By Bernard Salt
This article originally appeared in the Australian – Special Report
When you played sport you had a game plan. When you started your first job you had a career plan. (OK, so that plan didn’t work out as intended, but you had a plan.) When you met your life partner you had a life plan: engagement, wedding, house, kids. When you started your own business you had a business plan.
So, why not a game plan, a life plan, a business plan all rolled into one for retirement?
I mean, any sort of plan has got to be better than just wafting across the retirement line and wondering, what’s next?
However there seems to be a hesitation to developing a retirement plan and partly because such plans end up at the same destination: the great abyss.
Planning could deliver a better quality of living
I think many people would simply prefer not to even consider, much less plan for, their own mortality. Well, I say, get over it. Life’s journey is more efficient, carries more meaning and delivers a better quality of living when there is a plan.
Here’s where I think you need to start planning for retirement.
Planning for retirement starts, for most, in their 50s
There is a remarkable transformation that takes place when Australians pass into their 50s. In their 40s, social chat focuses on the achievements of kids — your kids, your friends’ kids (but mostly your kids) — as well as on renovations and careers.
After 50, the term superannuation suddenly enters the lexicon in a profound but curious way. People will talk about “the need for super” but no one will discuss how much super is enough super. And of course there is no right or wrong answer to this question. Some super is better than no super, and no amount of super is enough super.
It’s quite a philosophical question when you think about it.
Hoping for the best rather than dealing with the issue
Planning for retirement sounds like a logical thing to do but it isn’t popular. And the reason is that, not only does it lead to the great abyss, but it exposes human failings along the way.
Far better, for some, to pretend there is no issue to address, to place faith in “the universe” to provide (including the saviour option of winning Lotto or of partnering up with someone who has provisioned for retirement), to develop a soothing narrative that explains why life’s been cruel to you and to you alone, or — and I must say I like this one — the “you could be dead tomorrow” logic which obviates the need to plan years in advance.
Developing good saving skills early pays off
The best thing you can do to deliver a better retirement isn’t signing up to a whiz-bang super fund in your 20s, although that does help. The best thing you can do is to develop good saving skills in your teen years and to carry this discipline throughout life.
This is the “out there” idea of taking responsibility for your own circumstances and not being tempted by the seductive option of rationalising that “life’s been hard for you” so why bother?
Yes, it is true you could be dead tomorrow. Yes, life has been harder for you than for others. Yes, you have had rotten luck in relationships, in the housing market, in your career (and, yes, it probably was because you were never sufficiently ruthless).
Women likely to live for another 25 years in retirement
The fact, however, is that if you have passed the 60-mark there is every likelihood you will live for another 25 years, or longer if you are female.
So, let’s get down to tin tacks.
Let’s assume life beyond 80 is constrained by limited mobility and health issues. Some of these years will be spent alone. Very few “partnerships” survive beyond 80. In this world there are 20 good years of active retirement living to be fitted into the post-60 stage in the life cycle. And, indeed, many more years if health and finances hold out beyond 80.
In the first of these two active decades of retirement you’ll be fitter (and richer) than in the second. Here’s how to manage these years. In your 50s sock as much into superannuation as you possibly can. The kids should be off your hands. The house should be paid off in this decade.
Continue to work and plan for a working life beyond your current role. It might be in the same organisation but in a contractor role. Forget about being a director; you’re not in that league.
Build good relationships and talk about the way you think you can make a contribution going forward. If there’s someone five to 10 years older doing something like what you want to do, then cite that example.
Scale back work in your 60s
In your 60s, scale back work from five days to four and then to three and two after the age of 65.
The idea is to remain connected into the commercial world and to ramp up the retirement and lifestyle component.
Find a hobby, join a “Save the Wetlands” group, travel with your life partner. Or, and this is one of retirement’s greatest revelations, sometimes “being retired” exposes both parties to the fact they don’t get along. Sometimes, happiness in retirement involves detoxifying your life of relationships that aren’t working.
Dividend stage of the life cycle
Independent travel during the 60s is one of life’s joys. Finally, you can do what your millennial kids were doing throughout their 20s.
Travel the world. Learn how to use Instagram. Make your 60-something friends jealous. Make your 30-something children by now immersed in mortgage, work and kids, jealous (actually they’ll be pleased for you).
I call this the dividend stage of the life cycle and it very much suits the baby boomer logic.
All good things come to those who wait, and especially to those who have made sacrifices over a lifetime.
The second decade of the active retirement stage in the life cycle involves slowing down.
Slow down but keep active
Perhaps choose the cruise option rather than independent travel. Health issues and reduced mobility might constrain physical activity. Throughout these years there needs to be constant — meaning daily — investment in physical exercise.
Former PM John Howard was often ridiculed for his daily power walks when he was in office. I admired his self-discipline, and I am sure that this investment has delivered him better mobility at age 80. Left to its own devices the human body will atrophy; you need to get it out there and run it (or walk it) around the block every day to ensure that everything keeps working.
Invest in relationships
The 70s should be the peak “grandchildren enjoyment” stage. By this age, your own kids will be in their 40s with primary school or teenage children. Now is the time to create and to leave an impression on the next generation.
Do you want your grandkids to remember you as old and crotchety or as active, fun, funny and warm? Invest in good relationships with your kids, with your kid’s divorced partners, with your grandchildren. Let bygones be bygone and seize these precious years and make them count.
It’s the 80s and beyond that are difficult. Or that can be difficult. Partners and friends die off. Even relationships with kids, now in their 50s, can become strained because of life matters. Perhaps their life hasn’t turned out the way they thought it should. Perhaps they are resentful of your happiness? Of how “easy” you had it? Or, perhaps it’s the other way around.
Remain connected to your community
The most difficult thing beyond 80 is to remain connected to others in the community.
Make sure you are positioned near to your family. There’s no point being 80 in the Outback if your kids and grandkids are living on the coast.
Build relationships and connections beyond your immediate family and dwindling circle of lifelong friends. Join a choir. Go to church. Become an elder. Even if you have doubts about God, the process of interacting with a community can be rewarding.
Have your affairs in order
Make sure you have prepared a will, that it is current, that it is in a place where others can find it.
You need to have all your affairs in order. Leave a legacy of a parent and community member who cared, who worked, who sacrificed, who was a role model and who was rock solid.
And along the way make sure you take the dividend of an enjoyable, rewarding life that had meaning to you and to others.
Disclaimer: The information contained in this communication is general in nature and does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate for your personal circumstances prior to making any investment decision.