THE NEGLECTED DECADE
I’m sure I wasn’t the first child to be told by their parents that time goes by more quickly as you get older. I remember thinking at the time that this was clearly a ridiculous concept, how can time possibly pass more quickly? At age 10 I wasn’t that clued up on the Philosophy of Space and Time and not surprisingly that position hasn’t changed. I do though remember those endless summers, halcyon days indeed, days when a six week school holiday seemed like an eternity.
Fast forward a few decades and a year seemingly passes in an instant, so does time pass more quickly were our parents correct? Probably not, but there are hugely increasing demands on our time which of course results in it being a more scarce resource than it once was which kind of equates to the same thing.
The potentially good news in all of this is that time may again stretch out later in life when the demands on our time start to recede, however if we allow a “neglected decade” then having the luxury of more time in later life may fall short of expectations.
So when I talk of a neglected decade what exactly am I referring to? I’m talking about the decade where the demand on our time peaks, where it can become so scarce that personal time almost ceases to exist. Demands like the home, the children and the career.
Of course much of this draw on time is positive it’s life building and bringing up children is a wonderful thing (most of the time). Creating a successful career or business is a fantastic thing to do and having a nice home is an aspirational must have for most Australians, so where is the neglect?
I would propose its often health and money, health because we are simply demanding more of ourselves; it’s often a decade of increased stress. We are getting better at managing the health scenario, people generally have a healthier diet and are more active through gym memberships or participation in sport, but what about the money? We get pretty good at generating good levels of income and often reach peak earning capability but often we build a lifestyle equal to it, it’s the decade of private school fees or upgrading to the larger family home.
According to the Australian Institute of Family Studies the average age for a woman giving birth to her first child is 28 and the 2011 census tells us that the average number of children per family is 1.9. Given these statistics the most likely “neglected decade” for most couples would be when they hit their early forties.
At age 40 retirement feels like a long way off, it’s not a priority, there is way too much going on, there isn’t much spare cash and I’ll think about it later. Sound familiar? The problem is that time is at its scarcest and before you know it 40 is 49, remember how quickly 30 became 40? There’s still a residual of youthful arrogance that getting old is a long way off. Neglecting retirement planning for 10 years can have a dramatic effect on the end result and there’s plenty that can be done even in the absence of free cash flow.
Simply getting serious about your plans for retirement is a start, I meet way too many people in their early 40’s who have no real grasp of what’s going on with their super. 40 is a landmark birthday “life begins at 40” and it can certainly be a fun and fulfilling decade however it is also a birthday that demands reflection of one’s life both what has been achieved and what yet might be achieved. It’s a birthday that provides a catalyst for getting serious about your long term financial objectives.
Make sure you don’t look back at a financially “neglected decade”, make the time to talk to a high quality adviser and get educated about what can be achieved.
Are you around the age of 40, have you reflected on the prospects of your long term financial future? Here are 5 questions you need to consider:
1. Do you know your current financial position?
You might have more opportunity to invest than you realise, are you maximising your financial potential?
2. Are you clear on your financial goals, do you have a plan or strategy?
Supplement your income? Retire early? Leave an inheritance for the kids?
3. How familiar are you with your super?
How much and where is it? What’s the investment strategy? What are the fees? Get more involved – it’s your money.
4. Do you know the type of investor you are?
There are lots of online profiling tools that will help you work this out
5. Have you got a financial adviser? A good one?
If not, take charge. Find one and make an appointment.