I am becoming more concerned about the state of 'Retirement Planning'.
Financial planning for retirement is the relatively easy part:
- Essentially just read 'The Barefoot Investor'
- Save, pay off debts, own your home, sufficient superannuation - done
One layer deeper is the Financial Independence community that suggests:
- Calculate your annual spending
- Multiply by 25
- That amount is what you should have invested into simple index funds
- Such that an average return of 7% allows you to withdraw 4% annually without touching the principal (accounting for estimated 3% inflation)
- Almost certainly oversimplified, but there you go
And even easier; if you are someone who will be claiming a pension that you have earned; or are someone who plans on allowing everyone else to chip in to cover your retirement, simply deduct those numbers from the above.
A concerning number of people will never achieve financial retirement anyway. But that is not the topic for today.
Again, I am becoming more and more concerned about the other 'Retirement Planning'.
Not the financial side.
But rather the side encapsulated by the question:
"What are you going to do until you die?".
I understand that many of the current pre-retirement generation are going to be 'Grey Nomads', migrating around and around Australia in a caravan, ostensibly for decades, presumably until they are too old and frail to continue.
How do you know you will even enjoy it?
Have you tried it?
Have you tried caravanning?
You will need to dispose of your faeces in designated holes at campsites.
Yep - you'll have to pour your poo into a hole.
Stuff will break constantly. And, in Australia, you will be sweating in your caravan 86% of the time.
Have you thought about that?
Again, have you tried it?
Why don't we think more about this practical, arguably more important part, of retirement planning?
This is important.
There is no point retiring with a nice-looking superannuation account, selling your outright-owned home then moving to the northern beaches if you are going to hate it and be bored.
Have you ever actually stayed "on the northern beaches" for any length of time?
Yes, I realise it is your retirement plan (and so is designated for your retirement), but why not just try it for a week. Then try it for a month.
Because presumably you are going to survive for longer than a month after you retire.
What are you actually going to do there?
This Ramble was all prompted by the meeting of a lovely American fellow from Colorado, USA, in his early 50s, on a plane from Bariloche to Mendoza in Argentina.
He was looking to retire in "the next few years" and was looking into potential new homes.
He will have lots to consider: geoarbitrage of income in USD and expenses in (rapidly devaluing) Pesos; languages; healthcare planning; insurance; optimising flight routes (eg from South America to North America for family etc).
The point is that this chap was looking to spend a couple of weeks in a few different cities in South America to get a feel for the place.
To try out living there.
To try out retiring there.
Most of you reading this are Australian. From my purely anecdotal evidence of not much more than 'my general vibe of the situation' - no one is doing this.
There is a generation of greying pre-departure Grey Nomads who have literally no idea if they are going to enjoy the retirement they have been struggling all their lives to save for.
No idea at all.
They can't have - they have never even tried it - caravanning, living in a yurt, a hobby farm - whatever.
This should terrify you.
It terrifies me.
So, here's what you should do: whatever you think you might like to enjoy in your retirement - try it right now (or at your next convenience, with leave, holidays etc).
Book a farm stay (often literally free if you supply the work) and try out hobby farming.
Hire a caravan (this is extremely accessible in Australia - there is no reason not to try this) and head north for a few weeks.
Stay in Bali for a month - not necessarily in a serviced luxury hotel, but in the kind of villa you might retire to, where you need to do some shopping, organise a sim card, and go out for dinner in the local dining precinct.
Ugh, sure, book a place in the "northern beaches"...
Because it could honestly be one of the most important retirement decisions you make - more important than superannuation contributions, health insurance, investing in your career, or paying off your house.
Because a negative answer of "oof I thought I would like it but that really sucked" is incredibly important.
Just imaging returning from your two weeks of caravaning having absolutely hated it and being so relieved that you are not going to work for the next 30 years until reirement age under the misapprehension that you are absolutely going to love the Grey Nomad life.
It is an aswer that potentially allows you to dodge a 30 year, severeal hundred thousand dollar mistake.
Now consider the following: how would you feel if you worked all your life, got to retirement age, sold your house, the caravan arrives, you head north...and...hate it?
There is no turning back the clock. We can never go back.
So without delay, go and trial retirement.
(Because you will likely have some fun along the way as well...)