Should you retire in a weak economy?
So many people I work with are still in the workforce due to the knocks their savings took during the GFC. Sure, Australia escaped a lot better than most countries That said, superannuation and investment portfolios took hits that may not be fatal when you’re young, but hurt a-plenty if you were planning to retire this June. They had the cruise booklets, the grandkids primed and the couch in just the right spot to catch the afternoon sun, and suddenly find themselves looking at another 5 years in the workforce to try and recoup the money they lost in those horrible months.
I can imagine no worse fate. Just when you think you’re free of the nine to five, you get shackled ever closer. So what can you do if your finances are looking paler than you would like, and yet you want to get out of the workforce?
There are some people who have the financial resources and the willpower to reign in their spending enough to be able to retire, even with diminished assets. This requires a fair amount of naval-gazing; if you don’t think you could handle making any cuts to your lifestyle, the best choice might be to stay in the workforce. If you think you can make some tough decisions and get some old-school frugality happening, then maybe you can stretch the money.
Tara Siegel Bernard has a couple of suggestions on how to do it.
Visualise your money goals
A financial planner interviewed by Bernard asks his clients three questions. If you had all the money you’d need, how would you live your life today? If you had five years to live, what would you do with that time? If you had 24 hours to live, what and whom did you miss?
The questions are designed to get you thinking creatively, about what you really care about and how to achieve that. The lifestyle you’ve adjusted to in your peak earning years may not necessarily be the one you really enjoy. Retirement may be important to you because you want to spend more time with your partner or your family. Maybe retirement is important to you because you’re tired from working, you don’t want to be in traffic three hours a day anymore, and your garden needs attention. If your reasons are similar to this, they’re inexpensive dreams and probably worth making the adjustment to your lifestyle that will enable you to retire sooner rather than later. A lot of the time, the expenses we think of as necessary are just trimmings and we can do without them just fine.
Track your spending
Know the ins and outs of where your money is going. It’s the best way to save money and cut back, especially once you realise that some expenditure is unnecessary. You do it for travel, why not invest some of that time researching and analyzing your bank statements and credit card bills?
Get communal
Connect in with your community. After working for so long, there’s a lot in your community you’ve probably been missing that will help you cut back. Why ot share vacation homes or get food cooperatives up and running? Something like downsizing a home is a sensible idea but an emotional decision, so make your choices rationally. After all, once you’re retired, you’ll have plenty of time to find all the best bargains.
How do you plan to retire early?
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