Welcome to the new reality: penniless at 100
With interest rates going ever lower, let’s consider what retirement might look like in the not-too-distant future. In this example, our baseline retirees are an 80-year-old couple with $1 million to live off in a mortgage-free house in a zero-tax environment.
They hold the classic Australian equities portfolio that averages out to a yield of about 4.5%, with average market franking (about 72%) taking it up to 5.89%. They have mostly banks, Telstra and hybrids. They hope the bank sector will recover and they will “be all right in the end”.
They have instructed all the companies they own to pay dividends into a specific bank account, which collects
