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How to have a worry free retirement – Part 3

Thursday the 24th of November was Thanksgiving Day and this year we had something very special to be thankful for, as it was also settlement day for the last of our investment properties and the proceeds from the sale was enough to pay off our home mortgage. When we prepared our 10 year goals in 2005, one of our goals was to own our home outright by 2011 and we have managed to achieve that goal. Being completely debt free is a wonderful feeling, and it is another step towards a worry free retirement. In Part 1, I mentioned that the key to feeling secure is having income that exceeds our expenses. In Part 2, I suggested a few ways to increase income and today I would like to share some of my thoughts on reducing expenses, without compromising on your quality of life. Reducing debt is one way of reducing your expenses. Without mortgage payments, our living expenses will be significantly reduced and we can increase our contributions to super with the extra cash.

The good news is you do not need a lot of money to have a happy life. Last week a friend of mine attended the funeral of a 96 year old lady from our church and she thought this lady’s life was a good example of a life well lived. My friend could see that this lady was well loved by all her children and grandchildren and she was living with one of her children when she died. She helped her children care for their children when they were young, and built strong bonds with them by doing that. She endeared herself to everyone by helping them in whatever way she could. My friend always wondered how this old lady was always able to remember her name so well and very touched to find out that it was because she prays for my friend every day. I don’t think this old lady had much money but her life seems so much richer and fuller than many who may be materially more well off than her.

That lady reminded me of my maternal grandmother who was a homemaker all of her life so she never had much money, but everyone loved her and some of my happiest childhood memories were Sundays at her house. Her kids and grand kids would drop by her house every Sunday to visit her and to catch up with each other. My grandmother was a great cook and a keen gardener. She was always busy in her kitchen or garden and there was always something yummy to eat at her house. She had 35 grand kids so she had to have a schedule for the grand kids to have sleepovers at her house. I could not wait for my turn to stay at my grandma’s house as there was always fun activities to do which would include simple pleasures like feeding her fish, killing snails in her vege patch or making cookies and other goodies for Christmas and Chinese New Year.

My parents chose a totally different path for their retirement. They turned down offers from the children to live with them or close to them, preferring to move far away from the children to be with their own retirement community. They spent their time doing leisure activities with other retirees. They refuse to have anything to do with new technology like mobile phone and computers and live in their own time warped world. None of their grand children really know them as they only see their grandparents once every few years, and have no idea how to relate with them. If I had to choose between my mum’s and my grandmother’s model for retirement, I would choose my grandmother’s model for myself.

Kingsley and I are saving responsibly for our retirement and at the rate we are going, we should have a pretty decent amount in super by the time we are ready to retire. By converting this into annuities progressively as described in Part 2, we should have a decent income stream to live on comfortably when we can no longer work. However, we do not know what will happen in the future. Ralph Norris, the outgoing CBA chief executive warned recently that a GFC II is on its way and no one knows what the final outcome of this will be. Deflation could erode the value of our assets or inflation could erode the purchasing power of our cash. Even if that happens, I am pretty confident we can still have a rich and happy life as long as we have good health and good relationships with our loved ones, just like the two role models I mentioned earlier.  Our picture of a happy retirement is not just about having lots of money to enjoy ourselves. It includes supporting our family and our community in whatever way we can. If we have more than we need, we would like to bless others financially. If we don’t, hopefully our kids (or grand kids) would be happy for us to move in with them. Without a mortgage or bills to worry about, even the aged pension should be enough to live on pretty comfortably, so we don’t have to worry about becoming a financial burden to them or having to eat dog food, ever.

Christina McDonald

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