Saturday, July 26, 2008

Some Thoughts on Retirement

I guess most of you will not even read this sentence since you will be thinking that my topic is of no relevance to you. Well, I'm glad that you do not need to concern yourself about this. At least I have come to the realization that at my stage in life this is indeed and important issue for me.

I in no way have it made. I gave up a full-time employment (for which I had never received anything related to a pension) in 1999 to go with my family to Hawai'i to be a student first and then a volunteer. After eight years, we returned to Taiwan in summer 2007 with a few thousand in cash (in the bank) and a modest but oldish apartment in a fairly remote part of the suburbs of Taipei.

Fortunately, in spite of being a volunteer in Hawai'i with only meals and eventually health insurance provided in exchange for the work I did, the realities of life taught me how to survive on very little or no income in the form of donations, which is often how volunteers survive long term. By the time I left Hawai'i, I was able to cover my living expenses (including the high rent) and also enter the Ironman and related races. It basically started with a few inquiries from people in Taiwan who required my editing and translation skills and eventually I had plenty of work to keep me busy, at least a lot of the time.

So, when I returned to Taiwan, it was not as if I had to look for a job. My email address remained the same and that was basically all that mattered. My advice on retirement is of course based on my own circumstances, which will probably differ significantly from the experiences of other people. Anyway, to keep things brief and to enable you to draw your own conclusions, here are a few pointers as I see things at present:

1. Get a nice home, but one that is inexpensive to maintain: Our apartment near Taipei had served us well from the days when our older son could not yet stand up. They rode their tricycles up and down the living room, caught the school bus on the road outside, came back for vacations from Hawai'i, sometimes bringing an American friend or two with them. However, the immediate neighborhood was more run down compared to when the boys were small, and the house needed a lot of work to get it anywhere near looking really nice. After seeing something a lot nicer and meetings with bankers where I had to show through tax statements that I had consistently been earning money in Taiwan even though I hadn't been living there, we were able to purchase a brand-new and significantly bigger place in southern Taiwan in the same city as all of my wife's siblings. Then with the banks happy to provide the mortgage needed for the new house, through my day-to-day work I was able to pay for quite extensive repairs to the old apartment (to make it liveable and/or sellable), and then as we got possession of the new place, to pay for the various fixtures and fittings (such as for the kitchen, fitted closets for the bedroom, curtains, a solar energy water heater on the rooftop, air-conditioners, the list is endless and the work isn't finished yet). So at least my wife gets to have the kitchen the way she wanted it for the first time in her life. The reason why I wanted to get a place like this sooner rather than later was that moving house proved to be really quite difficult, even though we brought little furniture down with us, preferring to buy mostly new furniture for the new house. We had something like about 150 boxes or cases of things, each of which held the equivalent of suitcase. It was a nightmare and my younger son and I (the older son was overseas on a course), spent more or less the whole night just moving the boxes downstairs from our 5th floor apartment, to get them on to the road where the moving truck could pick them up. I had thought my knees were bad, but I seemed to manage very well with all those steps and boxes. We had 20 years of things that we had accumulated.

By having a home that is inexpensive to maintain, I am obviously thinking of condominiums with association fees or elevators, etc. For our new place, we don't have any of these. We only pay for utilities according to what we use and of course phone and Internet fees.

Great care should also be taken when buying a house. While I don't think house prices change very much in Taiwan, only a week or two ago a large block of apartments with basements got flooded out by the heavy rains from the typhoon. Those apartments are less than 10 miles away. We don't have a basement, and now I see why.

2. Learn to manage money well: When in Hawai'i I just assumed that every woman had a rich husband with me being the only exception. For those of us who haven't had a steady job with a pension and the rest for the last 30 years or so, life can more often than not be a battle just to have enough to pay the next month's rent. That was my experience the whole time in Hawai'i, and I am kinda tired of that lifestyle. It can be really stressful, especially when signing legally-binding contracts to rent an apartment for six months when we can only afford the deposit and the first month's rent. Having one's own home means that you can live comfortably (you get to buy a nice bed which will last you forever), and at least over here in Taiwan the value of the property is unlikely to fall, even though it may not go up much. A good way to save money is to cut down on expenses (since incomes are often relatively fixed) by cooking your own food (which is much better for you anyway), working from home if possible and saving time and transportation costs, using a bicycle or public transportation, etc., and avoiding unnecessary things like subscriptions to clubs, spas or health drinks, etc. when there are significantly cheaper alternatives. A final word of caution about money. Make it hard for you to spend money (i.e., be very strict with yourself on the use of credit cards), but convenient for others to put money into your account in return for services rendered, and ideally have several accounts with relatively small amounts in each. Remember there are a lot of swindlers out there who will do everything to cheat you.

3. Have a Plan "B" and maybe a Plan "C": While one should try to focus on one's current lifestyle in terms of income and budgeting, do dream about that eventual second home in Hawai'i, for if things go well for you, that may well become a reality in the not-too-distant future. On the other hand, it might be a good idea to think of a "worst-case scenario" (not too bad a one) should you or you spouse have an accident or a major illness, or something unexpected happen. To better cope with such an eventuality it might be a good idea to build up some cash reserves in the bank that could be easily withdrawn if needed. This might mean having to postpone a vacation, but it may be well worth it. We should not be a burden on our children, as they will have their own lives to lead. However, we should be there as much as possible for them, and as far as ours are concerned, they are always welcome in our home, and maybe that eventual second home may be for one of them.

4. Don't think of retirement as just sitting around doing nothing: I hope to see retirement as being in a situation where I do not need to work to cover my living expenses. However, it will be a long, long time before I can do that, particularly in view of the generally low interest rates that would apply to any savings. So I hope to continue to work as long as I can (by doing something that is knowledge-intensive rather than physically demanding (as my brain will be the last thing to go out - I hope). Then I will continue to focus on the sports I am interested in (currently swimming), in the hope that they will keep me healthy, although health and fitness are two different things. The sports help me feel I am still capable of doing things, of beating some younger people, and that I am not just an old fogey. Still, the kind of sports lifestyle I have will depend on how much I can sensibly afford. I do not have the kind of money to travel the world doing Ironmans, but I can train cheaply in my own back yard, and maybe consider doing Ironman Japan and going over to Hawai'i to train and race with my friends. There are also various social activities in the community we should consider getting involved in, and everyone will have his or her own preferences.

Anyway, I could go on and on. However, anyone who has read this far will have other blogs to read and other things to do, and I must also turn my attention to some more "work" or bed or whatever. In closing, please do not think of me as being old. (I am in denial). I am at 23,000 plus meters in the last 5 days of going swimming - tired, but still surviving!


ShirleyPerly said...

Actually, I think everyone should be thinking about retirement as soon as they are on their own and definitely before they start having a family. Good to hear you've been giving some serious thought to it. I can't say that many people I know have, with the exception of my (step) daughter and her husband, who are still in grad school but know of the importance to start planning for such things early in life.

Dolphin Boy said...

Starting early is the key and a finanical planner is a big help too! but most of all enjoying what you really want out of life!