It’s funny how when you’re young, retirement seems a lifetime away. Which, now that I’ve typed up that sentence, seems pretty logical, at least for the traditional view of retirement. I’m clearly a genius…
I vividly remember when superannuation was introduced in Australia. ( For the benefit of overseas readers, it’s the retirement account that employers pay 9.5% of a worker’s wage into. People can’t access this money until a defined age, based on when you’re born. For me, it’s 4 years away…yeah, baby!)
I was around 18 and working at a Coles shop in the Bourke St mall on the weekends when I was at Uni. When I started I was asked if I wanted to sign up for voluntary superannuation. I didn’t even know what it was. When I was told it was for retirement, I laughed and said, “Oh, I don’t think I need to worry about that yet!”
I was an idiot. The compounding on that money would have been incredible by now.
For most people, myself included, tipping more money into superannuation only becomes a priority when we reach the more mature decades of the 40’s and 50’s when retirement becomes more concrete. But by that stage, many people are up to their necks in debt. How can people save for their ‘golden decades’ when a huge proportion of their wages are earmarked to pay interest on stuff before it even hits their bank accounts?
That’s when the panic sets in.
I suppose I was fortunate to have a different model when my brother and sister and I were growing up. Mum and Dad were frugal. Dad had an all-consuming passion for bringing home vintage and veteran cars (usually Rileys) home in boxes or on the backs of trailers and restoring them to mint condition. He was a perfectionist, spending hours of time and quite a few dollars on bringing these cars back to how they looked when they were new.
I remember talking about this with Mum one day when I was about 10 or 11, and Mum saying, “Your father always wanted to restore a ‘Riley 9’ because it was the first car he had when he was growing up. But he didn’t bring home a single car until he’d paid off the mortgage.”
Dad modelled that being debt-free was something important that you had to achieve. He also demonstrated self-discipline by denying himself the car. He’s a man who, when he has a hobby, throws himself into it whole-heartedly. He was obsessed with his cars, to the point that my clearest childhood memories of him are of his feet sticking out from under whichever car he was restoring when I went to the garage to call him in for lunch or dinner.
It would have been very easy for him to take out the mortgage on the house, start his family and then ‘reward’ himself by bringing home a car. Why not? That’s what everyone else seems to do.
Instead, he set himself the goal of paying off the house and being debt-free, THEN rewarding himself with the car. And not a brand-new car, either. It was a 30-year-old Riley 9 that he literally brought home in boxes and rebuilt from the ground up. He bought it very cheaply, then cash-flowed the restoration, giving himself untold hours of entertainment right in his own backyard.
He and Mum also joined the Riley car club, where the main activities seemed to me, as a kid, to be driving to parks with picnic lunches, where they’d all park their cars in a row and admire them. Mum would chat with the other women, Dad would crawl all over the cars with the other men, while we kids would race around with all of the other kids. Pretty cheap entertainment!
(I found this photo online that shows how we three kids would ride in the ‘9’… in the boot, with no seatbelts. NO WAY would it be allowed today! But by gum, it was fun.)
Meanwhile, what was happening with the money that used to be paid into the mortgage?
At first, Dad was the sole wage-earner, but once my little sister was in school Mum went back to part-time work. Her wage paid for the ‘extras’ – ballet lessons, cosmetic renovations to the decor, little family holidays etc. Dad paid for bills, groceries and a ‘big’ renovation to add an extra living room to the back of the house. Once that was done, he began to invest.
He was primarily a real-estate investor. He was able to throw hundreds every month towards a deposit because they were operating from a position of strength with no debt. They bought a small unit, but after some troublesome tenants they sold the unit and switched to small commercial factories.
Mum and Dad own them to this day. They’ve been retired for around 20 years and they still earn income each month from these properties. After buying 3 factories, they switched their investments to managed funds and were able to top them up rapidly, again because they had no debt.
As their children, my siblings and I absorbed these lessons growing up. Interestingly, nowadays we all appear to be on vastly different spots to each other on the spectrum. I won’t comment on where they are in their finances, (it’s none of my business, after all), but I know that I can see how clear-sighted my parents were about the future they wanted when they were working towards their eventual retirement.
(Mum in Bali. She and Dad go there for a month every year, as well as doing other trips.)
Dad turned 80 this year, while Mum is a couple of years younger. They still take trips overseas every year, as well as frequent long weekends away with the Riley Club. Dad collects watches. He doesn’t have to check his bank balance every time he wants a new one to add to the collection. Mum does Art classes a couple of times a week. They live comfortably on the income from their properties and investments, still living in the house that they bought 3 years before I, their oldest child, was born.
This was all made possible because they valued being debt-free and investing for the future, all while bringing up their family in a lifestyle where we had all our needs met, with some of our wants granted. If their health deteriorates they’ll be able to sell their factories one by one, as well as their house, to provide for themselves as their healthcare costs rise. They made sure they would not be a financial burden on their children.
I so admire this! In literally 10 minutes the school bell will go, and I’ll be walking off to a class that… well… let’s just say that I’ve had classes I’ve liked better. Would I like to turn around and walk out of the school and do something more enjoyable? You bet! Have I reached the number I need to reach to be able to live off my investments without worrying, just like my parents did? Noooo…
So off I’ll go to class, keeping my money invested and compounding, with my parents’ example firmly before me. Present Frogdancer can work for a few more years so that Future Frogdancer can kick back and enjoy her life.
I’m pretty sure that’s what Mum and Dad would want.