Planning for retirement

Dear friends, I've opened the Simple, Green Frugal Co-op blog again. I started the blog back in 2008 with a group of bloggers I invited to join me. When things got busy, I retired it but now it's back with its unique take on simple life.  Click here to go there.

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I unintentionally fell into retirement when I stopped working because my head was about to explode. When I tried to reorganise my world so I spent less, one thing lead to another, everything started getting better and I never returned to work; I was in my mid-50s. Even though my retirement wasn't planned, it's been the most wonderful time for me with my family. I don't think I really thought about retirement before I realised I'd retired but I have to say, it's the golden treasure at the end of the working rainbow. Hanno planned his retirement and we'd paid of our debts before he retired but after retirement, he was bored so he bought a little shop in Montville and worked another six years.

This isn't where you'll be most of the time.  : - )

Being self-employed all those years, I only had a small superannuation package because there was always something else to spend the money on. Had we not been debt-free, there would have been no way I could have thought about retiring when I did. Now we're both on the pension and because we don't pay rent, have paid off the mortgage and have no other debt, we save a couple of hundred dollars every fortnight. And we live well. Our friends think we should travel but we're content being here and doing what we do. We might go for a trip to Tasmania and Victoria next year after the new book is out but that will be it. There will be no flying holidays and no extravagance.

We taught ourselves to be frugal because we could see that if we cut our living expenses, we would have a good life using our time wisely. I suppose we swapped working for a living for working for a life. We became much more productive at home and made a lot of the things we used to buy, and that made all the difference. That's one of the wonderful things about retirement, you have time. Your time to do as you wish. So if it is your wish to cut expenses, look for bargains and be more productive at home, you'll have the time it takes to do all it. And instead of being one of the people who feel useless in retirement, you can take control of your life and lead it to places unexpected.

There is a trap a lot of us fall into, and I fell too. And that is not taking retirement seriously, not making a retirement plan and not making your own estimate of how much money you'll need. The way we live doesn't fit into the mainstream estimates because a lot of our value and assets is in the work we do. And that's extremely difficult to plan for because you don't know how fit you'll be and how much you'll be able to take on yourself. My only advice is to judge your future in part on how you are today. If you've been healthy most of your life and plan to live the way we do, be optimistic and believe you can do the work. If there's some doubt, be more cautious.

You need to be doing this from when you first start working and although I don't think you need the amount of money our governments tell us we need, you do need enough to cover the kind of lifestyle you wish to live in retirement. So if you want to travel, you'll have to factor that in to your retirement estimate but if you're content to travel locally, then stay at home, you'll need much less. Don't forget, if you are very young now, you might not have the benefit of a pension so this long term planning is vital for you.

So what are the other things that can be planned along the way?

• Pay down your debt as quickly as you can. Once you've done that, you can start saving or adding more to your retirement fund. Don't put all your eggs in one basket either. I know a couple of people who lost half their retirement savings during the GFC because all their investments were in real estate. Diversify, use your common sense and treat this money like it's your lifeline, because it is.
• If you think you'll move before you retire, do it well before hand. There are a lot of things you can do in your own home to help you stay fit and healthy long into your old age. Things like fences, solar panels, vegetable gardens, chickens and bee hives. So if you need to move or you want to make those modifications to help you when you've retired, do it beforehand, not afterwards. You'll have the money for it and the energy to do the work yourself.
• Learn how to cook, sew, mend, recycle, garden, ferment, knit, fish, and as much about the maintenance on your house and car as you possibly can.
• Make a budget that you can live on and put your savings to work. Then menu plan, stockpile, shop for bargains, bake and do as much for yourself as you can before you retire. If you're using those skills when they're not essential, you'll adjust to retirement more easily.
• Try to live near your family or connect with your community so you have a support system around you. Stay healthy and fit and in your own home for as long as possible.  Despite the scaremongering, most people live out their lives in their own homes, not in retirement homes. The more you can prepare for a long life at home, the more successful you will be.
• Remain interested and involved and don't believe that older people can't do much. There isn't much respect for older folk now but don't ever let that stop you doing what you want, when you want to do it. 
• Make your own rules.

This is a question for all the stay at home mums and dads out there: Do you have a retirement plan that includes savings or insurance? I think most people will say no but it's an important part of our life's planning. The unexpected does happen and you have to be prepared for it. If you are working at home and have made plans for your financial future, please share  how you've done that.

There is some excellent information here about retirement for Australians. Even if you're 30, it's essential reading.  Information about getting ready for retirement. And here is a retirement planner, it's an Australian government product so don't worry about investment people harassing you after you fill it in. It's confidential and very helpful. Again, for every age and even if you don't live in Australia, it will give you some good ideas.