This week I'll be answering the questions asked by readers last week. The first is on retirement.I guess we fell into retirement without thinking too much about it. Well, maybe I did that, Hanno probably didn't, he's very careful and always plans, especially when finances are involved. Nevertheless, we both found ourselves "retired" - he is well and truly over retirement age (65 years) and gets a pension, I am still under retirement age and earn a bit of money writing. We are among the first of the baby boomers, and in Australia, the laws on superannuation (401K) only came into being during the early 1990, so we didn't come to this life with a pile of cash sitting in a retirement fund. Very few early boomers have cushy little nest eggs on which to travel the world and those who do would probably have lost a lot of it during this recession, if they invested in shares or real estate. We have a few shares but they lost a lot of value in the past year and I have a small amount of superannuation cash waiting for me when I turn 65.
I have never believed that we needed anywhere near what financial planners say you need - it's something like $500,000 per person! We live on less than $25,000 a year and pensions well and truly cover that. Of course, it depends on how well your own country provides for its elders ,but it also relies on debt - if you do have debt, it would be very difficult to retire on a small amount. We are lucky and paid off all our debt many years ago, we own our home and we're in good health. Health plays a part too, and we have kept our private health insurance - that is covered in our $25,000 a year. We do have free medical and hospital care in my country but it's slow, you go on waiting lists, and we want the comfort of knowing we can have the best of health care if either one of us is ill. But I don't want to make this post solely about money, because if you live as we do, while money is important, it's not the most important thing.
And please note, I am not a financial adviser, have never worked in any industry connected with banking or investments and I'm merely relaying our circumstances to you so you can understand our retirement, and maybe work on your own plans.
If you plan on a simpler lifestyle when you retire, yes, pay off debt first and put away some money, but above all else, develop a set of skills that will help you live the way you want to live. Learn to cook from scratch, learn how to bake, sew and mend, Work out what you'll do with an over abundance of vegetables - will you freeze or preserve/can? While you're still working, buy the tools and appliances you'll need to do all those daily and seasonal tasks.
Look critically at your home, will it support you in retirement? You'll have a lot more time to work at home - time to produce food in the backyard, raise chickens for eggs or meat, harvest honey from bee hives. Will you be able to do those things where you are now? Do you know how to sew, knit and mend? If you answered no, now is the time to learn. What about home maintenance and supporting your lifestyle with home servicing? Doing your own will save a lot of money. Learn how to unblock drainpipes, change the oil on the car, service the lawn mower, and clear the guttering on the roof. These activities will not only save you money, they'll fill your hours, keep you fit and active and give you purpose. Instead of working for a living, you'll be working for your life.
Get used to not buying clothes and shoes every year - fashion is overrated anyway. Develop your own style that is plain and simple and be proud that you've stared down the fashion police. If you don't already do it, buy the best quality you can afford and products that can be repaired. You want things to last as long as possible so look for value for money instead of the cheapest price. If you are both working, see if you can live on one income now, and save the other income for buying water tanks, solar panels or a reliable, and cheap to run, car.
But if you want to feel content with life and proud of what you do for yourself, if you want to take your life by the collar and give it a good shake, then this is the life for you. We can do whatever we feel like doing most days, we have the satisfaction of growing some of our own food, eating healthy food, taking each day slowly and we grow confident knowing we can look after ourselves, even if a major disaster occurred. We have grown closer to our own lives, we provide the raw materials for many of the things we need, we aren't passive bystanders any more.
I guess our example shows that if you have no debt, own your own home, have the space to grow some food and the knowledge to put some of that food up for later in the year, if you can conserve rather than spend and be happy doing that, then this kind of retirement may suit you too. It's probably the opposite to what a mainstream retirement is - whereby you save and invest as much as possible so you can stop work, relax and travel. We look forward to the work we do now, because the work helps give purpose to each day.
So if you are looking for a retirement that keeps you busy, entertained and thoughtful, if you want to feel in control of your life, if you are prepared to do simple honest work for the rest of your life, then start preparing for it now - in developing your skill set that will deliver to you a life like no other. I am here to show you it is possible, the hard bit is up to you - are you ready for it?
