Yep – we’ve done it. Metaphorically at this stage. We’ve hit the button and are reassessing our life choices.

I’ve reached that critical half way point in my working life, at age 42, and a series of questions have started to emerge in my mind:

• What am I working for?
• How much do I actually need to work?
• What will be the big expenditure items that I need to save for between now and retirement?
• What do I need to live comfortably in retirement?

As part of slowing it all down, my husband and I took some proactive steps to find out the answers to these questions. And the results have surprised us.

We can actually work much less than we are currently

YIPPEEE!!!!

(cue fireworks)

To get to a point of knowing an answer, we went through the following process.

1. We have virtually paid down our mortgage over the last year of self-imposed austerity measures.  We have set a pretty rigid budget since last September, and it has worked.  Our mortgage will be paid down in November.  I’ll post more detail on how we achieved this at a later stage.
2. We have taken time to understand, and have sought advice on our superannuation funds.  My husband’s fund is a defined benefits scheme, which means he receives a multiplier of his final average salary as a lump sum, as well as an indexed pension for life (I didn’t just marry for love alone….).  To understand these figures, my husband contacted his superannuation fund and was provided access to a calculator that spelled it all out.
3. My superannuation fund is just an accumulated benefits scheme, but I have been making some voluntary contributions in the past few years and I have accumulated a reasonable amount that will “top up” any further living expenses that we might require in retirement.  I found a useful calculator at www.industrysuper.com If you plug in your super balance, and adjust for your anticipated weekly expenses, you can work out how long your super will last you for.  For my purposes, I just added on what we would need on top of my husband’s pension, and we will be able to live until we are 104.
4. We then went through a process of understanding what our retirement income will need to be in today’s dollars.  To do this, we went through a budget that included a little overseas holiday each year and worked out a budget of $75k per annum, in today’s terms.  We also benchmarked this against other retirees of today (our parents, for example) to understand whether that was reasonable.
5. Between now and retirement – we have worked out what are major items of expenditure will be:
   1. Small house renovation ($100k)
   2. Savings funds for each of the kids and their homes or educations ($100k)
   3. A couple of car upgrades ($80K)
   4. Downsizing to a nicer, solar efficient home ($300k extra)
6. We are now working on a spreadsheet to develop just exactly how much we need to earn between now and retirement, so we can achieve some balance between what we do to earn money, and how we want to live.

I’m no financial planner – I’d suggest you absolutely get your own advice, but this process has been completely liberating. Instead of thinking that I would need to maintain or increase my current salary levels and keep working forever, I’ve actually learned that I can decrease my salary. I can take a career break. I can earn less. I can do less.