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1.6. Phase 4: seniority to exodus (60-80+)

1.6.1. Introduction

This phase has appropriately been called "the sunshine years". The age of 60 is probably a good target for attainment of your FSG, because it is the age when most people's energy levels begin to wane, and they get the urge to exit their job or business and to play a sport fulltime, or to start a new career. This phase only starts when you have reached your FSG. Some people will start it at 60, while others will start it at 65 or even later. The rules for this phase are:

- Choose this day carefully and prepare yourself emotionally.

- Continue to invest assets wisely.

- Resist the Indiana Jones temptation to make a comeback.

- Do not lend money to anyone.

- Undertake SKI holidays.

1.6.2. Choose this day carefully and prepare yourself emotionally

The age at which you start off this phase is dependent upon your success during the past two phases. As indicated in Figure 40 income ceases at the start of this phase. Thus, expenditure is financed from one source: your portfolio (retirement fund and/or personal portfolio). It is important to note that while expenditure falls over time, it does not fall sharply. This is a result of medical expenditure rising, while normal consumption expenditure falls. If your portfolio is able to sustain your partner and yourself comfortably (which includes travel) you have reached your FSG.

If you are fortunate to have achieved your FSG, which you will know before the start of the phase is reached, it is imperative that you prepare carefully for a new life in the form of hobbies, sport or a new career for which you have never had the time. In the case of a new career, it is liberating to not have to earn an income. One rewarding prospect is teaching, i.e. to give young people the benefit of your experience and wisdom. If you do not prepare for this, it is likely that you will become depressed and depart life prematurely. There is an undisputed link between depression and cancer.

If you have not reached you FSG at age 60+, you will need to keep yourself relevant or re-skill yourself in a field appropriate to your experience. To be avoided at all costs is to invest your portfolio in risky assets (including a new business, such as a coffee shop or a fishing tackle shop at the sea).

1.6.3. Continue to invest assets wisely

It is even more essential to focus on investing assets wisely and to allow for bear markets. As noted, it is wise to take objective advice and not be emotionally involved with your investments. However, if you are well-schooled in the investment industry it is likely that you will embrace self-management. In this case you will need to make the broad asset allocation, and choose the investments in each asset class.

Let's examine an example: you believe that the economy is robust and that asset prices will increase. You have a mortgage-free home and do not think it wise to have any further investment in property (because property is an illiquid investment). You also wish to keep a proportion of your assets in bonds and in cash (= money market). You require diversification and liquidity. You decide upon a portfolio as presented in Table 1. (A note: the terms used here are probably unfamiliar; they are elucidated in some detail later.)

With this type of portfolio you have achieved the following:

- Diversification (across 85% of portfolio).

- Taken advantage of the highest return asset class which can be done at the start of the phase but should be changed as you get older.

- You have risk (in the share market) but it reduces as the investment horizon increases (you may have 20+ years ahead).

- Kept transactions costs low (ETFs instead of the shares/bonds underlying them).

- Liquidity (in all assets except property and other real assets).

Asset class % allocation Asset type Diversification




ETF: Top-40 Index

An ETF is diversified



ETF: GOVI Bond Index

An ETF is diversified

Money market


3 money market SUTs & 3 bank deposits

SUTs are diversified; diversified across banks




Your home




Gold coins

No - because of limited options

Other real assets


Antique furniture, art, rare books & stamps, etc

Yes, probably

Table 1: Example of portfolio

As one ages the risk profile of this portfolio will need to be changed: less in risky assets (shares) and more in risk-free assets (TBs and short-term government bonds).

1.6.4. Resist the Indiana Jones temptation to make a comeback

There are many instances of people (wo/men of ego) who endeavour to "make a comeback" when retired. They have reached their FSG, and invest in one last venture, usually with the purpose of substantially boosting their HNW status and impressing their peers. Often this leads to financial disaster.

1.6.5. Do not lend money to anyone

When you have achieved you FSG it is likely that you will be approached by people, including your children, to invest in a "fail-safe" venture. When this happens place at the forefront of your mind:

- Your portfolio is sacrosanct.

- If you acquiesce your portfolio's risk and return risk characteristics will change in the direction of higher risk.

- Moral hazard rears its ugly head: easy money is easily squandered, especially by family, because there is no pressing need to repay / service interest.

- If the venture is viable (and it should be reviewed), bank funding is available; this is the banks' business, not yours.

1.6.6. Undertake SKI holidays

Spend the kids' inheritance. After almost half a century of dedicated work (accompanied by stress), when you have not relaxed much, it is time to learn to relax. When you depart for Heaven (some believe) at 80-90, your children will be retiring and probably not need to inherit assets.

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