24 October 2012

Preparing for retirement

I've had a couple of requests to write about ongoing changes as you age and get ready for retirement.

Hopefully, by the time you're in your mid-to late fifties, your children will have packed their things and moved out to start their own lives. This is one of the things you've worked towards for many years - not for them to leave but to see them set up their own home, maybe with someone they love, or a couple of friends. At this stage, you hope that all you've given your children - the love, time, effort, advice and guidance will allow them to spread their wings and find success and happiness on their own.

When that happens, you go back to being a couple again, or maybe a single person. Either way, you'll have a lot more freedom. You'll probably have more money too. The key to this stage of life is to have all your debt paid off because you want to be at that stage before you retire. If you do find you have more money and you still have debt to pay, put all that extra money towards your debt. Make sure you're paying your mortgage fortnightly instead of monthly, continue to live frugally and use all your spare cash to pay off your mortgage as soon as you can.

It might be a good idea to talk to your bank to make sure you're on target with the mortgage and to find out exactly how long it will be before you pay that last payment. While you're in that frame of mind, check your superannuation fund (401K/retirement fund) to see what money will be available to you when you retire. Even though you've got another ten years before that happens, it's best to know now if there will be less than you expect so you have a chance to make adjustments if you need to. Work out for yourself how much you need each year to live and multiply that by 20 and that will give you an approximate amount. In most countries men live to their late 70s and women to their mid 80s but no one knows how long they'll live - there is a fair bit of guess work needed so most people go by the average age lived. If you know you'll have to live on a government pension, research that so you know what to expect.

On the practical side, now is a good time to take a fresh look at your home. Will this house suit you when you're 20 or 30 years older? If you have to move, it's best to do that after the kids have left home and while you still have some capacity to earn. Think how you might be in the future, you need your home to support your needs, not hinder them. You might need to move if your home has a lot of stairs, if you're in a built up area and you want a quieter place, if it's too big for you with the children gone, or if you've lost your partner and the memories are difficult. If you do move, look to a smaller home, maybe with two bedrooms, and a smaller yard. You might want to grow your own vegetables or have a flower garden and chooks. If you're lucky, the sale of a larger home to move to a smaller one, might wipe out your mortgage. Look around with that in mind. Now is not the time to upscale or go upmarket. Choose what you know you'll need and be happy with that. Financial freedom might be just around the corner and if it is, you'll soon see the benefits of a smaller home. If you're renting, ask if the future is reasonably secure. Again, if you think you might have to move, it's best to do it when you have the energy for it and possibly just before you retire.

Decluttering will also be on your agenda. It's an idea time to do this when the kids leave home because you'll be able to pass on a lot of your family treasures. It will give you the space you need and it will give your children a good start in their first home while keeping the heirlooms in the family.

When you're sure you're in the home you will live in forever, do an audit of the house and yard. What needs fixing - now, in five years time and in ten years? You may need to install some extra handrails or make sure the steps are completely non-slip. If you want to grow vegetables and keep chickens when you retire, think about that now. Think of all the ways you can save money in your home when you have more time to do it.

Will you need fences? Hanno and I have found that fences of various styles and lengths have been a feature of our backyard since we moved here 15 years ago. Sometimes we had dogs, always chooks, we now have grandkids and fences have helped us keep then all away from the garden. We moved our fences when the dogs died, re-fenced again when we had grandkids. Do you want to have a potting shed/green house? It's time to do all that work, and the fencing, in your fifties. It was my experience and that of a few friends of mine that we lost our strength between 55 and 60. Do all the work that will set you up later in life when you have the strength for it.

If you want to start a new hobby, raise a garden or chooks, now is the time to start researching and teaching yourself everything you can about it. There will be more learning along the way, but at least get a start on it now. Once you know more about one of your choices, it may not seem as sensible as it did before. When the kids leave home, learn to cook for two, or one. This will impact on your shopping and how you store food as well. Make sure you still eat healthy food and make the time to cook - you are worth it.

Look at your appliances - if you still have the same fridge or washing machine you had 20 or 30 years ago, now is the time to replace it. The new appliances use electricity much more efficiently than the old ones did so you might replace your fridge or stove now and notice a decrease in electricity usage. You might find you want to get rid of a few appliances you no longer need - such as the dishwasher, clothes dryer, microwave. If you can afford it, install solar panels - it's a sizeable expense but it will pay off in the coming years.

Make sure you maintain your friendships and keep your family close over the years. Retirement is the time you will rely on them much more than in the past. And when you do retire maintain your internet activities and enjoy your online communities, but make sure you enjoy the outernet too. That is where life happens.
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