r/AusHENRY

The 4% rule of thumb says if you have 25 times your living expenses saved you have over a 90% success rate of not running out of money over a 30 year retirement.

I've been able to get to a 89% success rate with a 1m portfolio in super at age 60, using a 8% withdrawal (80K) for the first 10 years (adjusted for inflation), then 5% withdrawal (50K) from age 70 with the partial age pension kicking in from 67.

This is assuming:

• Inflation of 2.5% with a standard deviation of 1.5%
• Interest rates of 5% with σ 2%
• Super is in balanced at 6.5% growth with σ 7%
• Using the Asset Test (Homeowner) for the age pension
• Spare cash is added to the interest account
• Minimum drawdowns from super
• Lump sum withdrawals from super to fund the expenses early on

It's been quite fascinating to explore.

Our previous definition was 3m in usable assets including super, excluding the home. This was just a line in the sand that "felt about right". Turns it it was pretty close to the top 5% asset holders for 65+ (total net wealth of 4.8m - home equity of 2m).

So now we will use the top 5% asset holders as our definition of rich going forward.

We can now say this community is to help those top 10% earners eventually become those top 5% asset owners. Or anyone who aspires to be in any of these categories.

Link to PDF and link to article.

What does being rich mean to you?

Obviously there is more to it than a number in spreadsheet, but it's hard to instill this in the 500 character limit we have in reddit to define this community.