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Michael and Julie - age 59 & 54
Michael is the founder and 50 per cent shareholder of a Sydney-based consulting company, while Julie is the admin manager. They reside at Rose Bay, and have the following assets:
They are in good health and enjoy an active lifestyle that is focused on their children and grandchildren. Financial security is important and they “hope that we have enough assets to maintain our lifestyle in retirement”.
Retirement Plans
Michael has indicated that he will likely retire in five years at age 65. At that time he would like to “retire all debt”, and have assets producing an income stream to meet their living needs of $20,000 per month. They expect by retirement to live off their rent from the commercial office, rent from their investment properties, and income from their superannuation. They are thinking at retirement of selling their Rose Bay home and using the proceeds to pay out the mortgages. They will then move into their Darling Point apartment, which has magnificent views of Sydney harbour.
Financial Analysis
We projected Michael and Julie’s assets out over the next five years should they continue on their current path. We estimated that once they have sold their Rose Bay home, sold their equity in the business, and use the proceeds to pay down their mortgages, that their net assets should be:
Their main income-producing assets will be the Sydney office, the Maroubra unit and super, with their cash flow after retirement likely to be as follows:
Despite accumulating significant assets by their retirement, they will not produce the income that they require to maintain their current standard of living. In fact we anticipate that they will have a significant shortfall of approximately $13,000 per month.
Strategic Advice
Next week I will explain the seven strategic steps that we recommended in their Retirement Roadmap that enabled Michael and Julie to accumulate an additional $1.805m in assets, payout all mortgages, and enhance their cash flow by $168,866 per annum to ensure that they are able to meet their living needs in retirement.
Disclaimer: This information is general advice only, & has been prepared without taking into account the objectives, financial situation, or needs of any individual. It is not a specific recommendation to buy, sell or hold any product or security. Readers should seek financial advice before making a decision & should consider the appropriateness of this advice in light of their own objectives, financial situation, &needs.
Peter Lanham
