The Barefoot Investor Says We’ve Already Made It

And I disagree.

Don’t get me wrong – I love the Barefoot Investor strategies. They have truly been life changing for our family. However, when he says couples need only $250,000 in superannuation (singles $170,000) for retirement, it doesn’t sit right.

According to the Barefoot Investor, we’ve already nailed our retirement number.

And I couldn’t disagree more.

Barefoot Investor Retirement

In a nutshell, here’s the Barefoot Investor retirement plan:

  • Have your home loan paid off before retirement.
  • Accrue superannuation: $250,000 for couples and $170,000 for a single person. This is the maximum amount of assets you can own (excluding the family home) to receive close to the maximum amount of aged pension.
  • Never retire: keep working part-time.

According to the Barefoot Investor if you do all these things, based on current circumstances, couples would have an annual income of $61,073.

Here’s the breakdown:

Age pension$35,573
Superannuation pension$12,500
Part-time work$13,000
Total yearly income$61,073

Finer details:

The age pension is $35,573 per year per couple, indexed – the amount goes up slightly to keep up with inflation.

You are legally required to draw down at least 5% of your superannuation balance per year on retirement.

As a single person you can earn $6,500, or $13,000 for couples before it affects your age pension.

Why I Disagree With The Barefoot Investor Retirement Plan

Unable to Work

This is a major flaw with Pape’s retirement plan.

Not being able to work reduces $13K from a couple’s yearly income, leaving only $48K for the year.

Reasons are you may not physically be able to work as you get older due to poor health, sickness or accident.

Have a look at these figures from the Australian Bureau of Statistics:

  • 55% of people over 55 years old were retired from the workforce
  • The average age of retirement was 55.4 years (this includes people who had left their last job due to illness, injury, job loss, and other reasons).
  • For people who were intending to retire, the average age they planned to retire was 65.5 years, even though statistically the average is 55.4 years.

An astounding 21% of Australians were forced into early retirement due to sickness, injury or disability.

Pape’s recommended retirement plan clearly does not suit the ‘average’.

Workplace Ageism

Even if you do want to work, workplace ageism had 170,000 Australians aged between 55 – 64 unable to get a job.

Whilst underemployment (not enough work hours) affects a staggering 21% of older employees.

Caring Duties

Some people are unable to work due to family commitments. They have ended up the carer for injured or disabled adult children, or found themselves the guardian of their grandchildren.

Other people end up being the full time carer for their significant other who is unable to work due to sickness, injury or disability. Remember those 21% of Australians forced into early retirement – a large portion of them will need a carer which is typically their spouse.

Life can throw all sorts of curveballs that do not fit the standard narrative of retiring at an age of your choosing.

Volunteer Work

For some people, their retirement goals include volunteer work to support the community.

Many organisations and charities rely on volunteers to be able to help those in need. Fundraising supports vital community resources. Committees and boards are often staffed by volunteers. The strength of a community is in its volunteers.


Divorce is a blow to your finances at any age, but even more so when people are older as there is not as much scope for financial recovery.

Suddenly that $250,000 in superannuation, if divided equally, becomes only $125,000 per person. This falls short of the recommended $160,000 for a single person.

The divorce scenario may also result in having to rent and thus no longer having a paid off home. Add to this underemployment, retrenchment or an inability to work due to sickness, injury or disability and retirement is no longer looking so comfortable.

Another scenario is one person takes the house (and has no superannuation) and the other takes the superannuation (yet has no house). The person with the house has little income, whilst the person with the superannuation has to pay rent.

Age Pension Restrictions

The age pension is a safety net, not an end goal for retirement.

It also ties you down because you are bound by government rules to keep your pension entitlement and thus your retirement money.

You must tell Centrelink if you are on the age pension and you:

  • are going to live in another country
  • will be away for more than 6 weeks
  • came back to live in Australia within the last 2 years and started getting Age Pension since then.

After six weeks outside Australia, the pension supplement will reduce to the basic amount, the energy supplement stops and the pensioner concession card is no longer valid.

If you leave Australia for more than 26 weeks, then your rate of age pension is dependent on how long you have been an Australian citizen. The payment rate is a proportion of your time as a resident.

Personally, when I retire I’d like to travel anywhere I want for as long as I’d like with full retirement funds.

Compulsory Drawdown on Super

When you reach retirement age and can access your superannuation money, the government sets minimum drawdown percentage rates. That’s the amount of money that you must withdraw from your superannuation fund each year.

Note: from 1 July 2019 to 30 June 2021 under temporary Covid-19 rules the compulsory drawdown rates have been reduced by 50%.

As you can see from looking at the chart, the minimum drawdown rate starts at 4% and eventually peaks at 14%.

Most people have their superannuation money invested in the share market inside of their superannuation fund. And herein is the problem.

It’s got to do with the Trinity Study and the share market and the potential to run out of superannuation money.

Trinity Study

The Trinity Study was a retirement planning study to determine the safe withdrawal rate of money from the share market/investments.

The safe withdrawal rates refers to how much money you can take from your investments and not run out of money before you pass away.

Of course, no one can predict how long they will live after retirement.

The average life expectancy in Australia is 82.8 years, whilst Australia’s oldest man lived to 111 years, and oldest female to 114 years. As you can see there is a wide variation.

Now, back to the Trinity Study.

The Trinity Study is also commonly known as the 4% Rule, as this percentage is seen as the ‘safe withdrawal’ rate. This means you don’t take more than 4% per year from your investments for your money to ‘safely’ last.

Have a look at the chart below. The percentage figures quoted are how successful your investments will be at lasting until your death. 100% means 100% chance of your money lasting. At the other end of the scale is a 7% chance of your money making it as long as you will.

Some people invest in the share market outside of superannuation and retire as early as their 30s, hence the 60 year span.

At the top of the chart are the withdrawal rates starting at 3% per year and listed until 5%.

Note that only a low 3.5% withdrawal rate will ensure a 100% success rate of not running out of superannuation.

Yet, our the government mandates we withdrawal 5% per year from 65 years of age, 6% from 75 years, 7% from 80 years, 9% from 85 years, 11% from 90 years, 14% from 95 years.

Based on these withdrawal rates there is a real chance your superannuation money could run out especially if you don’t have enough money invested – and then you’d only be left with the meagre age pension.


As much as I love the Barefoot Investor strategies, I cannot agree with his retirement planning.

There are so many scenarios that can jeopardise the Barefoot Investor retirement plan:

  • Poor health
  • Sickness
  • Accident
  • Retrenchment
  • Work place ageism
  • Underemployment
  • Carer duties
  • Desire to do volunteer work
  • Divorce
  • A desire to travel long term
  • Running out of superannuation

My plan is to be an absolutely fabulous self-funded retiree.

What is your retirement plan? Please scroll below and share in the comments box.

Disclaimer: This is in no way financial advice. I am not a financial advisor. Do your own research and seek professional advice as needed.

3 thoughts on “The Barefoot Investor Says We’ve Already Made It

  • 21 September 2020 at 12:27 pm

    I can’t help but agree. Barefoot seems to be living in a perfect scenario. It would be a bare minimum I would say

  • 22 September 2020 at 2:38 am

    I’m surprised that the pension is so much lower than the US Social Security I’ll get. I haven’t taken mine yet but if I took it now it would be $55K for my wife and me and if I wait until age 70 it will be $66K USD. That’s much more than the $36K in the example. But here it is a function of how much you paid in and I guess that doesn’t impact the Australian version? I also paid a boatload into the program, much more than I’ll ever get back. I agree, that $250K plan is pretty sketchy, not much margin for any of those possible black swans you covered. You are going to be very secure doing it your way.

    • 23 September 2020 at 8:36 pm

      The Australian government pension is funded by tax payers money. It’s not a case of paying more in to receive more later. It’s a safety net to stop people from starving or becoming homeless (although, not always successfully so). Seems a much different scheme to the one you’ve mentioned in America.
      I really do like your term ‘black swans’ to describe the all the scenarios that could go wrong. Hopefully, none of them will happen to myself or my husband. However, to believe there is no chance of a black swan event is to live in la la land.


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