How did that happen? Largely forced upon me by recession I reckon – not many employers are looking for 58 year old staff! Luckily, I’d been investing in pensions for a while and a few other things dropped into place at convenient moments. Now, though, I have to look at things in a different way. The first stage seems to be adjusting.
Sorting out your head
I had this view of retirement. A sort of feet up, cold beer, hammock kind of image. Now, it may be like that for some people but it doesn’t work for me – either I’m having a problem adjusting or this form of retirement isn’t going to work for me. Actually, I’m having a problem adjusting anyway and I think that’s simply down to the much more flexible routine. In fact it’s so flexible, routine is probably not the right word!
On the other hand fate may have thrown me a lifeline.
There have been studies suggesting longevity may be linked to retirement age but they are not conclusive. One thing IS conclusive – we ALL die sooner or later! That’s not meant to be a morbid observation rather, it’s a practical one. The sooner you retire, the sooner you can start doing things that YOU want to do rather than being tied to doing things that employers want you to do.
So, while the flexibility of my so-called routine is difficult to adjust to, there’s a goal to aim for! If I can get all the other things right I’ll have the freedom to do pretty much whatever I want. Thats part of the reason for writing this post – realisation is just beginning to dawn.
Of course, in retirement you’ll have less money, that’s almost inevitable. But, you should need less too. I’ve had some well-paid jobs in the past and, like many others, I’ve been wrapped up in the consumerism trap more than I should have been. That is, spending money on things I didn’t really need just because I had the money. Fortunately, I recognised that some years ago and started taking steps to free myself. Frugal living is now high on my agenda.
It’s not about being poor! It’s just about not spending for the sake of it. For example, I have an aversion to regular payments such as mobile ‘phone contracts and subscription TV. They’re commitments to pay something every month for which you may not get good value and may not be able to easily turn off.
There are many sites on the Internet giving good advice but one that I came across recently has some good ideas. Jacob retired at 33 and you can find out how here. If you’re young enough, you could aim for similar goals, if you’re not you could simply make your retirement better and more fulfilling. Jacob talks about financial independence rather than retirement but, since retirement often means lower income, it’s worth looking at ways you can live well for less as well as how you can earn from a diverse range of income streams.
Originally, my income came from just one area, my salary, now it comes from a variety of investments and periodic work projects. The work projects are varied and optional i.e. if I want some extra cash I’ll let it be known locally that I’m available. I’m not particular about the type of work provided I don’t have to travel too far to get it and the cost of doing it is low. Hence the emphasis on local.
Part of my frugal living plan is, therefore, to have a variety of income streams. In effect, I’ve minimised my risk. Ten years ago I just had my salary and if that had disappeared I would have been in deep trouble. Loans and other commitments would have buried me in a matter of months if not weeks.
Today, many of the loans are gone as are most of the monthly commitments. If my work projects dried up tomorrow I could survive for more than a decade on the income I have. No, I don’t have a small fortune, just much reduced expenses.
Most of the time, people call ME on the mobile so I cancelled the contract in favour of pay-as-you-go. It’s pre-paid with cash. If I don’t have any cash, I don’t make any calls. Subscription TV was replaced by freeview and freesat, the only cost being the hardware to do it – not expensive these days. I don’t have health insurance – if you’re reading this in the USA be aware that the NHS provides free health care and, contrary to common belief in some areas, it’s very good!
Insurance cover in other areas, such as death benefits, have been reduced to minimum levels – after all, there’ll be a decent pot when I go so the estate can pay for the send off! Day to day, I buy only enough fresh food that I will use in the next few days. According to Government figures, almost 7 billion tons of food is thrown away in the UK every year, 40% of which is fruit and vegetables. Some of this is down to cooking too much while some is as a result of buying too much and it going off before we get to it. This costs a staggering £3billion. Buy less, more frequently and save!
Save energy – it won’t get any cheaper, ever. Save by fitting energy saving lamps, installing insulation (there are often grants available) and double glazing. Supplement heating with wood if you have an open fire or have a log burner installed. Run the heating lower – fleeces are cheap and you can use them to go walking!
It’s true what they say – if it looks too good to be true it probably is. Treat investments this way and you won’t go far wrong. I’ve always invested in pensions and, now my pension is in a SIPP, I get much greater control over how and where it’s invested. But, in the interests of diversity and minimising risk, I have other investments including property and shares. I didn’t need to be rich to do this but it took a while.
At the time of writing a 4% return is considered good and relatively low risk. Some of my 4% comes from cash invested in notice accounts i.e. I have to give notice to make a withdrawal and some is in no-notice accounts – that’s the emergency cash!
Then there are the shares. I’m not a trading guru so I don’t buy shares to make a quick killing – I don’t know enough about this sort of thing and I don’t trust anyone else to gamble with my money. I buy shares for the long term, big companies with solid histories and global reach. Their products are things that people buy regardless, such as food, energy and general commodities. The sort of stuff people still buy even in recession. I also look for good dividends – that’s my income – but if the dividend is in double figures I get suspicious.
Filling in the days
I hate this phrase! I have absolutely no problem filling in the days, in fact, I have more things to do than I can fit into the average day. However, I still get people asking “But what do you do?” Whatever I want! If work is your only interest now, you’ll have a problem when it goes away – develop more interests right now! They needn’t cost much, if anything. It’s free to walk somewhere.
You could start by de-cluttering – put some time to good use and add to your income at the same time. Sell unwanted items on Ebay or one of the many free sites on the Internet such as Gumtree or Craigs List. Alternatively, put cards in the local shop or, in the Summer, have a garage sale. If you just want rid of it, use Freecycle or similar. If you’ve never done this sort of thing before check out this site.
[to be continued]