Retirement and Property
People tend to become serious about retirement only ten to fifteen years prior to that important shift in life. Before that, retirement is something far away in the future. Most people would put money away towards retirement in the form of pension fund contributions or retirement annuities. But the critical question "Will my provisions be enough for a stress free retirement?" will only become a serious consideration when the reality of that nearing retirement becomes evident.
Normally people will be more financially equipped to increase their contributions towards retirement provision when their children become independent. The 10 to 15 years prior to retirement is crucial, as any delays in increased funding will have a detrimental effect on life after retirement.
Retirement is meant to be a time to lessen responsibilities and the time to explore your creative side, to do traveling, and live in a way that was not possible before. In order to do that, retirement should be thoroughly planned, way in advance. The following questions should be considered:
- Do I have a financial plan in place that takes the ugly effect of inflation into account? Most people under- estimate the effect of inflation and only start to realize the debilitating effect of that a few years into retirement.
- Does that planning take into account the different scenarios such as what will be the outcome should the husband pass away first and also what will be the scenario should it happen the other way round? It is heartbreaking to see that either a husband or the wife takes care of financial issues for most of their lives together, leaving the other out of the whole planning process, and then, should the financial planner pass away first, leaving the other unequipped to handle financial matters. Often that results in a scenario where a gullible widower or widow gets overwhelmed by unscrupulous "financial advisors".
- Do we plan towards a life in retirement? Many men work very hard right through their lives, where their only outside activities often boil down to watching sport on TV and perhaps a game of golf every now and then. One finds it more often that women have a fulfilling hobby in place that can continue into retirement. But if the day of retirement catches you without a creative, meaningful way to spend the days, weeks, months and years that lie ahead, the reckoning will follow and what should have been a fantastic time will turn into a bitter and unhappy experience. One should cultivate a meaningful life from early on and not let a one dimensional approach, whether that be a workaholic or "soapy"- holic, lead one or both into despair.
- Some people are fortunate and live in a house and neighbourhood where they are completely happy and where they can just continue to live in that manner after retirement. But, there are also many people that are tied down to houses in surroundings that are not conducive to a joyful way of being. Do not be caught at retirement in a dwelling where you have been frustrated for a long time. Plan way in advance to change that when you retire. Go where your heart yearns to go and put down your claim to happiness. Buy an apartment or a plot at the ocean or in the woods, and start to make down payments towards a different lifestyle in future. You will even find that the commitment to a different lifestyle in future will have a positive effect on your present lifestyle.
- Friendship and family will become even more important after retirement. Cultivate meaningful relations with precious people right through your life. Do not wake up in retirement realizing that there is no one that you really want to see and that the people that you treasure have no real reason to come visiting you, even if you have this great house overlooking the ocean with a inbuilt braai on the verandah or game jumping over you in the woods.
- James Hillman, a freehand Jungian psychologist, writes about the very young child having a sense of what to do with his or her life. And in the Gospel according to Thomas there is this wonderful saying that the essence of yourself will save you from an undoing of your life, should you listen to it. Should you not, it will kill you. Many people have no choice really but to bring the bread home whether their work is fulfilling or not. There is nothing that stops you from walking away from an unfulfilling job after retirement and starting up something that speaks to your soul. However, do not put your retirement funding at risk. It happens too often and big mistakes cannot be rectified in retirement years! Take small steps if you do not have funds available to start a new venture. But do it! And get your partner in marriage to join you in such a venture. It can lead to a meaningful co-existence of two souls determined to make an impact on their dreams. Your post retirement property could well be planned accordingly. A small factory at home or a home office can form part of your daily existence and you donít have to pay any rent on that! It does not only have to be work, you can even consider to start studying in a direction that has interested you all your life. But find the strings of your soul and tie it up.
- Do not underestimate the value of property as an important financial medium of contributing to your life after retirement. An apartment bought at the low of the property cycle and thus at a low price, and at the right location, will most likely escalate comfortably above inflation in terms of capital growth, and rental income will increase every year. One should not take up to much risk during those 10 to 15 years prior to retirement and property wisely implemented into your financial planning should be a solid base as the risk factor is relatively low.
- And finally at retirement, retire and then re-tyre.
Wim van der Walt
5 November 2007