Alternative and modest shelter arrangements for retired seniors? [Australia]

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
Jaymover
Posts: 80
Joined: Wed May 12, 2021 8:19 pm

Alternative and modest shelter arrangements for retired seniors? [Australia]

Post by Jaymover »

I live in an expensive city in Australia. I wasn’t able to buy something where I need to live for the next 10 years so I invested all my money 80/20 and continue to scrimp and invest.

BTW my rental is pleasant, well priced, secure tenancy and close to kids, if not a bit small.

I am an older (51 years) single parent with 10 years off before the kids are both over 18. Secure job on middling wage, rent and expenses chew up most of my income but I’m still able to scrimp and put $25K a year (including dividends) into my retirement account. Net worth is about $1 million now which sounds like alot but that is what a very small two bedder costs to buy where I currently need to live.

My investment goal is to have enough to have a bolt hole somewhere nice, a bit of a community, and enough funds to have a few modest adventures and visit the kids (or they visit me) wherever they may be in this wide land or overseas.

With all the evidence of rocketing house prices (everywhere, even in the formerly cheap places), I have this feeling that stock/bond returns are never going to keep up with costs of shelter and costs of living in the places that are worth living at.

So make myself feel more secure, I have started envisioning alternative accommodation options for when I choose to retire (or am forced to retire) which might be from 62 years onward.

Options I have dreamt of so far;
  • Buy or lease a cheap parcel of land somewhere nice with good people around and build a cheap tiny home/place to live and store my few treasured possessions.
  • Buy a modest bolt hole unit somewhere cheap and use the savings to travel around and do stuff.
  • Grey Nomad. Live on the road (with a modest van) for as long as possible, visit nice places, meet people. I love hard core camping so maybe it would be okay, like in the movie. Live on a 1% drawdown.
  • Share a rental home with other elderlies.
  • Minority co-ownership with a friend who is asset rich but cash poor. Build a little granny flat in their back-yard.
  • Professional house-minder, moving from house to house.
  • Live in a nice, cheap part of the world eg Bali.
  • Find a friend or girlfriend with a spare room in a big house and move in. Help with maintenance.
Most of the above options rely on staying healthy and able into old age, which I have been so far. The trouble with some of the above options is what happens if you end up with a serious old age disability or illness. Maybe having the lovely home doesn’t matter much in that situation anyhow.

I was really interested in hearing Boglehead thoughts on the above and whether some people have actually found some alternative, modest shelter arrangements that have suited their financial situation and life goals into old age.
User avatar
Beensabu
Posts: 840
Joined: Sun Aug 14, 2016 3:22 pm

Re: Alternative and modest shelter arrangements for retired seniors?

Post by Beensabu »

Bali sounds nice.

I just looked it up. That's super affordable, and there's a huge expat community.

Bali sounds really nice. Looks like I have a new dream. One day.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."
AlohaJoe
Posts: 5977
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: Alternative and modest shelter arrangements for retired seniors?

Post by AlohaJoe »

Jaymover wrote: Fri May 14, 2021 1:06 am I was really interested in hearing Boglehead thoughts on the above and whether some people have actually found some alternative, modest shelter arrangements that have suited their financial situation and life goals into old age.
As a fellow Australian I can sympathize with the intimidating housing costs. I wouldn't spend too much time thinking about possible scenarios for a future that is still a decade away. A lot can change between now and then. My only bit of advice is to not put too much weight on possibilities that you haven't actually experienced. Bali? Have you ever lived in a foreign country before? I live in Vietnam and being a foreigner isn't for everyone. A small bolt hole somewhere cheap? Have you ever lived hours away from your children, only seeing them a few times a year on holidays? Grey Nomad? Have you ever done an extended holiday (i.e. a few weeks) to see what it is like to not "have a home"?

The reality is that most people retire and stay in the same general area where they were before. That's where their social network is, where their children (and eventually grandchildren) are, where their hobbies and church and favorite cafes are.
Topic Author
Jaymover
Posts: 80
Joined: Wed May 12, 2021 8:19 pm

Re: Alternative and modest shelter arrangements for retired seniors?

Post by Jaymover »

I live in Vietnam and being a foreigner isn't for everyone.
I slept on the side of the road beside my bike once in Vietnam as there was nowhere to stay.

In all seriousness though I'm probably thinking about this because am physically resilient and some of the best times of my life was when I was living precariously. I met more people and gravitated to where the good stuff was I have lived in a van, in a tent, on couches, overseas, in refugee camps etc. With being settled and with kids one is forced to live in one spot, then the comfort zone expands, you accumulate stuff and for some a sense of staleness might begin to prevail.

In a place like Sydney it feels like most of my old friends have found reasons to leave or live so far on the outskirts it is quicker to fly to Cairns. I hear that in Vancouver all young adults simply leave town once they finish school or uni. All very well to have a nice house in a place like Vancouver when your kids cannot afford to live nearby.

Things really change financially if one re-partners with an additional perk being housing costs shared. However that financial outcome should never be engineered.

Maybe the point is to find older people living a bit differently and quiz them on how it's going.
andrew99999
Posts: 838
Joined: Fri Jul 13, 2018 8:14 pm

Re: Alternative and modest shelter arrangements for retired seniors? [Australia]

Post by andrew99999 »

I don't think your situation is as dire as you think it is.

1m with 21,250 added each year, at a real return of 5%, gives you 1.78m (in today's dollars)

It's possible that Sydney housing doubles over the next 10 years, but I wouldn't assume that is the case. The current inflation of assets is largely a result of the lowering of interest rates. The same reason for assets rising since 2012. But we are now at a 0.10% RAB interest rate. If the last 9 years were to continue, it would mean interest rates were -4%. Let's be honest and say that's impossible. Something else may have an effect, but I wouldn't assume the next 9 will look like the last. Sydney housing had a massive boom until 2003 and then didn't rise at all above inflation for the next 9 years, so don't think it's somehow impossible. Same thing in Brisbane and Perth — pretty much no growth for over a decade from 2008.

In addition to this, the aged pension offers a sweet spot for people with about 400k of assets after the main residence excluded. There are several less than ideal things in the Barefoot Investor book, but he goes into this (I think he calls it the Bradman retirement or something), and it's worth understanding. In fact, between 400l and 800k, due to the pension, your income isn't much different.

Is there an option for you to semi-retire at 61 instead of full retire? That would make an enormous difference. Living off the part-time salary and allowing your retirement savings to continue compounding without additional funding. 5 more years on the above numbers would result in $2.27m in today's dollars.

I would plan to own your house by 67, which is pension age, since it is not part of the assets test. Before that, if you can share or else buy a house and get renters, that's great, but I personally couldn't do it again after uni, but maybe people are different as they get older. I agree that things really change when you are partnered with someone who has the ability to pay for half of the accommodation costs.
Topic Author
Jaymover
Posts: 80
Joined: Wed May 12, 2021 8:19 pm

Re: Alternative and modest shelter arrangements for retired seniors? [Australia]

Post by Jaymover »

Yep Andrew. I actually paid a FP to model a few scenarios and renting, salary sacrificing into super (retirement fund), investing and living frugally was about the same as owning until retirement. Just hope my assumptions were not totally out.

And yes, owner retirees in Australia are a protected species so it is good to own something, even if it is just a tiny home in a backyard within a coownership arrangement (something not explored because people don't understand the arrangement). Actually, owning a big house outright could cost you most of your pension in maintenance, insurance etc so the trick is to own something that doesn't cost much to own, hence the bolt hole concept.

I could work until I'm 67 but my back up plan if I get made redundant before then and am still healthy then I think I will hit the road for a few years and meet some Grey Nomads and look for the perfect little place to live or purchase . This is a damn big country (Australia), crazy how we are all crammed into a few overpriced cities.
Valuethinker
Posts: 42635
Joined: Fri May 11, 2007 11:07 am

Re: Alternative and modest shelter arrangements for retired seniors?

Post by Valuethinker »

Jaymover wrote: Fri May 14, 2021 3:28 am
In a place like Sydney it feels like most of my old friends have found reasons to leave or live so far on the outskirts it is quicker to fly to Cairns. I hear that in Vancouver all young adults simply leave town once they finish school or uni. All very well to have a nice house in a place like Vancouver when your kids cannot afford to live nearby.
Absolutely re Vancouver. In fact it's now so bad even the parents move out -- the trade up steps between homes are just too large or the opportunity to retire with a pot of capital from house realisation. Even in far Surrey (eastern suburbs) it's too expensive. The city is quite land constrained by mountains and the sea so that does not help.

I have thought Vancouver was a bubble which would burst. It burst before. In fact what kicked off the current bubble was a near depression in the early 90s, where Canada brought in an investor-immigrant programme that gave you a passport if you invested less than $1m for something like 5 years. A lot of people, particularly from Hong Kong worried about 1997 and the handover to Beijing, took advantage of this. Domestic buyers and domestic factors have played a role but also the international flow of money.

The US had the housing crash in 2008, Canada dipped and then went straight back up again.

But Vancouver and Toronto both seemed to me in the last few years to be crazy bubbles, and score very highly on The Economist overvalued housing (relative to incomes, relative to rents) indices. And now that price inflation, rather than collapsing, seems to have spread to the rest of the country.

The lumber price boom is in theory good for BC economy but I suspect the combined impact of the pine bark beetle and overharvesting means that BC won't do that well out of it. Shipped too many trees already.
SR7
Posts: 65
Joined: Fri May 15, 2020 4:06 am
Location: Down Under

Re: Alternative and modest shelter arrangements for retired seniors? [Australia]

Post by SR7 »

From what I hear house & land prices have gone up a lot, but apartments have gone down in price. People want a backyard during a lockdown.

But apartments have some advantages during retirement, especially if you want to travel a bit. No yard to mow, and more secure with close neighbours keeping the place active. Just get a PO Box to keep your mail box empty.

Otherwise a place in the country, there is a LOT of space out there, once you get away from Sydney/Melbourne/Brisbane/Perth. There has been a long term flight to the city, which has hurt a lot of smaller country towns, maybe it’s time for the trend to reverse. When I was travelling I enjoyed places like New Castle and Coffs Harbour on the east coast and Fremantle on the west coast.
I studied Physics not Finance, so best to ignore anything I say about money.
Topic Author
Jaymover
Posts: 80
Joined: Wed May 12, 2021 8:19 pm

Re: Alternative and modest shelter arrangements for retired seniors? [Australia]

Post by Jaymover »

From what I hear house & land prices have gone up a lot, but apartments have gone down in price. People want a backyard during a lockdown.
.

Everything has gone up because interest rates went down and the government has allowed lenders to be cowboys again. Houses have gone up most.

Obviously we all want an nice house in a great spot in retirement plus a getaway with lots of money in the bank and a pension but have to make the most of what you have and then you must identify and prioritize your most important needs. I guess that is what I am going to think about carefully over the next 10 to 15 years.

Some wealthy older people I know with a nice big house or five seem quite burdened with their possessions and the responsibility and a sense of entrapment. Of course I am envious of their financial situation, but some ways it would be better for them to sell up and live in holiday houses for the rest of their lives and live with a sense of lightness. Their problem might be stinginess, not willing to pay for the assistance they need and the dread of decluttering.

I am thinking that the solution might be a cheap old little unit somewhere near some nice nature as well as a van. Basically a storage box with a bed not far from a park. No pets. The base has to be near lots of other similar aged people with a similar background and time on their hands. I spend six months a year on the road visiting family, dispersed friends and finding connection with other grey nomads. I have money to splurge on airbnbs every so often to get people together. I do a bit of house minding here and there as well as take on some odd jobs (travel with some tools) to give myself a sense of purpose. I try and stay as healthy as possible and not take on too many risks. If I meet a nice lady with a spare room I can move in with her for a while and see if it works out. Help her with house maintenance.

If I end up with a serious illness or disability I might go straight into aged care nice and early and not burden the kids with guilt of not putting their life on hold to nurse me in my storage box. Pay my kids their travel costs to come and visit every so often if they are not too close. Gift the $10K a year at times when they really need the money rather than holding the inheritance carrot on a stick.

The more I think about it the more I realise that great health is crucial irrespective of how much money you have.
Post Reply