What to do when you’ve left it late


I’ve been thinking a lot about retirement recently.

Not because I would normally think about it, but because the WellSpent editors and Jason, my sombrero-wearing, bike-crashing financial advisor, have been talking my ear off about it.

One thing they absolutely love to explain to me is the story of Debbie, the brilliant, financially responsible, forward-thinking angel, and then the other guy – a total moron. Let’s call him Jon.

Debbie does a good job of making Jon look stupid.

Debbie started saving for her retirement at the age of 22, and because of the MAGICAL power of compound interest (finance peoples’ eyes literally go misty when they mention it), she saved half a packet of popcorn every month for 7 years, and then stopped saving all together, and ended up with a zillion, billion bucks, because she started early.

Jon, on the other hand, is a post-30 professional with a dashing smile and a nice tie, and he’s going to end up so poor he’ll be sucking on used tea bags for the nutritional value.

Sound familiar?

Yes, I have started planning for retirement, and no, I didn’t start years ago, when everyone is supposed to. Of course I know that I’m doomed, and yes I’d like you to call the whaaambulance please.

What’s that?

It’s not too late?

That’s right, even for a complete financial fool like me, a plan can be made, and we can all retire to a reasonable life if that idea for an iPhone app we had doesn’t make billions.

RA-d. Rad.

The best way to ensure a catfood-free future is to focus on your RA, which stands for Reality Audit. Or Risk Averse. Or Rental Aardvark. Look, I’m not sure what it stands for, but it’s kind of like a savings account that you pay into for most of your life, and then they give it back to you when you finally just can’t stand one more minute sitting next to Michelle from accounting, and you retire.

It turns out that I do have an RA, and it’s growing, thanks to the Chief Financial Officer at the company I work for being more responsible than I am.

Unfortunately, what’s going into the RA is not going to be enough to sustain me in my old age, so I might have to start putting more into it to make up what money people call, “the shortfall”.

There are numerous tax benefits to putting your money into an RA. They’re quite complicated and I don’t know what any of them are, but I’ll find out from the editors and get back to you when I fully understand it.

Watch this space.

People who Rock

Take Charge of Your Money TaxTim