Money for nothin’? You gotta earn it!

There is a period in every parent’s life where all vacations seem to be “holidays in hell”. Who would travel with kids by choice?

Tired kids meet airport security. A truly volatile combination. I’ve never sweated more quickly than when I was forced to softly scream at my eight-year-old boy to stop talking about “blowing things up”, right as we were having our bags tested for explosives. An embarrassing first.

On the same trip, to be told, more than half way to Bali, we were being turned back because of volcanic ash … my head was about to make Mt Ruang look like a Jiffy firelighter. Not because of me, but because of the kids’ tears.

Those kid-free holidays will come after a lot of private school fees have been paid. And possibly a few other large kid-based expenses have torpedoed holes in budgets.

They’re pretty much too far into the future to even look forward to. But despite the fact that I will be in my mid-50s when my youngest finishes school, I am determined that these holidays will start to occur before I retire.

And for anyone with similar ambitions, that is going to mean that we’re going to need to be “set” well before retirement. Our retirement has got to be looking good many years before we’re actually there.

Like many, I would like to be in a position to retire more than 10 or 12 years before I hit “retirement age”. By the time Gen Xers get there, the age pension age will be 67. (I’m also determined that I won’t be eligible for the government age pension.) But your intended retirement age could be anything.

If your plans have rough similarities, then you’ll also have to do it without being able to access your super. Many wouldn’t be able to dream of retiring without being able to draw on their super. So, how do you retire in that instance?

So, how do we get into the position to be able to “retire” or slow down to a pace far less than five days a week?

Let me just stick one of my old Dire Straits records on the turntable and get it warmed up for you.

What we want is to get our “Money for nothing”.

It’s also known as “unearned income”. Income that you haven’t had to physically work for.

And how do we do that? We get assets. And, with them, income streams that earn independent of us showing up for work.

Such as, owning shares and investment properties. The rent from properties and the dividends and distributions from shares are pretty predictable income streams. And if you own enough of them, they can provide a very handy income indeed, thanks very much.

Eventually your super will kick in, but if you’re wanting to retire, or semi-retire, before 60 (anyone born after 1 July 1964 cannot begin to access their super until they turn 60), then you will need other assets, or a truckload of money saved, to draw down on.

“Great! Awesome plan!” I hear you exclaim. “So, how do we do it?”

That’s the tough bit. It’s going to require some sacrifice. Those investment properties and that multi-million dollar share portfolio don’t just magically appear. Well, they might, if your parents don’t spend all of your inheritance and manage to die at a convenient time, in your early 50s.

I’d rather mine hang around a bit longer.

So, it’s simple. In order to create this great pile of assets in the future, you need to sacrifice now. Such as, starting to contribute something meaningful, monthly, into an index fund. See if buying an investment property – and the gearing that comes with it – is appropriate for you.

Then get started. It’s never too late to start. But, obviously, the younger you start and the longer you allow the power of compounding to work for you, the more likely it is that you’ll hit your goals.

Starting at 30 will give you loads better results than starting at age 40. But it’s never too late. Just. Start. Now.

Any every plan like this should also include paying off your home loan sooner and contributing extra to your super. Everything that will help you get to those kid-free holidays sooner.

Bruce Brammall is the author of Mortgages Made Easy and managing director of Bruce Brammall Financial. E:


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