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How much income do you need in retirement?

This is a question that has interested me seeing my wife and I are both retired. It depends on whether you want to view this period of your life as one of simplicity without to many worries as to where the next dollar is coming from, or you want to continue a lavish lifestyle that requires money as the oil to keep it's engine going.

Either way, you won't be going to work for the boss, so there have to be other means of providing an income. My wife and I live in Australia which has a number of government pensions on offer. Unfortunately my wife is on a disability pension due to an illness but I am her carer on a carer pension, but don't get me wrong, we make the most of our income. We first retired about ten years ago and decided to go on a road trip around Australia in our camper van and with our pension coming in every fortnight planned carefully. In terms of richness, we experienced many simple, earthy things that we would not have seen staying in a five star hotel. We have now managed for that time using our, what some might call limited income, to live in a nice house with government assisted rent and take out insurances for our dog, car and property as well as an accident one too. We are able to eat well and enjoy our simple lifestyle. If we want anything we put it on lay by and save, it is very satisfying. So that is our side of the picture bit let's look at the mathematics if you don't have our option.

To get an annual income here on the present government regulated interest rate of 7%, you would be looking at investing $500,000,000 to get, say about $30,000 annual income, without the government health benefits we get, free medical and greatly reduced pharmaceuticals. We are not more than $8000 behind that on our combined pension income and with the addition of the above mentioned benefits come out at about the same. The question arises, who has a spare $500,000,000 these days? (and you have to pay tax on that dividend too). In a way I think my wife and I are on the best wicket here.

So I have pointed out two ways of getting by in retirement, but how much you need is entirely up to the lifestyle you want to pursue. If you want an expensive lifestyle then you have to pay for it, but our simpler lifestyle which came about through circumstance, has given us some very rich simple memories over the years of our retirement

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