Last week we looked at a key point - don’t go into a retirement village too soon and lose “your trade-your-house-down-&-release-more-cash-fallback-position.”
Remember Ron? Later on.
The MREINZ recently compared housing data over the past five years, and found that the annual growth rate (when adjusted for inflation) for house prices was:
- 6.2% in Auckland
- 5.8% in Canterbury
- a loss – yes - a decline - in many parts of NZ
Three important points about real estate
Real estate prices do not rise consistently or steadily.
Real estate prices can have long flat patches.
Real estate prices can fall too.
So if we are keeping our big house – and relying on it increasing in value - to trade down to release cash later on in retirement, we have to be circumspect.
It is like all investments - not without some risk - house prices are subject to jobs, wages, the economy, earthquakes, imported diseases, and more.
Housing does not have a guaranteed return.
However Kiwis love it and trust it
On balance, I think most Kiwis would read this and still prefer houses as an investment over all else. Anyway we will proceed on that basis, although some challenging questions are yet to come for us all in future articles.
Two weeks ago we discussed option 1 - rent out your house to pay for your tripping around. Say $300 to $600 per week rent is a tidy sum towards your weekly camping or accommodation fees, fuel, and activities.
Keep working - if you can work and fit in the “out and about” activities you want to do, then of course the cash flow from your work can fund your travels, be they near or far.
Work can be very good, especially for men, if you can find the sort of work that fits. Even better if you get a sense of satisfaction from it.
And as we have written before, 2 often can get you 5. By working just 2 more years can fund about 5 years of extra cash flow in retirement.
How ? You live off your work income , save your super, and grow your investments 2 years longer.
And it does not have to last as long - at least 2 years less - and you will have more - so the
chances of you running out of money later on are lessened considerably.
Travel & work
Of course, work does not have to be at your current job, as you could;
Go fruit picking in season.
Rent out your house and do live-in property management elsewhere.
Use old skills and work from home e.g. carpenter, cabinetmaker, motor mechanic, dressmaker.
Work as a remedial teacher in a school, or privately.
Teach maths, art, English and many other subjects to students who are battling in the classroom.
Offer your services as a consultant, or do locums.
Return to work part-time for the people who bought your farm or business.
Return to work part-time for your previous employers.
Manage a business or farm for someone who works seven days a week and need to break.
Mentor / consult for young people starting out in business or farming - do some good and maybe get paid too.
A lot of mature Kiwis work offshore in all sorts of roles e.g. manage a UK estate
Mature Kiwis are well liked for their good practical work ethics and you can find them everywhere.
Some jobs pay little or nothing, but offer free accommodation, which can be worth a lot.
Accommodation is our biggest cost – home or away
Another big topic with many implications for our standard of living from age 17 to 97. We will discuss this in a future article.
A future peep - spent too much ?
When and if you stop gadding about, some of you will find you spent maybe tad too much. We will discuss this in a future article.
Supplied by Alan Clarke, financial & retirement adviser, & author. He also writes regular articles for the media and on line.
His second book “The Great NZ Work, Money & Retirement Puzzle” is now available.
You can buy it on line at www.acfs.co.nz
Alan is an independent authorised financial adviser (AFA) FSP26532
His disclosure statement is available on request and free of charge