A Late-Starter’S Guide to Retirement: How to Quickly Get on Track for Your Retirement When You Start Late

Copyright © 2014 JEREMY FOXON.

Cover Design by Doralin Kelly

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ISBN: 978-1-4917-0534-6 (sc)

ISBN: 978-1-4917-0555-1 (hc)

ISBN: 978-1-4917-0535-3 (e)

Library of Congress Control Number: 2013921658

iUniverse rev. date: 01/09/2014

Contents

Acknowledgements

Foreword

Welcome

1. WHY YOU SHOULD BE CONCERNED

2. TAKING STOCK: MY POSITION TODAY

Mental Capital: How Ready Am I Now For The Changes Ahead?

Physical Capital: My Portfolio And How It Leads To Abundance Tomorrow

3. A NEW MINDSET TO GROW FAST

Attitudes For Success

Habits To Take You There

Maintaining Your State Of Harmony

4. STEPS YOU MUST TAKE NOW

Your Retirement Vision

Three Essential Tactics: Go On The Offensive

5. NEW REVENUE SOURCES

I. Investing In Businesses (Equities)

II. Investing In Debt (Bonds)

III. Investing In Alternative Financial Products

IV. Investing In Property

V. Trading Financial Instruments

VII. Starting An Online Business

VIII. Creating Content

Real People Are Doing These Things Today

6. THE ROAD MAP: NEXT STEPS AND MILESTONES

Preparing For Your Journey

Planning: Your Engine To Immediate Action

Set Smart Goals To Make The Ideal A Reality

7. PUTTING IT ALL TOGETHER: WHAT DOES IT MEAN TO ME

8. FINAL WORDS

Appendix A

Appendix B

Bibliography

References

ACKNOWLEDGEMENTS

Putting this work together took a while. I would like to thank my wife Serena who was present for all of our personal financial episodes over many years, some of which I will outline here in the book, as well as being responsible for most of the successful ones. Also to say there is not a finer carrot cake made on the planet but hers.

I would also like to acknowledge and deeply thank my children Fiona & Oliver Foxon for their support throughout. Especially Oliver who has undertaken many of the coordination exercises to produce the final manuscript especially arranging the main editing and cover design, as well as contributing to some sections when we were out of inspiration and tea. Thanks, and if you young generation heed the lessons here, you will never need this book later on.

A LATE-STARTER’S GUIDE

TO RETIREMENT

FOREWORD

I am really excited and honoured to be able to write the foreword for ‘A Late-starter’s Guide to Retirement’. I first got to know Jeremy Foxon when he attended my Wealth Academy Program in 2011. This is a program where I coach people from all walks of life on how to create, manage and invest their money more effectively, in order to reach their desired financial goals.

It was from this program that Jeremy learnt the many ways of how he could actually create multiple sources of income through simple business ideas, while holding onto a full-time corporate job. He also learnt the strategies on how to accelerate the growth of his savings and net-worth through savvy investment techniques that he will share in this book. Jeremy has discovered that with the right mindset and wealth creation skills, he can still achieve his financial dreams despite starting relatively late.

It was at this point of time that Jeremy realized that he was certainly not alone. Many of his friends, colleagues and family members have also come to realize that they can no longer depend on their companies, governments and past savings plans to ensure that they are financially secure in their soon-to-come retirement years.

With a savings rate of 1%-2% and an inflation rate of 4%-5%, many seniors have come to realize that with the little savings they have left (after paying off the mortgage, car loans and their children’s education), they are inadequately prepared for the day they will inevitably lose their jobs to people younger, faster and cheaper.

Jeremy shared with me his purpose for writing this book. He felt that he was extremely lucky to have been exposed to these wealth creation strategies at the right time and is extremely happy that he has put himself on the right path to financial freedom and security. However, there are many out there who have not woken up to this stark reality or are simply in denial that they will soon be out of a job and may not have enough to survive in their golden years, with the little savings they have.

This book that Jeremy has written will give you hope that no matter how late you start, you can still grow your finances quickly enough to achieve the financial security and freedom you deserve. This book will show you specific solutions and strategies on how to manage your finances intelligently, and how to create passive income through a variety of financial instruments. I am sure that the pages that follow will be a life transforming experience for you!

Adam Khoo

Founder & Executive Chairman

Adam Khoo Learning Technologies Group Pte Ltd

WELCOME

The purpose of this book is to share some practical ideas and suggestions on the subject of how to build wealth for retirement quickly, when you start the process late.

So who is this book meant for? It is for those of you who now realise that you must take serious action towards maximising your income in your later years, when you are aged fifty years or older. It is for those of you who now realise that you do not have enough set aside for your ‘golden years’. Your retirement plan, if you have one, is falling short of your expectations for whatever reason. Perhaps new commitments have come along, such as those we get with our ageing relatives, whose needs you must also now consider and fund. Or perhaps your reason is just a plain old lack of planning, because you were busy doing other things—I know that one applies to me! For whatever reason, you are unsatisfied by your current situation and prospects. What is infinitely more important than any reason is that you realize you must take action to make your retirement financial situation better, and that you can use some help how best to do that.

For ‘retirement’, I am referring to that period of your life when your main career job is over—broadly-speaking, sometime after you have reached fifty years of age. Some people prefer the term ‘second age’ but for purposes of this book I will mainly refer to the period as retirement, since most readers can understand this concept perfectly well. We will also hear stories from real-life people based over many countries and see how others have prepared for this period, or not, as the case may be.

Many of you will have some sort of government-funded pension, but you have calculated that this government-funded pension of yours is insufficient to fund your retirement dreams and will be little more than just the bare minimum for survival. For some, this book will also serve as a check for how well you think you have prepared so far—and if you have started earlier, well done! Let me share with you in this book some more ideas on how to improve even further. For others, maybe you had done some preparation and were feeling in good shape. Then, along came 2008 and the financial crisis, and you lost a lot of your profits and even some of your nest egg. You want to build it back up again, and in a hurry.

Whatever your situation to date, it is never too late to take action, and this book is aimed at helping others who, like myself, are late-starters to see how we can plan and act now for our retirement goals, having started from our fifties onwards. The goal is, after all, to live comfortably, independently, and with self-fulfilment in our later years, isn’t it? For some of you, it may be to draw a breath and see this beautiful world in new ways, experience new things and places for the first time, or view old ones through a new, wiser perspective. For others, it may be to leave behind a legacy beyond your days, whether it is through a charitable cause, a creative artistic composition to be enjoyed by and to inspire others, a business idea you have always toyed with but never felt it the appropriate circumstance to act on, or through supporting and influencing your grandchildren. Whatever your dream may be, to enjoy the freedom of time in your golden years, it is vital that you be in a financial position to accomplish all this, even to the point where you feel that you have enough and can start to give something back as well not to land every fish you catch but to throw some back into the sea.

For others, you may decide that the retirement years are best spent prolonging the original career job, still around a 9-to-5 framework, in view of the benefits from a regular salary, medical benefits, and other benefits. Who is to say that this is not also a viable and desirable option? If you fall into this group, there is still plenty of material here to create new possibilities around your interests and talents to add to your regular income.

I will also share some of my real-life experiences in the area under the heading, ‘My Story’. I am a self-confessed late-starter, starting to get my retirement situation sorted out well into my mid-fifties. I will share my stories as honestly as possible. You will see that an ‘average Joe’ can both fall on his face as well as pick himself up and move forward.

A few words about me—no big mystery—I am now a sixty-year-old corporate executive in the logistics industry, with a working lifetime in business development. I am a company ‘foot soldier’, who has worked in many countries of the world, in both US and non-US tax jurisdictions—just one of the multitude of worker bees who always drew a salary from a ‘9-to-5’ existence, and someone who definitely started his retirement planning late. Although I had what I thought counted as plans in my younger years, I realized how ineffective they were when some funds were hit badly by the various market volatilities of the 2000s. Growth and performance did not match what was expected, and it became painfully obvious that all the ‘planning’ I had done was not going to get me where I felt I needed to be.

So if you are in similar circumstances to me then I salute you and say, take heart, all is not lost. I truly believe you can start late and still get to where you need to be. I am convinced of this, because I have made progress along the path myself, and if I can do it, surely you can too.

I also have drawn on the experiences and thoughts of friends and associates in how they have prepared for retirement years. I will highlight the most interesting and relevant of these responses. Like my own personal experiences in the ‘My Story’ sections, all of the stories from contributors come from real live people scattered around the world in Europe, Asia, and the Americas. I hope these stories will resonate with you, bringing some moments of ‘Yes, that’s me! Same exact thing happened to me. I feel the same way too.’

The late actress Katherine Hepburn said, ‘Life is hard. After all, it kills you.’ I hope that we can treat the serious subject of our retirement savings with the same balance, taking time to consider the non-financial parts of retirement along our journey in this book, such as the importance of maintaining our health. This journey, whilst serious, must also be always fun, and kept in balance.

There is a lot more to life than just the financial side—both before retirement and during the later years—but you understand the primary focus of this book is to look at the financial aspects of swiftly gearing up for the later years, when you are less able to provide for yourself and other loved ones. The clock is ticking.

Let’s start our journey by taking a quick look at some reasons why most people put off the retirement savings exercise. Studies show these include the following:

• They think they lack sufficient funds to do so (62%).

• They do not know how to go about making a plan (23%).

• They do not have time to seek financial advice (15%).

Do any of these reasons apply to you? If so, you can see you are not alone. Regardless of why you have delayed, it is far more important that you have made the decision to join me on this journey, rather than worry about how or why you got here in the first place. Once you have finished this book and started to apply the topics, I encourage and welcome you to join the comprehensive web community of late-starters like us, at www.latestartersguidetoretirement.com. In addition to being able to interact and share ideas with other late-starters, it will be a great source of further information, user-friendly and regularly-updated with relevant content. This subject will become increasingly important in the world for reasons we will see later, and for everyone this is a lifetime journey. So again, welcome.

Finally, this is not written with any particular country in mind; I currently live in Singapore but have lived and worked in the United States, United Kingdom, continental Europe, the Middle East, and several East Asian countries, so I know that the financial ideas discussed here are available in all these locations to a greater or lesser degree. Anyway all are available via the ‘great global classroom in the sky’, the Internet.

As I am not a financial planner, the ideas discussed in this book are my own ideas of what may be of interest and value to the reader. I have no vested interest in any recommendations I make. Throughout the book I will caution you to invest your time and study before embarking on any of the opportunities I propose.

And a final note on the history and concept of ‘retirement’. Historically, the period of retirement in the western world is comparatively short. As a baby boomer, that is, someone born in the period of prosperity after 1945, we have only our parents’ generation and possibly their parents’ generation to compare to. Not long before that, people worked as long as they were able to and were then supported by their children or relatives or by charity in their later years. In one of the questionnaire responses (Appendix A) you will see reference to the farmer of years gone by who would aim for a large family that could support him when the farming days were over. This is a good example of a typical retirement in those days and circumstances. It is only in the last one or two generations that the concept of stopping the 9-to-5 job altogether and enjoying the golden years really took hold.

So for us, will we be the beneficiaries of public pensions and private pensions? Will we be getting a ‘golden handshake’ from our employers at the end of our 9-to-5 days? If you have any doubts about that, even one tiny bit, then this book is for you. And how will this book be judged a success? As you can believe, I feel very passionate about this subject, so much so, that I set aside the personal time to research and write about it. These issues are happening to me right now and I guess to you too. I continue to walk this walk, because it creates great value every day in my own life through the actions I take and which lead to improved financial circumstances for me and my family.

So if I were to sit down with you and chat about your retirement life, I would regard it a success if, at the end of the conversation, I had provoked in you some or all of the following new ideas:

• You have started to check your own situation and know exactly where you are, and you now see the urgent need to take action.

• You have genuinely started to find answers for your own situation—reviews, solutions, checklists—all designed to take you forwards.

• You are on the way to finding the right formula that works for you; for a balanced view of retirement, led by good financials—you need a plan.

• You make an action plan that belongs to you and to you alone.

• You act on this plan of yours; you must take action.

I would like to share with you here an insightful quote about action, which comes from Anthony Robbins—a man who has been an inspiration to many. When talking about taking action, Anthony says: ‘I believe that life is constantly testing us for our level of commitment, and life’s greatest rewards are reserved for those who demonstrate a never-ending commitment to act until they achieve’.i

Especially as time marches on and the need for a retirement plan becomes ever-more urgent, the call to action is what will separate the prepared from the unprepared; those who strive for more from those who just accept and settle for the inadequate; and, ultimately, the winners from the losers in this financial battle for your second age.

PART ONE:

GETTING READY

1

WHY YOU SHOULD BE CONCERNED

The stark fact is that one of the following statements is probably true of your retirement plan today:

• It does not exist at all.

• It does exist but only in your head as thoughts and good intentions.

• It exists and is partly in place, but at this pace, it will not produce enough in time.

• It exists, but you fear new global economic turndowns or unforeseen expenses cropping up.

STATISTICS THAT WILL SCARE YOU

‘The risk that retirees will outlive their assets is a growing challenge,’ says the US Government’s Accountability Office.ii Increased life expectancies and healthcare costs, coupled with declines in financial markets and home values over the last few years, have intensified workers’ concerns about how to manage their savings in retirement. And what are some of the US Government’s suggestions?

• Delay taking your Social Security (to seventy years old).

• Buy an annuity to supplement your monthly income.

After pouring that bucket of cold water over your head, the US Social Security’s Trustees said in May 2011 that it would not be able to pay recipients in full beginning 2036 anyway.iii What a bombshell. In other words, as highlighted in The Economist,

‘The pension hole just keeps getting bigger. Assets owned by pension schemes have generally been falling in price while their liabilities have been rising relentlessly. The numbers boggle the mind.’ iv

Assets falling; liabilities rising relentlessly—that’s not what we want to hear, is it? Especially when we see population demographic trends like the percentage of Americans in retirement age increasing from 11% in 1990 to 20% by 2020, from roughly 30 million to 55 millionv, or the number of Western Europeans over age 65 doubling in the same period.vi And it’s not just the ‘Old World’ that is ageing rapidly. Consider the statistics of ageing in China: the number of retirees is set to double between 2005 and 2015, to 200 million people.vii Because the economy of China has been established using cheap labour from the countryside, how will the economy function when by 2050 the number of retirees has risen to 430 million people? And with the one-child policy in place for so many years, a married couple faces the prospect of caring for four ageing parents between them, instead of sharing the burden with siblings as in so many other countries.

Consider this