I seem to keep having the same circular conversation with my friends who are of a certain age. It begins with the dilemma of what to spend our money on and how much to indulge ourselves. Yes, I know some of us are in a privileged position not having to greatly worry about money. We have adequate pensions through our superannuation funds. For that I am grateful.
But, then, the conversation moves to our reluctance to spend it. Will we run out of money?
Manoeuvring around the vagaries of superannuation and spending money would be easy, we declare, if we knew when we were going to die! Now, this sounds exactly the sort of thing an actuary would say. Money in the bank divided by the time/years left, equals what amount to spend.
But life is never that easy or that simple.
For a start, would we want to know when we will die? This is a major existential dilemma. Perhaps, for some of us, knowing when might galvanise us into action to do the things we desperately think we want to do. Climb Mount Kilimanjaro? Visit the pyramids, see Machu Picchu?
Years ago, I took an elderly relative on a bus tour in Europe, specifically to the Passion Play in Oberammergau. Since that play is held only every 10 years, the window of opportunity to see it was slight. I noticed that many of the people attending were elderly, frail and could hardly move up and down the bus stairs or last the distance of the two-day play, falling asleep in their chairs as the afternoon wore on. They had effectively left their run too late.
For others, knowing when they will die, might tip them over the edge into a major depressive meltdown, effectively ruining the remaining years left. A catch 22, if ever there was one.
Economists are often targeting retirees, encouraging them to spend and not live a frugal life. They, of course, want money moving in the system and if we who have it, sit on it, then its value to society is eroded. Governments chastise us also, declaring loudly that superannuation is for retirement living and not a vehicle for wealth creation and tax dodges. And they are right, the basis for setting it up was to ensure a dignified retirement income, not a hoarding of wealth.
Two concerns seem to dominate this discussion. Firstly, as my friends age they fear the cost of sickness and their general healthcare. They fear not having enough to enable them to choose their own doctors and type of care. This looms as a strong motivating force for frugality. Secondly, many of my friends also want to leave an inheritance to their children, and oftentimes grandchildren, duty and devotion until the end.
The bank of mum and dad also gets a workout in this discussion. Many retirees are in a position to help their children with money towards a deposit on a house. It might not be a large sum, but, of course, as a young person trying to save a housing deposit, any gifts or help is usually gratefully received in today’s fraught housing market.
So, what to do with your superannuation dilemma? Be happy that you have this dilemma in the first place. Then perhaps a chat with your children before they find a nice nursing home for you!
What do you think of this topic? Are you a spender or a saver? Let us know in the comments section below.
Also read: Revealed: Who saves, who spends
