Here’s how to kick your finances into shape before you hit 50 and help you retire financially free.
Hey Gen X! Here’s what you need to know about your money and finances before you turn the big 5-0.
The next decade and a half is going to tick away fast and some of us need to grow up and get serious about our finances. You don’t want to be stuck at home eating baked beans whilst your friends post their fabulous post retirement travels on social media do you?
Home truths about your finances as you get older:
Same old, same old doesn’t work
If you have no savings, or shock horror still have debt it’s not going to disappear miraculously. A lot of naval gazing and some hard cold change is needed.
Poverty can come to those who ask for it
Are you staring down the barrel of poverty in retirement? That’s what’ll happen if you still have car loans, HP, credit card balances and other sorts of debt (such as spending hidden on the mortgage). If that’s the case you’re not going to be able to retire come 65/67. Do you really want to work ‘til you drop?
You may end up unemployed or sick
It’s much harder to get a job or even an interview after the age of 50. Employers prefer “someone more suitable”, which means “younger”. What’s more many Kiwis eat up their retirement savings after falling ill in their 50s or early 60s. Oh, and you’ll find it harder to get a mortgage the older you get. Banks won’t lend to people whose only income is New Zealand Super. Depressing huh? That’s why you need to save now and insure yourself.
Beware of what your boomerang kids cost you
Modern day offspring come flying back every time they need a handout or somewhere to live. If you do agree to help them buy a home or business, don’t expect that money back when you need it. The moral of the tale is that the time has come to put yourself first.
How to create a retirement pot of money
If that made you feel depressed, the good news is that you can do something about your situation. Start today.
Move from financial inertia to action
Get a budget, pay off your consumer debt, stop extending the mortgage, don’t mistake wants for needs. This is your last chance to get some serious savings behind you. Wealth comes through action not inaction.
You can change. Look at your last bank statement, list everything category from most essential to least essential and start chipping away at the bottom half of the list. It might need a radical rethink. For example most middle income Kiwis could cut 50% from their grocery bills and be healthier for it. Start with the booze, meat, packaged foods or even those ciggies. Create a family budget and stick to it!
Consider buying a rental property or two
It’s good to diversify your savings and a rental property might work for you. Beware however: first-time landlords can make a lot of mistakes such as putting potential capital gain ahead of rental return and/or not pricing out renovations properly. Sometimes an ugly duckling such as a concrete block unit is a better investment than the best house on the block.
Be a good Gen X and maximise your KiwiSaver
You may think KiwiSaver is a government plot, or you could invest better yourself. Nowhere else will you get a 50% return on your first $1042 from day one. If you’re employed you can also throw in your employer contributions. Just bite the bullet and do it. Gen X will be the first generation to build up some serious KiwiSaver money.
Be honest with yourself about your finances
If you’ve just read the bullet points above and said: “but I’m different”, or “that doesn’t apply to me” then go back and look for ways to make it apply to you. Change for the good only happens when you seek it out.
This might all sound a bit depressing. But it’s best to know, than to stick your head in the sand.