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From now into the future

Now that I’m still in lockdown and have free time, one of my goals is to get a better handle on planning for retirement. I’m in my 30s and while I’m relatively still young, I’ve realised it’s time to start focusing on it more.

Lately, I’ve been more cognizant about how people around me are spending their retirement, and I’m hopeful that we’ll be able to experience the same when S and I are at that age.

I do feel like we’d have to be a bit more creative about how to get there. Things were different a generation ago. Back then, people with modest jobs on average incomes could purchase a house, pay it off within a reasonable timeframe, retire then spend their days in their homes.

Unfortunately, space being a premium in Sydney, prices have skyrocketed (houses cost 9.3 times the average income at the moment) as people are pushed further out. It’s not uncommon to hear stories of multimillion dollar houses in prime locations being sold – and the vendors weren’t super rich people either. They were middle class folk in modest jobs who happened to build or buy those homes 40 years ago and stayed there. It’s easy to complain that someone in a similar situation right now could in no way afford something like that – or if they could, they’d have to be mortgaged up to their eyeballs and have no quality of life otherwise. But of course, back then those areas weren’t desirable, they only became so when they gentrified. And people back then worked all their lives to pay off their mortgages.

Current circumstances, and my specific situation especially, are vastly different. I went to university, plus an additional 4 years of post-graduate study, which meant my savings went dangerously low on several occasions. I lived in a few countries before arriving in this one ~10 years ago. I had a couple of career changes which meant I started from the career ladder bottom-most rung more than once.

I acknowledge that being able to do those things – the travel and the study and the career changes – are luxuries. And that they came with consequences. Comparing myself to how people were decades ago, I’ve got less savings and assets like superannuation or equity in a freestanding home. But that’s a choice I’ve made. It is what it is. However, it means I need to do a bit more to get my retirement plan up to scratch.

At the same time I know I – we – are lucky. For one, we’re pretty good savers. Personally, I record every cent I spend (advice from my accountant grandfather). This helps me understand where my money goes so I know I’m spending it on the right things and saving it if not. However, “saving” and “property” are my only wealth strategies at the moment. I remember vaguely researching shares before, then giving up on that because I had purchased my apartment and decided to put all my money into paying off the mortgage. I don’t know if I should continue to rely on putting all my savings into property, or if I should get into investing. And if yes, what? How?

I’ve been trying to read books but they seem either to be super basic (“step one: make sure you earn more than you spend”) or geared to people who have already settled on an investment strategy. But I’m committed to this. Here’s to financial freedom!

(And whaddaya know… six posts down. One more to go!)

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