Pete Wargent blogspot
Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.
"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.
"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.
"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.
"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.
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Wednesday, 7 November 2012
What does retirement mean (and how should you prepare for it)?
Depends who you ask…
“As in all successful ventures, the foundation of a good retirement is planning.” - Earl Nightingale
We have such differing viewpoints on retirement means. Does “life begin at retirement”? Or is retirement about “doing nothing, without worrying about getting caught”?
Ask those who sell holiday homes what retirement means and they’ll tell you it means living the dream! - waking up on a sunny day next to the beach, a round of golf, a leisurely swim, relaxing in a sunset bar or restaurant.
Ask a youngster, they’ll probably say retirement means opportunity, to do whatever you want without being told what to do! In the conventional sense, retirement means leaving one’s job, usually upon reaching a prescribed age.
Although worryingly, the term can be either passive or active: you might retire, or you might be retired by your employer, hence the maxim: “the best time to start thinking about retirement is before your boss does.”
The word retire is one of the English language’s most wonderfully loaded terms.
Imagine if you asked an economist for an explanation. To her, retiring might mean taking an asset or money out of circulation. Ask a baseball pitcher? To him, it would mean ending a batter’s turn at the plate or the other team’s ‘at bat’.
Enquire of an Army General and he’d tell you retiring means retreating or withdrawing; but quiz a naval officer and he may speak of retiring an old battleship.
What if I described someone as ‘shy and retiring’? You’d assume they’re disinclined to be sociable. But if I told you I was going to retire you’d probably think I was heading to bed, or at least to recuperate in seclusion.
Or it could even mean I was going to recede or simply disappear from view completely, such as when the sun retires each evening or sets on our lives.
Confusing! Thank goodness I’m English!
In fact, the word derives from the French tirer, meaning to draw or pull - tirer les rideaux means draw the curtains, if memory from school lessons serves correctly. Perhaps we should see retiring as drawing the curtains on one chapter of our lives in favour of another?
The big challenges of retirement
As alluded to above, the problem for many Aussies is not really knowing what retirement means for them, and therefore it’s difficult to formulate a coherent strategy.
I’m a long way from retirement age, but I understand from others that it’s vital to have a plan to stop yourself becoming irrelevant in retirement. It can be problematic for men in particular, who tend to define themselves by what they do.
“I’m an author. My brother’s a lawyer and his mate’s is a mechanic, but he married an accountant… ”
This confuses when a career ends, for it can lead to a disconcerting loss of identity:
“I’m an ex-accountant…I used to work for a large firm…I once had clients in mining…”
Women tend to be more adaptable than men. Maybe that’s because they’re less inclined to define themselves solely by their choice of career. Perhaps because they may also have taken various important roles in their lives: student, career woman, home-maker, carer, mother.
Research seems to show that a happy retirement for most requires a sense of purpose and regular human contact.
Some find this through continuing to work, but in a voluntary capacity – continuing to do what they did before but without being paid for it. Nothing wrong with that, provided of course, that’s what you want to do!
Others contend that the entire concept of retirement is a working/middle class abstract – the wealthy design the life they want to lead and therefore the very idea of retirement is meaningless to them. Interesting ideas.
The reality for most Australians
Will it be “goodbye tension, hello pension!” or just “twice the wife, but with half the income”?
Unfortunately, the reality for most Australians is that the average superannuation lump-sum payout is only in the region of $200,000 for men and significantly less for women, yet we could live for several decades beyond the retirement age.
What happens then? Spend the lump sum quickly – perhaps on a 'SKI' holiday - and live on the Age Pension?
I’m not here to cast judgements on the adequacy or otherwise of social security benefits, but I’d urge you to consider the level of the Age Pension you might qualify for and compare this to your existing monthly expenses. In many cases, the result is a horrifying mismatch.
What we need in retirement
It’s clear that a happy and successful retirement requires careful, thoughtful planning.
What’s needed in retirement is an ongoing income stream which allows us to do what we want, when we want to do it. You can then lead a rich, exciting and fulfilling later life rather than one which is dictated by financial pressure.
The way to achieve the income stream you desire is to build a portfolio of assets when you’re working, which can be converted into an income stream later. The superior investments to acquire while still in the workforce are two-dimensional assets - those which can grow, but also are income-producing.
Then you’re not forced to sell them in retirement in favour of so-called ‘income assets’ such as term deposits, which pay a handy income in year 1, but the long-term performance of which is diabolical.