Net Worth - DEC 2024

Chart updated to end of DEC in sidebar.

Stocks/cash decreased -$18,263 (-5.91%) to $290,675 but this was mostly due to my using $20K from my mortgage offset account to make a non-concessional contribution in super. I will do a similar contribution every month for the rest of the FY, so I max out the NCC cap for this FY, as I will have a $0 NCC cap in future years (probably) due to my TSB being too high.

Retirement savings (SMSF etc) increased by only $2,045 (0.1%) to $1,965,189. Despite my normal SGL contributions and the extra $20K NCC.

Est. valuation of our home (my half) increased slightly by $1,296 (0.11%) to $1,194,503. However he 'Other real estate' (my 'lake house' and the investment apartment) decreased by -$12,239 (-0.56%) to $2,183,231.

Other assets (my online depository bullion account at Perth Mint, and the bullion value of my gold and silver proof coin collection) increased by $2,425 (4.87%) to $52,228 due to a resumption of the gold and silver upwards trend during December..

Overall, NW decreased somewhat by -$24,736 (-0.52%) to $4,693,835 during December, so I didn't finish 2024 on a record high. However, my NW still increased by $0.5M during the past year, so I can't complain ;).

As usual I have no idea how things will turn out during 2025, so I will just stick with my investment structures, long term asset allocation, and usual saving and expense budget.

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Decided to max out my NCC cap space this FY

The two main contribution types that can be made into superannuation are concessional contributions (CC) and non-concessional contributions (NCC). Concessional contributions are those that have the 15% contribution tax applied to a 'before tax' amount of income contributed into superannuation -- eg. Superannuation Guarantee (SG) paid by the employer, any salary sacrifice amount, and any amount of personal contribution where a tax deduction is claimed. The annual cap on CC is currently $30K, and there are various employment. tax residency and age requirements that aren't relevant to most working Australians. Non-concessional contributions are the 'after tax' amounts one can also contribute into superannuation ie. you take some money that you already paid income tax on, and make a contribution into superannuation without claiming any tax deduction. There is an annual cap on NCC of four times the CC cap (ie. currently $120K), and there are some 'carry forward' rules that allow unused CC cap space to be 'carried forward' for up to 5 years, subject to some other requirements (eg. TSB under $500K, age limit, employment status etc.). There is also a 'bring forwards' rule that allows you to make an immediate contribution of up to three years of NCC, ie. 'bringing forward' up to 2 future years of NCC, so you can make an NCC of up to $360K in one year, and then have $0 'cap space' for the next two years. However, this 'bring forward' rule only applies up to the TSB cap (currently $1.9M). If you already have >=TSB then your NCC cap is $0, and you can't use the 'bring forward' rule. And if you are close to the TSB cap, then you may only be able to  make a NCC of $120K, or perhaps 'bring forward' one additional years of NCC, ie. make a $240K NCC. According to the ATO:

• You are only eligible to bring-forward the next 2 years of contributions if you are under 75 years (67 years for 2021–22, 65 years for 2020–21 and prior years) on 1 July of the first financial year in which your total super balance on 30 June of the previous financial year was less than $1.66 million from 1 July 2024 ($1.48 million from 1 July 2021, and $1.68 million from 1 July 2023).
• If your TSB on 30 June of the previous financial year was $1.66 million or above but less than $1.78 million – you can contribute 2 times the annual cap over 2 years (that is, $240,000).
• If your TSB on 30 June of the previous financial year was $1.78 million or above – you can't bring forward any amount, but you can make a current year contribution of up to $120,000.

Our SMSF is currently preparing the fund's tax return for FY24, but from my monthly estimate of my retirement savings balance, I had around $1.79M as at 30 June (the actual figure in previous FY has varied from my estimate by +/- $10K-$20K) and my TSB is current around $1.96M. So this will be the last year I can make any NCC into super - either $120K or $240K, depending on my TSB as at 30 June 2024. I have just over $200K sitting in my investment mortgage offset account. so I have setup an automatic $20K/mo deposit into my QSuper account for the next 6 months (to use up my $120K NCC cap space for this FY). Once out SMSF tax return is finalised and lodged (around April next year) I will be able to get the official TSB for 30 June 2024 from the ATO mygov website, and can make another $120K 'bring forward' NCC contribution if my TSB was <$1.78M.

It is a bit hard to do optimal tax planning given the timing of when SMSF tax return figures become available (about 9 months after the EOFY) -- if I had known last June that I was going to be just over the $1.78M TSB limit to impact my NCC 'bring forward' by $120K, I might have paid myself the maximum 10% TRIS pension rather than the minimum 4%. The extra $18K TRIS pension payment *might* have just brought my TSB down to the level permitting an extra $120K NCC to be paid into super this FY.

Ah well, you do the best planning possible with the data available at the time...

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How many 'go-go' years will you have in retirement?

One of the factors to be considered when planning for how long your retirement savings might need to last, is to consider both life expectancy and healthy life expectancy. The World Health organisation has published some data on Life expectancy and Healthy life expectancy by country. For retirement planning purposes it is also important to look at these figures at age 60, not 'at birth'. The relevant figures for males in various developed countries are listed below:

Male Healthy Life Expectancy at age 60: (2019 data)
        yrs => age:
Australia         18.2 78.2
New Zealand 17.9 77.9
Japan 18.8 78.8
UK         17.6 77.6
Germany      17.0 77.0
France         18.5 78.5
USA         15.6 75.6
Canada 18.2 78.2

Male Life Expectancy at age 60: (2019 data)
    yrs => age:
Australia      24.4 84.4
New Zealand 23.8 83.8
Japan 23.9 83.9
UK         23.0 83.0
Germany 21.9 81.9
France 23.3 83.3
USA         21.8 81.8
Canada 23.8 83.8

So for the average Australian male aged 60 who intends to retire at 65, it would be reasonable to expect (on average) to have 13.2 years (to age 78.2) of healthy, or 'go-go' years where spending needs might be somewhat higher to fund travel, hobbies etc. Then a slightly lower spending rate during to slow-go and no-go years to age 84.4 (ie. another 6.2 years).

Of course past lifestyle, genetics, and behaviour during retirement and luck (eg. terminal illness) could make actual healthy and total lifespan vary considerably from 'the average'. So it is really just a reasonable 'guestimate'. I find it quite amusing that financial planners often plug in national life expectancy (sometimes with an extra 5 years added on 'just in case') when doing Monte Carlo simulations to provide a 'probability of success' figure for a specific retirement starting balance, asset allocation, and estimated average return and std dev. The 'simulation' of 1,000 'runs' will then spit out a figure like '96%' probability of success, meaning that in 4% of the simulations the retirement funds would be exhausted before the 'end date'. But if one also takes into account the uncertainty in the 'end date' (ie longevity risk) such probability figures are really have massive 'error bars'. The plots of the simulations often show the average final balance and the range (and perhaps top and bottom quartiles), but generally do not show the impact the variability in life expectancy will have on the range of 'projected' outcomes.

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Net Worth - NOV 2024

Chart updated to end of NOV in sidebar.

Stocks/cash increased $7,373 (+2.44%) to $308,938 due to a strong equities market during the past month.

Retirement savings (SMSF etc) increased by $74,920 (3.97%) to $1,963,144.

Est. valuation of our home (my half) decreased slightly by -$1,296 (-0.11%) to $1,193,207. However he 'Other real estate' (my 'lake house' and the investment apartment) increased by $35,067 (+1.62%) to $2,195,470.

Other assets (my online depository bullion account at Perth Mint, and the bullion value of my gold and silver proof coin collection) decreased by -$1,616 (-3.14%) to $49,803 due to a reversal in the  gold and silver upwards trend during November..

Overall, NW increased strongly by +$114,448 (+2.49%) to $4,718,571 during November, to hit a new personal record high. Since 1 Jan my NW has risen $555K, which seems rather unbelievable.

I added  a new widget to the top of the blog template - the 'Buffet Indicator' for the Australian Stock Market Total Capitalization divided by the Australian GDP.  The US version suggests that the US stock market might be overpriced (so there is increased probability of a correctio or extended period of low price growth) in coming years. The Australian market in comparison seems more reasonably priced (unlike the situation in 2007), but often drops in 'sympathy' with any large fall in the US market regardless.

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