Bestselling author and presenter Martin Hawes enjoys mountaineering, climbing, hiking, and skiing. Oh, and when he’s working he provides individualized financial coaching to help clients become wealthy and free to pursue their dreams too.

Twenty Good Summers

Work Less, Live More and Make the Most of Your Money

By Martin Hawes

Allen & Unwin

Copyright © 2012 Martin Hawes
All rights reserved.
ISBN: 978-1-74237-806-0

Contents

Foreword,
Section 1 Planning,
1 Twenty good summers,
2 Making the break,
3 A life of two halves,
4 Arrange (and maximise) your business,
5 The importance of work,
6 The ‘enough is never enough’ syndrome,
7 Risks to your twenty good summers,
Section 2 Setting things up,
8 Do we have enough?,
9 Factor one: how much capital do you have?,
10 Factor two: the lifestyle you want,
11 Factor three: the house you want,
12 Factor four: inheritances,
13 Factor five: how much will you work?,
14 Factor six: other income,
15 Factor seven: life expectancy,
16 Factor eight: the returns you will get,
17 So, do you have enough?,
Section 3 Making it work,
18 Arrange (and maximise) your investments,
19 Build a portfolio,
20 Managing investment risk: lakes and rivers,
21 The place of property,
22 The place of shares,
23 Living on capital,
24 Make every summer count,

CHAPTER 1

Twenty good summers

Ten years ago, I turned fifty. Any birthday which has a zero on the end is always a bit of a wake-up call, but for some reason my fiftieth in particular was accompanied by feelings that time was sliding by. I have always been heavily involved in the outdoors — mountaineering, climbing, hiking and skiing — and I was starting to feel that there were more things to do than I was ever going to have time available to do them. I kept looking at mountains to climb and trips to go on and thinking, ‘How am I ever going to have time to do all this stuff before I get properly old?’ On my fiftieth birthday, I spent the day climbing frozen waterfalls. From the top, I could see the vastness that is the Southern Alps of New Zealand and said (for the hundredth time) to my climbing mate, ‘So little time — so much to do!’

This got me thinking: maybe I only have twenty good summers left — just twenty good summers to enjoy the mountains and do the other things that I love. In twenty summers I would be seventy (my allotted three score and ten). Hopefully, at that age I won’t be dead and I will still be enjoying life — I know lots of people in their seventies, eighties and even in their nineties who are still very active and enjoying life. But chances are that by the time I am seventy, I won’t be doing a lot of the things that I love at the moment — I probably won’t be out climbing, doing seminars, biking, skiing and so forth. I may have only twenty good summers to do these kinds of things. Perhaps I won’t get even that number, and I am surely not going to get a whole lot more than twenty even if luck is on my side.

Well, last year my twenty good summers came down to twelve good summers; and by the time you’re reading this book it will be down to ten … Time no longer stretches forever in front of me, with endless potential. These are small, finite numbers — never-never land is starting to look like it doesn’t exist! It really is time to act, to live the life that I want. Assuming that this life on Earth is the only life we have, and evidence to the contrary is not particularly great, now is the time to live it to the full — to spend the remaining summers wisely, making each one count. Now is the time to be as free as possible to do the things that I have always wanted to do. Maybe I will get more than twenty good summers to go climbing, but I am not prepared to bet on it!

I have told this story at seminars many times now. It always strikes a chord, especially with people of a similar age to me — that is, the generation known as Baby Boomers. They recognise that, in spite of what they thought in the past, they are not going to be forever young, and that if there was ever a time to take dramatic steps to live the life that they want, that time is now.

I am a quintessential Baby Boomer. By and large, we Baby Boomers have had a very comfortable, easy existence. We are used to having it every which way, with the lifestyle we wanted and a high level of comfort. We don’t want to work now, or at least not so hard, but we don’t want to go without. As a generation we’ve had it very good, with no world wars, no depressions, no epidemics, nothing to spoil our easy existence. And we want to keep things good!

Some of us are still wondering what we are going to do when we grow up. We invented sex. We are starting to discover middle age and tell each other that it does not really start at forty but at fifty, and we will push that out to sixty when we need to. No doubt sometime soon we will invent death and dying! At least it will seem like it. Having established the permissive society, now we want to give ourselves permission to work less and live more. These are the things that characterise the Baby Boomers — the ‘now’ generation.

Most importantly, there are lots of us and we have always been able to dominate simply because of our numbers. As we come to our numerical peak and take political control and, therefore, control of our nations’ cheque books, we will continue our dominance. That there are so many of us makes a big difference to what happens across society, including the economy and business markets. That there are so many of us is important to business, as we create trends that businesses can sell to. It is also important in that while there are a lot of us — before we start to die off, which is likely to start happening very soon — governments will have to support us as we age.

This sizeable generation of people who thought they would never grow old is starting to want to change what they do. We have always said that we would never retire — retirement is a swear word to many Baby Boomers, who think it means giving up and withdrawing from society. So, ever inventive, we have tried to come up with a new word for it. ‘Lifestyle’ — more and more, we want to surrender our jobs and our houses in the suburbs to pursue a new lifestyle. Look at the evidence — we are flocking to the coast or to small farms on the edges of cities. People are downsizing their houses and their jobs to live near a beach or in the country, or are moving into lock -and-leave apartments in order to be able to work less and play more. The result: higher prices for coastal land and floods of people buying holiday homes or apartments in the mountains or on a beach.

Truth be told, Baby Boomers are probably starting to get tired. Some of us have had high-pressure jobs requiring us to work hard for years, and now the generation that believed it would never age and never want to retire is starting to feel the need to slow down. We do not want to admit that we are starting to age and really want to ‘slow down’ so we are seeking this thing called lifestyle but, really, lifestyle is a euphemism for retirement that saves us from having to use the dreaded ‘R’ word. Because there are so many of us this is making a huge difference to property and other markets, and will continue to make a difference for twenty years or so yet.

What does this lifestyle look like? Well, it means working less, having more time to do the things you haven’t had time for in the past, enjoying living in a nice house in a nice place surrounded by good friends and family. It is not about buying a rocking chair, sitting in it and waiting twenty years to die. It is about being active in our hobbies, our gardens, our communities, on the beach or in the country, and active in our travel in the backblocks of home or to other countries. It may also mean being active in paid work — albeit not as active as before.

These are the things my clients have told me when they dream their dreams. For the last few years, I have been actively involved in WealthPlanning, helping people generate and arrange the money they need for the life they want. As part of each session with a new client, I ask about their ideas of a dream life. These are the things that nearly always come out: more time, more relaxation, travel, contribution to the community, time with the family and stepping back to enjoy the good things in life some more. Above all, the consistent theme is that people want to get out of the daily grind — to have more time, and the money and energy to enjoy it.

However, in easing back so that we can live the lives we want, we first need to sort our money out. Our parents might have called this retirement while we call it seeking ‘lifestyle’, but the problem is just the same — how do you fund the life you want when you are no longer part of the daily grind? How do we use the capital we have to obtain the passive income we need to be free? That is what this book is about.

This is a book for everyone who expects to work less and live off savings. Whether you are already at that point or aspire to be there in ten years’ time, you need to know how to use your investment capital to supplement the money you will have from superannuation and, perhaps, from working.

This expectation poses some questions:

• How much money do we need to be free?

• How do we arrange that money to generate income?

• How can we continue to work, albeit not so hard or continuously?

• How do we access the capital in our biggest asset — the family home?

• How can we organise that money to maximise our income?

This book tries to answer these questions and show you how to use your money to give you the life that you want. However, it first assumes a couple of things:

• The first assumption is that you do have some capital — nothing comes from nothing and you cannot have financial freedom if you have to keep working as you are now. If you aspire to financial freedom you will have to set yourself a target for your wealth so that you can live the life of your dreams. I call it your ‘Freedom Figure’ and this is discussed in Section 2.

• The second assumption is that you want to work less and to enjoy a more peaceful and unhurried life — this is not to say that you will necessarily stop work altogether.

Lots of people happily work and run businesses well into their seventies and eighties. Stopping work completely is not the lifestyle of a lot of people’s dreams. Even if you are financially able to live entirely off passive income, you may not want to — there is a lot of joy and a lot of pleasure for some of us in our work.

This is not a book on how to develop the wealth that you need to live the life you want — there are other books on that sort of thing. However, having said that, I hope it will serve as an inspiration to you to develop the wealth required to live the life of your dreams. If you do not yet have adequate money to be free, you need to set yourself a target or a goal so that you can continue to work and strive with an endgame in mind. That endgame is financial freedom — a position where your money and your time are your own.

Money is not an end in itself — it is the means that will allow you to live the lifestyle you want. My experience is that there are many people who have quite a lot of money but who do not have it properly arranged and invested in a way that will allow them to be free. Sometimes people do not know how or when to stop, how to say that they have enough — that now is the time to get on and do the things they have always wanted to do. The habit of a lifetime, the habit of building up wealth, can be hard to break. But the number of good summers is steadily diminishing. What follows is how to use your money to make the most of them.

CHAPTER 2

Making the break

It is hard to make changes. Breaking the habits of a lifetime is never going to be easy. You may have a very clear vision of the kind of life that you want, knowing what changes you want to make and understanding all too well the things you do not like about the way you currently live. You may have a strong feeling that time is slipping away, that now is the time for you to stop saying, ‘One day I really want to …’, and just go and do it. Nevertheless, despite all these things pushing you to a new life, it is hard to make the break.

Deciding to work less and live more is a great step into the unknown. For years you have been pushing in one direction along a road that many have travelled before. You have married, maybe had children, perhaps divorced, progressed your career with good promotions, perhaps developed a business, the children have left home …

Now, you have picked up a book about slowing down, working less, rearranging your finances and living a different life. You have picked the book up, and you are reading it! This is a journey into new territory — territory not so well travelled. And that is frightening. There is no one to tell you what the terrain in this new place is like, what and where the traps and pitfalls are, what to avoid and what to seek out. Given all this, it is not easy to move away from the security you have always known.

Well, some people have gone before you, and they have reported that this is not a territory full of snakes, crocodiles and other wild animals. In fact, the terrain is fairly soft and the weather benign — it is actually a pretty nice place. Certainly it is not heaven on Earth, full of milk and honey — there are things that can go wrong and traps for the unwary. But working less and living more is not a fearful way to live.

So what is stopping you? Experience through my WealthPlanning work has shown me a range of things that typically stop people. People do have their ‘buts’. ‘I would like to slow down, but …’ It is very common for the ‘but’ they give to be an excuse, rather than the real reason for not making the break. Without digging too deeply into psychology and therefore moving into an area beyond my competence, I sometimes have to work quite hard to find people’s real objection to taking action.

Here are some of the common things that I find stop people:

• Many people, even some who are quite wealthy, worry that their money will run out before they do. This is the most obvious and common fear, and it is dealt with in Chapter 8, Do we have enough? Suffice to say here that you may not need as much as you think. There is also the ‘enough is never enough’ syndrome, which is dealt with in Chapter 6.

Depending on factors like how much you are going to continue to work, the investment returns you can obtain, and the lifestyle you want, you may well find you already have enough to live the life that you want.

• Stopping work makes people seem old. If you think of retiring as slowing down and working less as, you may fear that you will move into a space labelled ‘Old Age’. That is not a great picture to place yourself in, and it is probably not accurate. Just because you have decided to travel more or to work from home that is not a reason to see yourself as suddenly being old.

• Many people are concerned about what family and friends will think. Will they think that you have lost it? That you are no longer up for the game? That you can no longer foot it in the real world? Some people will not care what others think about their change, others will feel they have to carefully craft a story to explain what they are doing. • Some people have no clear picture of what they are moving towards. Most people know what they do not want; for example, a client who is a motor mechanic told me he did not want to have his head under a car bonnet any more. However, not only do you need to know what you do not want, you also need to know what you do want and have a clear picture of what your new life will be like.

• Some people’s sense of self-worth is tied up in what they do. Both their status and feelings of belonging are tied firmly to their work. If, for example, they have been CEO of a large firm, they do not want to become ‘just a consultant’.

• Many people fear being bored and/or lonely. There are people for whom work is nearly their whole life — they have friends from work, their work is their vocation and avocation and there is not much else in their lives.

• Personal relationships may get in the way. Spouses and partners may want to do different things with their time, or perhaps one does not want change while the other does. At times partners may make assumptions about what the other is thinking and feeling that are inaccurate; for example, someone may think their partner will never want to leave a much-loved and well-kept house and garden, while in reality the focus on house and garden has developed simply because there is nothing else to do in Cricklewood.

(Continues…)Excerpted from Twenty Good Summers by Martin Hawes. Copyright © 2012 Martin Hawes. Excerpted by permission of Allen & Unwin.
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