Rule of Thumb article
I would like to refer to today's article by John De Ravin regarding 'The rule of thumb takes the guesswork out of retirement.'
He states that "We assumed that the assets in an ABP earned an investment return (net of expenses) at a rate equal to the rate of increase in average weekly earnings plus 3.5 per cent a year, and retirees held no assets outside superannuation other than possibly the family home."
According to the Bureau of Statistics website, in May 2019, the rate of increase in average weekly earnings was 3% for the previous 12 months.
This means that an ABP has to earn 3% + 3.5%, i.e. 6.5% (net of expenses) to be able to apply the Rule of Thumb theory.
In my humble and honest opinion, I believe that this is not always achievable.