‘Under 5 minutes’: The perfect retirement formula revealed

Aug 30, 2022
A financial adviser shares his easy formula to workout how close to retirement you really are. Source: Getty

A financial adviser has taken to social media to provide people with the key to working out exactly “how far off you are from being in a position to retire” with a simple formula.

James Wrigley posted the video “How to work out if you can retire” on his TikTok, saying all that’s needed is a piece of paper, a pen, and five minutes.

@iamjameswrigley How to work out if you can retire #money #investing #retirement #pension ♬ original sound – James Wrigley

“If you’re looking forward to retiring, trying to work out where you are, what you need to do, what your gap might look like, or even those that are aspiring to retire early or to kind of trade the nine to five for more lifestyle, I’m going to show you an equation,” Wrigley said.

“On a piece of paper, I want you to scratch out your nest egg assets. So that’s cash in the bank, savings, term deposits, balances of your superannuation, investment properties, shares, and total up all of those.”

Wrigley went on to reveal the next step is to outline “lifestyle assets”.

“The value of your home, a holiday house if you’ve got one, cars, boats, caravans, and motorbikes, all of these kinds of things. Add them all up and total those up,” he said.

After adding up all your assets, Wrigley said it’s time to add up any debts you may have.

“So mortgages that you have on other properties. If you’ve got a car loan, a boat loan, a caravan, a credit card that you don’t pay off each month with a balance rolling over, buy-now-pay-later services, and personal loans,” he said.

“Total up all of those.

“Then what I want you to do is, take the total of your nest egg assets and subtract the total of your debts. That’s going to get you net nest egg balance, and that’s the number that’s going to put you in a position to retire.”

Wrigley said the lifestyle assets are just “lifestyle, making life fun and enjoyable, they don’t do anything towards building up” the net nest egg total.

“Ideally what you want to be working towards is whatever it is you plan on spending in retirement, whatever that number is net of tax, multiply that by 20 and that’s your number,” he revealed.

“So that’s where you need to get to, and if you’ve got your set up right, you probably can retire today.”

The financial expert’s advice comes as Australia’s retirement age continues to get pushed back amidst the rising cost of living making retirement seem unattainable.

Seniors were dealt a devastating blow recently when the latest findings from the Association of Super Funds of Australia (ASFA) revealed that retirees will now need to spend more in order to retire “comfortably”.

The ASFA Retirement Standard June quarter 2022 figures, released on Thursday, August 18, found couples aged around 65 need to spend $66,725 per year to enjoy a comfortable lifestyle in retirement while singles would be met with an annual cost of $47,383.

ASFA Deputy CEO, Glen McCrea pointed to the “ever increasing health costs” that retirees are faced with as a major contributor to the increased cost of retirement.

Costs associated with healthcare aren’t the only expenses putting strain on the budgets of retirees with increases in non-discretionary items such as groceries and fuel hitting seniors’ hip pockets.

The price of fuel has shot up 32.1 per cent over the last year while vegetables and beef have seen increases of 14.6 per cent and 9.4 per cent respectively. Even a daily cup of tea has been impacted with a 9.3 per cent price hike on coffee and tea products.


IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.

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