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My Best Way to Retire is …

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I am often asked the best way to retire.  It’s not an easy answer because everyone is different in terms of their dreams, personal situation and money.  However, I can tell you with genuine insight how I personally am approaching and dealing with retirement.  I’m in the second half of my sixties and so far, so good.  This is how I’ve handled it so far.

The first thing I did was not to sit back, do nothing and let it just happen to me.  I started thinking seriously about it around 10 years ago.  I thought about it a lot and actually visualised what I wanted my retirement to look like, and feel like.  I practised what I preach.  That is, to be able to enjoy my retirement on my terms requires some fair dinkum planning.

A question I get asked a lot is …. “If you are retired, why are you still working?”

My answer is that I hate golf, I am a lousy fisherman and I don’t want to haul a caravan around Australia.

When I thought about my own retirement, I thought about three (3) things:

  1. Purpose
  2. Health; and
  3. Money

 

Health

The way I see it, without good health I won’t be enjoying retirement on my terms.  The money will play a different role.  It will be financing medical costs and life extension rather than the life I had planned.  So when I wake up each day, it is not money or purpose I am thinking about.  It is maintaining good health.  Because it is only with good health that I can make the rest of it work.   I confess right here that I haven’t been anywhere near perfect or disciplined about this over my life and, as so often is the case, I got a big wake-up call recently, which fortunately I survived.  Fortunately, it wasn’t a heart attack or a stroke but only because I am a believer in regular medical check ups and the signs were detected early.  It was two things.  The first was 5 years of Atrial Fibrillation for which I eventually had two catheter ablations.  The second was a deteriorating aortic valve which resulted in an open heart valve transplant last year.  After all of that, I lost weight, reduced the lifestyle risks and am making the most of my new lease on life.  I consider myself very fortunate to get another go at good health so it remains my top priority.

Purpose

I struggled with this for a while because I wanted to do something worthwhile and self-satisfying.  I’m a bit of a home-body but not 24/7.  I do like to travel, so does my wife.  At the other extreme, I didn’t want to be on holidays forever nor do I want to hang out with old farts, comparing health problems and medications.  I think that is the fastest way to meet the grim reaper.  I know not everyone likes their job but I do.  I actually like being a financial adviser because it helps people, and after all these years I have gotten really good at it.  So why give it up?  The solution for me is to work part time and leave plenty of time for coffees, travel and socialising.  There is no rule that says retirement must be devoid of all work, or that money can’t be earned along the way.  The way I see is that it’s nothing more than a new and evolving phase of my life cycle and I can structure it any way I like.  Besides, if I am working, I am not annoying my wife and she is free to enjoy her retirement in a way that best suits her.  Also I think flexibility is the key here.  If I find something more than work that I am more passionate about, trust me I will quit working and start doing that.  I most certainly don’t view retirement as a homogeneous journey.  For me, I want it to be a time of fulfillment as well as a time of new experiences.

Money

Money is certainly important but not my top priority.  There are many ways to get money and it really doesn’t matter how, provided that it’s legal.  In my view, the main purpose of money is to provide choices throughout retirement, such as accommodation, standard of living, travel and fun; then in later years (much later hopefully), to pay for medical expenses, aged care and a funeral.  Money doesn’t buy health or purpose.  It also doesn’t buy a happy marriage or replace a lifetime partner or lost friends.  For me, my biggest retirement goal as far as money is concerned was to be debt free before cutting back on work and allowing myself to think ‘retirement’.  Without debt, I can live very cheaply if I want to; and importantly I can conserve money that might be needed later if health and mobility deteriorate.  Of course, out of all the different types of personal debt, the home mortgage is the one that takes the longest time to whittle away.  But credit card debt and personal loans etc also have to go.  In retirement, carrying debt is like dragging an anchor.   It will strip away retirement savings in no time, which can make the later years of retirement downright miserable.  My second priority is to try to be as tax-free as possible.  Of course this is impossible while I am still working part time but access to superannuation benefits after age 60 (with conditions) and after age 65 (without conditions) certainly helps the cause.  In the end, everyone in retirement needs some form of income to live so in that sense, paying tax if necessary is generally a good financial sign.

So there you have it.  That is my take on retirement.  What you do will be different to me, but the process of planning it should start early.  The reason I say that is while there is plenty of time to contemplate your retirement purpose, you might want to start getting a grip on your health before you get the frightening wake up call; and you might want to start saving and buying some investments that can help with the retirement cause later on.  The issue isn’t whether you utilise or trust superannuation or not.  Superannuation for all its complex rules and government tinkering is just a tax concession, nothing more.  The main game here is you taking action early enough to squirrel away some money and assets for later on.   The challenge is to do it when you have so much else on.

Call me if you want a chat.  All I charge for a first meeting is a cup of coffee.   I am much more interested in getting to know you and your circumstances; and figuring out how I can help you, rather than what I can sell you.

Cheers

Gary

 

Retirement – Making the Most of the Last Lap

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Retirement is generally regarded as quitting full time work somewhere in our 60’s, and starting a new phase of life without having to trudge off to a daily shift at the salt mine.

Although retirement can last 20 or 30 years, it is the last lap because there is only one outcome at the end of it.   We don’t get any younger; the body starts to fail and at some point we die.

So broadly speaking, retirement has two (2) phases which are often blurred and overlap.

  • The early part is enjoying a new-found freedom and having fun.
  • The later part is the drawing near to life’s end

The early fun part often requires part time work and some budgeting so that money doesn’t run out.  The later end of life part always needs some serious planning to make sure that (a) any time spent in failing health or aged care runs as smoothly as possible; and (b) we don’t leave a mess behind after death for our kids to clean up.

In my case, I am 66 and for me retirement is pretty good at the moment.  I survived a serious heart problem last year and now I run my business part time from home.  I am healthy and relaxed. I spend time with family and friends; and I work at my own pace.  That would be at enjoyable pace rather than high speed, high stress pace of the past.  I see fewer clients than I used do and they have to be a little more patient sometimes because they find me away on a holiday occasionally, whereas two years ago that would never happen.  Work is now fun and it keeps my brain active.  I feel I could do this for at least another decade; and I will if I can because I love what I do.  I am very good at it and I know I can make life so much easier for others.

So here I am at the start of my retirement, and I am very mindful of the deterioration of health and end of life that is somewhere ahead.  So here is my top ten (10) checklist to make sure that my own affairs are in order:

  1. Get debt free, my number one priority as it is a lot less expensive to live debt free in retirement.
  2. Boost super as much as is affordable.  The government constantly screws with it but it is still the best tax concession saving we have.
  3. Live as tax free as possible.  Superannuation pensions and the Age pension (Centrelink) help this cause, while income producing assets outside super (e.g. shares and rental properties) tend to work against this cause but if you are happy to pay tax then it’s fine.  Every situation is different so it is a matter of structuring for the best result.
  4. Review personal insurances.  Is all of it still needed?  Typically, it gets hellishly expensive as we get older.
  5. Check insurances in your super fund.  You are paying for it even if you think you aren’t, and they are also age-based premiums.
  6. Review your Self Managed Super Fund.  Is it still appropriate in old age?  Do you have a plan for it?  So many SMSFs perform poorly and there is no mercy from the ATO for ageing trustees.  Additionally, there are some real benefits for older people to transfer back to retail super (depends on your situation though).
  7. What to do with your business?  Business owners need to make decisions about what to do with theirbusiness and the company or trust that owns it.  Will it be a family succession or will it be an external sale?  While succession continues your legacy and helps the family, proceeds from a sale can attract a big capital gains tax concession if you transfer it to super.
  8. Plan for mental health deterioration.  We all need to have someone we trust beside us to make decisions and sign on our behalf (i.e. Enduring Powers of Attorney and Medical Directives).
  9. Plan for aged care.  Nobody wants to go there but in the event that it becomes necessary, have a plan and tell the kids well in advance so that the decisions are yours, not theirs.
  10. Organise your Estate.  This is an area that two thirds of Australian adults ignore which is silly because your family then has to deal with the Public Trustee, which can be an excruciatingly long, frustrating and expensive process.  For most of us estate planning is so much more than a will because a will only covers assets in your own name (only).  Separate arrangements must be made for super, companies and trusts.  The idea is to make your instructions clear through your will, your super nominations and other post death instruction documents.  Also be aware that you can put extra protections in place for a disabled beneficiary; and extra protections in place for yourself against a problem beneficiary (e.g. a child with a marital, gambling, drug or spendthrift problem).

So there it is.  My message to you is get this stuff done, find a purpose in life, and have an enjoyable retirement with a lot less to worry about.  Call me anytime to discuss because nothing I have outlined here is straight forward.

Cheers

Gary