The Business of Retirement: Stage 2 – Planning
JUST DO IT
Last month I wrote about the realisation that, no matter what time of life you are at, retirement will come upon you at some stage (whether you like it or not). Whether you choose to retire early or are faced with having to, the earlier you start planning the better. We all know this and we’ve all heard it before, right? Here’s the rub – there’s a big difference between knowing it’s coming and realising it’s coming. My revelation came after I truly realised it. Realisation meant I suddenly had to face reality. No matter when you face it there is going to be a degree of pain. It’s either a little bit of pain over a long time or a lot of pain quickly. You know that saying “time flies when you are having fun”? Well, let me tell you when it also flies …when you’re late fifties and you’re staring down the gun-barrel of retirement at 65!
Step One for me in the planning process involved a lot of hard truths:
Compromise
Comprising your spending-lifestyle for the sake of saving or investment sucks at the best of times but there are two choices for most of us when it comes to planning for retirement. From an income point of view, when you have a job you can choose to compromise when you no longer have a job you have no choice but to.
Planning vs. Dreaming
Remember when you were a kid and you had a nightmare and you’d run into Mum and tell her about it and she reassure you that dreams weren’t real? For some reason, as adults, we start believing again that “dreaming” something will make it happen. I dream I’ll own a Gulfstream jet to fly me on holiday. Will I? Nope. Dreams still aren’t real – Plans are. Don’t confuse the two.
Visualisation
I don’t know how many times when I worked in the corporate world I’d go on courses where you had to “visualise” something and it would always be positive. You’d envisage driving down the road in a nice car in the sunshine with the birds singing. If you haven’t planned for retirement then visualise standing on that same road (as you can’t afford a car) in the rain. As humans we’re programmed more strongly to react to pain than pleasure – it’s how we survive as a species. Not having enough resources in retirement hurts.
Step Two involves a lot of hard work
To retire you need money or a source of generating money. I’m not dictating how people achieve this but, for me, I love property and it’s worked well because I’ve worked hard at it. I’ve always loved tennis and I play a lot of it. One of the things I like about it is that if I lose a point I only have myself to blame, if I win then I get all the glory. Investing in property is a lot like that for me, I rise and fall on my decisions. My investment class is helped, and driven in part, by the fact I own a Mortgage Broking company and I live it every day – and I’m good at my job. However, everyone else has exactly the same opportunity – they can sit down with someone like me and map out a plan.
On the other hand you might like investing in shares or another investment vehicle, which is fine too. What I would advise is that you get to know your area of investment, become an expert in it or surround yourself with a team that you trust who are expert in it. In my experience, diversification is a great way to protect what you’ve built but specialisation is a better way of growing an asset/income base. Bill Gates didn’t slave away for years designing computers and selling Tupperware, he specialised and he’s looking ok for retirement now. Pick an investment vehicle you can be passionate about.
Retirement is an absolute certainty at some stage for everyone and you need to accept (and act on) that. Like most people you’ve probably seen Shia LaBeouf’s “Just Do It” video on YouTube. On first view I thought I was watching a guy who had lost his mind but, in the context of my belief about how seriously, passionately (and early) we should planning for retirement, it fits perfectly.
“Just Do It” – who would have thought the best guide to starting planning for retirement would be Shia LaBeouf & Nike?