Money

The 5 pillars of an epic (& financially secure) retirement

Retirement is a word that literally means ‘to withdraw’.

Macquarie Dictionary says we retire troops from battle, retire to bed and retire from the workforce. It’s about seclusion, retreating or falling back.

But what if retirement was about becoming super fulfilled? Or super pumped that Australians have been forced to save and fund the second chapter of their life through superannuation and the age pension?

No more sleepy retirement plans

Bec Wilson has literally written the book on the topic, How To Have An Epic Retirement.

The book argues that the last 30-40 years of our life story deserves to be epic, especially if we understand the rules and tools that enable us to transform retirement from ‘giving up work’ to focus on ‘truly coming alive’.

The 5 fulfilment and financial pillars of an epic retirement

There are 5 fundamental pillars to underpin a fun, fabulous and financially secure later life.

Retirement pillar 1: Time

Time is the most precious element of retirement, and it can either be squandered or savoured.

“If you’re 60 today and you plan to live to 92, then you have 11,680 days’ worth of time left on this earth,” the book states.

  • If the last 5 years of your life are spent in poorer health, you can subtract 1825 days, leaving 9855 days to squeeze the best out of life.
  • Sleep will take up 3285 days worth of time
  • ‘Obligations and ablutions’ – think cleaning your teeth – will take another 985 days
  • This leaves you with just 5585 days – or 134,040 hours – of fulfilment to pursue.

There’s something about gaining perspective on how quickly time passes to realise that getting ‘value for time’ is the most precious element of being older.

Retirement pillar 2: Money

Most of us want more money than we have, but true ‘wealth’ is not about how much money you have but how you spend what you do have.

How to Have an Epic Retirement suggests there are 12 key money steps to guide this important pillar:

  1. Explore whether you are eligible for the age pension and when you can get it.
  2. Figure out the role the home you live in will play in your retirement income - where you live, whether you will rent or even rent out rooms in your house for extra income will matter.
  3. Consider whether you will work during your retirement.
  4. Build a budget that calculates the cost of your lifestyle in pre and post-retirement.
  5. Understand your superannuation.
  6. Find a financial advisor.
  7. Build a retirement savings plan.
  8. Cross-check how much money you really need against the so-called 4% rule, created by an actuary called William Bengen.
  9. Begin investing for retirement years to take advantage of the magic of compounding.
  10. Get your retirement cash flow right. Think about how you spend, drawdown on investments inside and outside of super and claim discounts through programs like Seniors Card and Citro.
  11. Prepare a will and estate plan.
  12. Review your life insurance.

The big question determining money and finances is how long will you live? None of us have the answer to that, but the next pillar may influence it.

Retirement pillar 3: Health and wellbeing

People aged in their 50s and 60s today are likely to have longer life expectancies than today’s lifespan of 85 for women and 81 for men.

The evidence reveals that people who keep doing some work will also live much longer than those who don’t.

Retirement pillar 4: Happiness and fulfilment

Life can have more meaning than merely working full-time.

Bec Wilson writes that regardless of people’s level of success, people aged in their late 40s and 50s are often at their most unhappy (and not because of career failure or stress).

“Researchers say that many people have a fundamental change of values in their 40s and 50s, starting to take family, community, charity and purpose more seriously, often causing them to look more closely at why they work and re-evaluate their purpose,” the book says.

Image source: Pexels

There are 4 big reasons people change careers in their 50s, 60s and 70s, including:

  1. Being financially independent and wanting greater purpose and connection.
  2. Their passions and interests have shifted and they want to explore the unknown and what’s interesting.
  3. They may find themselves unemployable due to ageism or lower cost bias in a particular industry.
  4. They want to give up full-time committed work and the stress associated with it to chase hobbies, interests and travel goals.

Retirement pillar 5: Your home, ideally own it!

Your home is a huge part of your retirement lifestyle - it ideally needs to be owned debt-free with no mortgage and should be suitable for you to age in place.

And there are no right or wrong answers, only very personal ones. But your ‘retirement housing strategy’ forms a huge part of your financial planning, assets and lifestyle.

Bec Wilson recommends everyone chants “My home in retirement should be a place to live that is right-sized for my post-retirement budget and needs.”

In other words, you don’t need to live in the same 4-bedroom home you may have raised kids in or purchased to be close to work - you can live wherever your heart desires.

It's important to have fixed housing costs when you retire, and owning a home without a mortgage is the simplest way to do this.

SOURCE: AIHW data reveals declining rates of home ownership

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