Will it be champagne on tap – or soggy oats?
Alan Henderson of Erskine + Owen answers the tough questions about retirement
As I write this, it’s Saturday morning. I’m watching my son swim; I’ve just dropped my other son at cross fit. I’m negotiating to not have to drop my daughter at gym, but I know in an hour or so I’ll be picking her up. I’m shattered from a full week at work, plus organising house maintenance, helping with homework, helping with community projects… Next week will be even busier as I try to fit in two weeks of work before going on my son’s school camp.
Sound familiar? All our lives are crazy busy. We’ve hardly got time to sleep. We’re often stressed and juggling numerous demands. So when I ask people what they’re doing to make sure they have champagne on tap in retirement (or beer, or endless travel, or kids’ inheritance…) I’m often met with a glazed, cynical look, and sometimes think they’re about to start ranting at me á la Jerry Seinfeld.
For some reason I spend a lot of time thinking about the future. I can’t help it. I guess I’m a bit of dreamer. But when I think about my retirement it freaks me out. I see how quickly time goes and I know 60 is just round the corner. What will that be like? Will I be eating oats with water… no brown sugar and cream? Will a flash night out be the local buffet stuffing my pockets with bread rolls for tomorrow’s breakfast, or will it high tea at the Langham just because I can? Will I give a dollar to the Sallies at Christmas time, or will I be able to fund a housing project in a struggling part of New Zealand? When we have health problems – as all older people do – will we languish on a waiting list, perhaps in pain, or will we be able to afford prompt, quality care and a quick recovery? And lastly, will the kids build a granny flat out the back and feed me because my pension can’t cover my rates… or will I forward early house deposits to my kids because there’s plenty of equity in my retirement fund?
I’m confident that my old age will be just fine. But I keep asking these challenging questions of other people – because I hope it will spur them to take action. I’ve been asking uncomfortable questions like this for about 20 years in a professional capacity. I left a well-paid corporate career and did something I have a genuine passion for: helping people get wealth and a passive income in retirement.
Two decades later, I’m delighted to report that I’m now having some very pleasing conversations with clients. We open up the plan we created years ago, and look at where they’re supposed to be today. The news (if they have executed the plan) is always very pleasing. Our clients who have stuck to the playbook have investment portfolios that are either on track or exceeding expectation. We’re seeing clients create the millions of wealth we targeted. Their Plan is working. Spouses are pleased their families are ‘sorted’ – others are relieved the risk was worth it and there is security. Imagine the peace of mind that brings.
There are also those clients who started a plan with us, perhaps bought one property, but then life got in the way of continuing. They’ve made gains… but failure to execute the Plan fully has meant they’ve missed out on a lot of wealth. Of course, sometimes the reasons are legitimate: separation, death, loss of income. That’s life. Those with grit and determination get back on the horse, but some just seem to drift. I anguish over it because I feel I haven’t done my job. But I can only prod so many times before meeting resistance or having my own motives questioned. (As they say, you can lead… )
Finally there are those that get it, they see that investing can work, they know that they should do it, but worry and fear overtakes them and ‘possum-in-the-headlight’ syndrome kicks in. They never say they’re scared, they just stop returning calls, or say they’ve decided to wait – wait for the bonus, wait for the market to peak, wait for the market to bottom out, wait for the market to start lifting, wait for the market to peak, wait for the market to drop, wait for the… oh, I said that. But some of these people are still repeating themselves a decade later. There’s always a good reason not to invest. And yes, if that’s what you’re looking for, there really are always good reasons not to invest.
The biggest reason for failure at property investment? Not acting. I’m hearing some strong negatives right now. People say it’s different today, prices are high, lending is restrictive, etc etc. Well, it’s always been like that. When I was 26 I contracted on two apartments off the plans and put down a small deposit. I got pre-approval from a bank but by settlement they’d changed their mind, and I had to get creative. I used my credit card, and the rest is history.
We all have different skills and many of us don’t have the time or inclination to get creative when it comes to investing. So we’ve used our property expertise and provided a way to make it easier to get into the market. Even with as much as $200k it’s pretty tricky to get into the market right now. So, to give people the opportunity to create a more relaxed and prosperous future, we have provided a way to invest in multiple properties. It can be accessed with as little as $100k.
Maybe this isn’t for you. That’s OK. But if at the moment you have zero chance of enjoying champagne on tap when you retire – then for goodness sake, do something.