Alan Clarke offers savings advice.
Can you keep your big home longer? This is a big subject -- much bigger than even I thought when I started collecting material for this series of articles.
Last week we looked at a key point -- don't go into a retirement village too soon and lose your ability to trade down your house and release more cash.
Do house prices always rise?
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 per cent in Auckland.
5.8 per cent in Canterbury.
A decline in many parts of New Zealand.
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 in retirement, we have to be circumspect.
It is like all investments, and 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 in future articles.
Option 1
We have already discussed renting out your house to pay for your tripping around.
Around $300 to $600 a week rent is a tidy sum towards your weekly camping or accommodation fees, fuel and activities.
Option 2
Keep working. If you can work and fit in the "out and about" activities you want to do, then the cash flow from your work can fund your travels, be they near or far.
Work can be very good 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, two often can get you five. Working just two more years can fund about five years of extra cash flow in retirement.
How?
You live off your work income, save your super, and grow your investments two years longer.
And it does not have to last as long -- at least two years less, and you will have more -- so the chances of you running out of money later on are lessened considerably.
Travel and work
Of course, work does not have to be at your current job. 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 motels.
Manage a business or farm for someone who works seven days a week and needs a break.
Mentor/consult for young people starting out in business or farming -- do some good and maybe get paid, too.
Offshore work
A lot of mature Kiwis work offshore in all sorts of roles, such as managing an estate in the United Kingdom.
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
Housing is another big topic, with many implications for our standard of living from the age of 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 a tad too much. We will discuss this in a future article.
Alan Clarke is a financial and retirement adviser and author. His second book, The Great NZ Work, Money & Retirement Puzzle, is available 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.