This year – for the first time in my 60-something years – I sought professional financial advice.
Until now, my modest income and extreme aversion to risk has made life simple. I’ve been lucky enough to have enjoyed relative financial stability, something that not everyone gets to experience. I am a payer of bills, an acquitter of financial obligations.
But like many older Australians approaching retirement, I have had to give some serious thought to life after paid employment. The statistics tell me I can expect to live for at least another couple of decades.
With long life comes frailty. If I’m lucky enough to live as long as my parents, I will have to move to a single-level apartment. The same stairs I now climb up and down multiple times a day – and to which I attribute my continuing good health – will be a health hazard soon enough.
I began to spend idle moments scrolling through real estate websites, but soon realised the chance of finding an affordable apartment was low. I felt some relief: I am very attached to the home I have lived in for the past 12 years, since becoming a single mother of three teenagers. It has accommodated the ebb and flow of solo chicks flying the nest and returning home to roost, sometimes in pairs.
There will come a time when the nest is empty, but that time hasn’t yet arrived.
I have a modest amount of superannuation, although nowhere near enough, according to moneysmart.gov.au. I planned to work for a few more years, contributing what extra I could, before settling into semi-retirement while I was still young and well enough to enjoy it.
As a risk-averse “extremist’”, it has always been my practice to play with the hand of cards I have now. A possible inheritance wasn’t part of my plan. So when I came into some additional funds in recent months, my dream of moving to a single-level apartment became a possibility. I found an apartment, ran it past my financial adviser and signed. It would be tight but manageable.
All that remained was to sell my current home. Regardless of your financial expertise, you – like me – may have heeded the predictions by the head of the Reserve Bank of Australia that interest rates wouldn’t rise until 2024. But in the three months since I signed the contract to purchase, there have been three interest rate rises, making four in total since May.
You don’t have to be a financial expert to understand what this has done to house prices. My beloved family home – in a highly sought-after school zone – was put up for sale four weeks ago and only a handful of buyers have come to look at it.
Facing an uncertain financial future as a result of taking one catastrophic risk, after a lifetime of living within my means, has been shattering. I take full responsibility for this decision. I have had to accept the only offer made – an offer I would have considered an insult a month ago – and will live with the financial consequences for the rest of my life.
This is a cautionary tale for all Australians, but in particular for those at or approaching retirement age. No matter where you fall on the risk-averse spectrum, the word from the trenches can be summed up in three easy steps: Never buy before you sell. Rein in even your most modest aspirations. And – most importantly – think twice before putting your faith in the advice of Australia’s central bank.
