So now is the time to think about how you would like to live in those so-called ‘Golden Years’. Would you like to retire to the country, away from the city hustle-and-bustle, with a few hectares of land to breed dogs or grow roses? How about travelling the world, off to Europe for a few months in the middle of each and every year, enjoying the Mediterranean summer and avoiding those winter chills back home? Most of us have our dreams about how we would live if only the time and the money were of no consequence.
Unfortunately, for most people in their later years when they no longer work full-time, that dream remains just a dream. Their life frequently becomes an exhausting and financially challenging exercise. They are left balancing minimal incomes against the ever-rising costs of rates, insurance, groceries and the most basic necessities of life. The Government superannuation currently pays just $633 per week for a couple and $379 per week if you are single, and that’s before tax. Probably enough to stop you actually starving to death, but not much more.
Some years ago the goal at retirement was to have your house paid off, your car paid for, and a few hundreds of thousand dollars of savings in the bank. If you could achieve that – and quite a number of people could not – you were well set up for the rest of your life. However, times have changed. Interest rates on the money you have saved are now minimal. Great for borrowers but really bad news for savers. The interest you now get on that hard-earned nest egg squirrelled away in the bank is probably going to be only enough to buy you and your partner lunch once a month, providing you both share the one muffin that comes with your coffee.
However, all is not lost. You can still live your retirement dream; you just have to go about getting there in a different way. The ideal first step is to start planning for your retirement as early as possible. Then time is on your side. However, those of us who are rather more mature can still make a significant difference with proper planning and the right moves.
When you consider your plan remember that for most people there are just three requirements for a good life: somewhere to live, someone to love, and a reason to get out of bed in the morning.
Get together with pen and paper – and your partner if you have one – and take just five minutes to jot down the details of the life you would love to live in your later years. Obviously, you do need to apply some realism here – moving to California and becoming a movie star is probably out, as is winning a gold medal at the next Olympics. As every person’s dream is different, for a couple there would probably need to be some compromise around future plans. Both of you need to feel that each person’s dreams and desires are considered and accommodated.
Once you have that on paper, try and distil it down into just one or two sentences. What and where are the important points you need to establish, and you need this ambition to be as clear and concise as possible. It will be your goal for your future.
In my next column we will consider how you can get from where you are now to where you can live that dream.
Peter Lewis.
Peter is an established long-term Auckland residential landlord. He is also active in providing tenancy advice to the North Shore Citizens Advice Bureau and works within various property investment associations. He is not a certified financial planner or an accountant.