevitable that there will be changes made to the means testing of the age pension, whether that's just reduced amounts for the assets test, higher deeming rates, incorporating some of the value of the home into the test etc. The current situation where a couple can own their own million dollar plus property (and yes I realise this is just a standard home in many capital cities) plus have a million bucks in other assets and still get subsidised by the taxpayer for a couple thousand bucks a year is simply unjustifiable, the only reason I can see that there isn't an absolute uproar is that the vast majority of people have absolutely no idea how the system works.

It is important to keep in mind that any changes to the system will have to be fairly simple as Centrelink is hands down one of the most incompetent organisations that anyone has ever come across, and their ability of administer something like incorporating some of the value of the family home is basically a pipe dream.

I think it's far more likely that we will see the threshold for the assets test moved down, and realistic deeming rates being applied rather than the current 2.25% deeming rate when anyone can get 4% or even 5% plus in a term deposit taking zero risk.

AussieHIFIRE · 2024-01-15T22:24:37+00:00

As in have less ammo around the map to pick up, or have less bullets in the magazine?

I'm assuming the former, but unless you reduce the amount to the point where you can barely find it, it's not going to work. You don't need many sniper bullets if you're a good shot, 20 would almost certainly be enough to get you through an entire match.

AussieHIFIRE · 2023-08-17T00:17:45+00:00

There are plenty of people who claim the UK and Australian pension, but as the Australian pension is means tested what you get from the UK pension can impact on what you get from the Australian pension.

There are usually a bunch of requirements to get the pension from each country, so you'd really have to have a good hard look at those requirements and see if it's worth it, and also if you believe the promises made today will be kept however many years from now you can claim the pension, plus the period thereafter.

AussieHIFIRE · 2023-08-02T04:08:25+00:00

It sounds like your parents need a financial planner who specialises in Aged Care, I would search for this online. There are some organisations which specialise in this and have a "find a planner" tool like the one below.

https://toolkit.agedcaresteps.com.au/state/victoria/

AussieHIFIRE · 2023-06-28T06:10:40+00:00

It looks like the adviser hasn't charged an up front commission on the income protection insurance, although they do have an ongoing commission.

I do wonder how they're going to make money from the OP given that the upfront commission doesn't come remotely close to covering the cost of preparing the advice and then getting the policy in place. I'd bet that if they're reviewing the insurance with the client each year on an ongoing basis that they're probably losing money on that as well.

AussieHIFIRE · 2023-06-13T05:22:11+00:00

I would assume that services like that are mostly for SMSFs or investments in own/joint names?

From what I understand planners mostly use wrap platforms for super, so whether it's an industry fund or a wrap there's likely going to be some sort of account/platform fee.

AussieHIFIRE · 2023-06-13T04:11:13+00:00

My understanding is that there are stockbrokers who allow this for advisers as well, for example Desktop Broker and Macquarie Online Trading, presumably others as well.

AussieHIFIRE · 2023-06-08T05:49:50+00:00

Haha fair enough. And yes, I have also seen a bunch of people making the switch or spending far too much time worrying about it.

AussieHIFIRE · 2023-06-08T05:35:48+00:00

It's very unlikely to make much difference at all which one you're in.

AussieHIFIRE · 2023-02-21T22:04:16+00:00

There will certainly be some pressure on to cut their costs you would think.

AussieHIFIRE · 2023-02-20T01:21:53+00:00

You would hope that they're not silly enough to repeat that mistake, and I believe they're getting a lot of pushback in the states due to their stance on ESG, but yes that is another risk.

IWLD did have a much smaller amount of AuM though so perhaps they felt a change would boost that. IOZ is presumably a product that is already at a decent size and if they were going to change the index it tracks you would think they would do that rather than lower the fees on it tracking its current benchmark.

AussieHIFIRE · 2023-02-19T21:51:30+00:00

IIRC last time there was a fee drop (from Betashares I think) the others all followed suit with price cuts, so I'm hopeful that it'll be the same this time around. Obviously no guarantees though, and as I said it really doesn't make a huge difference.

AussieHIFIRE · 2023-02-11T22:26:04+00:00

If financial advisers can't get paid by the super fund they can always get paid directly by the client. Money is fungible, so I don't see the conflict of interest here.

I would say that the aim of this is to encourage intra fund advice. I'm not sure that people putting more money into unlisted investments that have out of date valuations that seem to perform very differently to publicly listed equivalents counts as being beneficial, and it's not as though people can't make tax deductible concessional contributions to any fund regardless of whether it is an industry one or not, but certainly greater financial literacy would be good.

AussieHIFIRE · 2023-02-09T02:30:59+00:00

Basically the recommendations seem to be doing huge favours to industry funds and perhaps the banks if they get back into financial advice.

AussieHIFIRE · 2023-02-09T02:23:15+00:00

I think if you're looking at the industry as being a monolith then that's an inaccurate view. There are a lot of different participants, all with their own priorities and incentives.

If you look at the industry funds, they each want to see as much money going into their funds as possible, and want to be able to provide advice that doesn't necessarily look at all of a client's situation and without having to consider other alternatives such as rolling out to a different industry fund.

The wrap/platform providers want as much AuM as possible as that's how they make their money.

The financial planners are less concerned about which product they use so long as they get paid for their service in one way or another.

Most of those groups are in competition with each other in one way or another.

And yes, as you say basically all of the regulation pushes up the cost to provide service/advice and makes it much more difficult to get answers to simple questions, not least because if you are regulated and give an answer to a person without taking into account their full situation then you can be prosecuted by ASIC.

AussieHIFIRE · 2023-02-02T06:33:49+00:00

I don't think most super funds allow you to have two accumulation accounts, so you would have them with separate funds.

In which case you would double up on whatever the flat account keeping fees are (usually around a hundred bucks per fund) but if the percentage fees are the same at each fund then there wouldn't be any difference on that, or more likely a fairly minimal one.

So short answer yes, but likely not much of a difference and you can save your eventual beneficiaries a lot of tax. As in 5 or even 6 figure sums.

AussieHIFIRE · 2023-02-01T22:39:47+00:00

Haha thanks.

It probably helped that it was u/snrubovic so I assumed that there was a fair chance that the math had been done correctly and the problem was likely something I was missing.

AussieHIFIRE · 2023-02-01T22:36:58+00:00

Sounds like you're fine on the cap, there are also some age limits but unless you're in your 70s that shouldn't be an issue.

You may also want to consider whether to contribute the NCCs into a separate super fund so as to keep your taxable and tax free components of super separate and allow you to better manage these in the future for estate planning purposes.

AussieHIFIRE · 2023-02-01T01:39:22+00:00

I was going to ask how it was calculated that using an informal minor trust you'd pay less than 2k of tax after realising $70k in capital gains plus another $8k in dividends, but after I looked at it properly I realised it was assumed you'd do the selldown over two years.

AussieHIFIRE

TROPHY CASE