Let’s keep going.

  Rule 3: Never, ever retire

  It’s said that the two most dangerous years of your life are the year you’re born and the year you retire.

  Well, it looks like you made it through the first one, so let’s talk about the second.

  The golden rule of retirement is … keep working.

  That doesn’t mean you have to keep your existing job (especially if you’re a tiler with dodgy knees).

  You can do something less labour-intensive — just a day or so a week, and it doesn’t need to be every week.

  Work is good for you: retirees who continue doing some kind of part-time work are found to be the happiest and the least likely to suffer depression.

  Why not use the skills you’ve honed over your career to do some useful work?

  I meet so many Uber drivers who are well-to-do retirees who don’t need the money — they just like chatting to people and earning their keep at the same time.

  And better yet, if you do work, the government will bend over backwards to help you.

  Once you reach pension age, you’ll not only be able to draw a tax-free pension from your super, but in addition a couple can earn up to $28 974 each without paying a cent of income tax (singles can earn $32 279 per year).

  Yet what if your advisor says, ‘You’re a winner, you don’t have to work another day in your life’.

  Barefoot says, ‘Work anyway, even if it’s a day a week’. The biggest mistake you’ll make with your retirement is to give up working.

  You’ll never, ever, run out of money

  Let’s take a final look at the retirement scoreboard, after you’ve applied all three rules:

  You’ve paid off your home.

  You’re getting the full age pension of $37 013.60 (per homeowner couple) per year, indexed for life.

  And you’ve got a balance of $250 000 in super, of which you are legally required to draw down a minimum 5 per cent each year. Note that this rate has been halved for the 2020–2021 financial year.

  (After you turn 65, you draw down 5 per cent of your account balance — in this case, $12 500 of tax-free income per year. As you get older, the minimum you’re required to draw down gradually increases. Why? So you spend it … and don’t hoard your nest egg in a low-tax environment! And, if you don’t need to draw down the full 5 per cent to live la vida loca — and in this plan you don’t — you have the option to squirrel the excess back into super.)

  You and your partner each work just one day a fortnight (and not every fortnight — you’ll be in Noosa, remember) to bring in a combined $15 600 a year, completely tax free. (You can both earn $300 per fortnight — as an employee or via a side business — without paying tax or affecting your pension.)

  Age pension: $37 013.60

  Super pension: $12 500

  Work: $15 600

  Total: $65 113.60

  That’s $2678 more per year (according to ASFA) than you need for your comfortable retirement! Ker-ching!

  The three-bucket retirement solution

  Let’s talk about how you should manage your buckets … before you kick the bucket!

  You understand how the buckets work while you’re working, right? Well when you retire, you’re going to operate your buckets from within your superannuation.

  Think of it this way: it’s like you’re a grey nomad who’s been invited to Woodstock. When you get there, you pitch your tent. Then you like it so much, you stay there!

  Now replace ‘Woodstock’ with ‘superannuation’ and you get the idea. And in this magical place there is no taxation, and you’re pitching your ‘tax-free tent’ here — well, up to the $1.6 million cap, anyway. (No joints, guitars or free love — but there’s possibly a health care card, and tax-free income for life!)

  You’ve been used to saving up some ‘safety money’ in your Mojo account, but now you can do this inside super. You’re picking up your Mojo and moving it into a similar savings account inside super. From now on, your Mojo Bucket is inside your Grow Bucket.

  And you can manage your money inside your super fund exactly the same way you manage your money currently. The only difference is that you’ll now … pay no freaking tax (unless you’re really rich).

  A quick recap:

  Your Blow Bucket remains the same; that’s still for everyday expenses (which you’ll access with your everyday transaction account). And feeding this, in part, will be pension payments from your Grow Bucket.

  Your Mojo Bucket, however, now sits inside your Grow Bucket. And what’s more, it will go from having three months of living expenses to three years of living expenses.

  Huh?

  Sounds like a lot of money, right?

  Yes, it is.

  You’re no longer working, so you need to be even safer. Here’s the thing: knowing that you have three to five years worth of money socked away is going to stop you from having a lot of sleepless nights when the markets get rocky. That Mojo will buy you time to ride out the storm. It will give you a feeling of safety and security — and control.

  Now if you’re a Carlton supporter, you’re probably quite comfortable with losing, so you may only need three years of living expenses. If you’re inclined to freak out and sell at the bottom of the market, shoot for having five years of pension payments.

  Where will you get three years of pension payments for Mojo?

  Easy peasy.

  In the three years leading up to your retirement, you should direct your Fire Extinguisher into maxing out your pre-tax super contributions (your Grow Bucket, that is).

  And here’s the important part:

  These three years of super contributions should be invested into ‘cash’, not ‘shares’.

  So, I want you to call your low-cost super fund and tell them that you want anything you contribute, in the three years before you retire, put into a cash account within super. Which we’re going to call … drum roll please … your ‘Mojo’. (Same ‘safety money’ it’s always been, but now within super.)

  There’s another very smart reason to devote the last few years of your working life to boosting your Mojo. Could you imagine working your guts out in the three years before you retire, only to have the sharemarket crash the day you slap on the sandals and socks?

  Remember, when you’re retired you’re effectively turning the tap to a dribble (but never completely off — you need to keep working — even if it’s just to keep the old grey matter ticking over!), so you need to be conservative.

  And the upside of having three years of pension payments in Mojo is that it allows the rest of your money to be put to work and earn a better return.

  Your Grow Bucket is also where the remainder of your money should be invested. Specifically, it should be invested in good-quality, dividend-paying shares or share funds within your … again … ultra-low-cost super fund (see Step 1).

  These shares will continue to earn dividends. And here’s a final trick: I want you to automatically divert all dividends into your Mojo Bucket (which is now inside the Grow Bucket) so that your Mojo’s being automatically replenished.

  In retirement your biggest risk is that you’ll outlive your savings. You need to stay ahead of the rising costs of living, and historically, the only reliable way to do that is by investing long-term in the sharemarket and getting these dividends.

  Besides, you can’t work forever.

  And if you’re lucky enough to find yourself under the lights of the MCG on a balmy summer’s evening and you’re 100 not out, that Mojo will provide an extra level of padding.

  Now, go back to page 217 and read about your comfortable retirement again.

  Go on … I’ll wait.

  There’s no reason to be afraid.

  You’ve got this.

  Everything you wanted to know about the Donald Bradman Retirement Strategy — in one-and-a-bit pages

  What if the government cuts the age pension?

  It won’t.

  Can you really imagine any politician getting re-elected if they cut the sole source of income for the largest voting demographic? Of course not.

  Will the government change the low-tax status of super?

  It will. It’s inevitable. Politicians from both sides have form on stuffing around with super. Every year super will become a little less attractive. But they still have to provide us a carrot to get us to save and not be totally reliant on the age pension.

  What if I don’t have $250 000 (or $170 000 as a single)? Should I downsize my home?

  Sure, why not? Then you could buy something cheaper and put the balance into super. Remember, the value of your house is exempt from the age pension assets test. Your other option is to keep working full time for the next few years until you nail your number. The government encourages older people to continue working by allowing them to draw on their super while they work. This results in you paying less tax — allowing you to sock more money into super.

  How much Mojo do I need in retirement?

  You should sock away between three and five years of pension payments in cash or fixed interest.

  Why should I bother saving at all? The government will just reduce my pension

  You’ve been listening to talkback radio, haven’t you? Having more money in retirement is always better. Yes, if you save a lot you’ll lose some (or all) of the pension, but that’s because you’ll be much better off!

  How do I know I’ll get the full rate of pension?

  There are experts you can sit down with — for free — who will help you maximise the amount of pension you receive. In fact, I’ll give you their numbers on page 232.

  Nail your number

  Tonight you’re going to nail your number. There’s no need to go to ‘pensioner night’ at the pub — your retirement is going to be a snap after you create a plan to nail your number.

  ENTREE:

  Work out how much you currently have in super.

  MAIN COURCE:

  Next, whip out for your phone and google ‘ASIC MoneySmart Retirement Calculator’.

  Type in your details — your age, your expected retirement age, your annual income, current super balance, investment choice (balanced) and, most importantly, the extra repayments you can now make from your Fire Extinguisher.

  It’ll calculate how much income you’ll likely have in retirement. Play around with the variables and see what adding extra money will do to your end balance.

  DESSERT:

  Chocolate.

  (You’ll be eating a lot of that in retirement.)

  As you’re munching away, read on so you can jump online and find yourself a strapping (often free!) financial advisor to flirt with.

  Finding your financial advisor on Tinder

  Picture this.

  You’re on a first date with a bloke called Simon.

  As you enter the restaurant, your first impression is that he looks like a nice guy. He’s wearing a suit. He’s smiling. He looks trustworthy.

  Then he opens his mouth …

  Simon: So tell me about your goals … and your income … and your assets.

  You: That’s a bit forward. I thought we were just getting to know each other …

  Simon: We are! But before we can proceed you need to sign this letter of authority. Think of it like a marriage contract — it entitles me to a percentage of your assets for as long as we stay together.

  You: That sounds like a very bad deal for me … what do I get out of it?

  Simon: We’ll meet up once a year and I’ll show you my pie chart.

  You: This is moving too fast for me. All I wanted to do was ask you a few questions about …

  Simon (sighing): Look, for a one-night stand I charge $4000. But, honestly, I’ve moved on from all that. Truth is I’m really not that interested unless you sign the contract and I can get my hands on your assets.

  You: Well, can you at least guarantee me higher returns?

  Simon: Oh sure … but … not in writing. The truth is that the managed funds I select for you only have a 20 per cent chance of beating a basic index fund … which is understandable, given I’m taking an additional 1 per cent straight off the top — whether your balance goes up, down or sideways.

  You: I’m going home now, Simon.

  Simon (ogling your assets): Look, wait. You don’t understand. I really need this relationship right now. It’d be good for me …

  You: Goodbye, Simon.

  Ludicrous, right?

  Sure, but this is essentially how the financial planning industry operates. Has done for decades.

  But if you think that’s weird, let’s take a look at the way they charge for their services.

  Let’s say you have $500 000 in assets.

  If you’re charged a standard 1 per cent financial advisory fee, that’ll be $5000 a year.

  Now let’s say I go to the same advisor, but I have $1 million in assets.

  I’m paying the same rate of 1 per cent, which means I’ll get the exact same service and the exact same funds as you — but I’ll be charged $10 000 a year.

  That’s like a fat dude walking into a restaurant and the waiter saying, ‘Hello sir! Given you’re over 130 kilos, we will be charging you double for everything on the menu’.

  ‘But,’ protests the fat dude, ‘I’ll be eating the same bowl of pasta as that Kate Moss lookalike is eating over there! Why am I being charged more?’

  ‘Because you’re fat, sir,’ says the waiter.

  Even more ludicrous, right?

  Well, let’s run the maths.

  With $500 000 invested in a share fund growing at around the long-term average, how much do you think that 1 per cent annual advisor fee will cost you over the next 20 years?

  Let’s play The Price is Right.

  Will you pay $100 000 to the advisor?

  Higher!

  $200 000?

  Higher!

  $300 000?

  Higher!

  Over 20 years of investing $500 000 in a share fund, that 1 per cent your advisor charges will result in you paying fees of $420 160.

  The truth is the world of finance is rigged. It doesn’t exist for your best interests.

  Seriously.

  For years the peak body for financial planners, the Financial Planning Association, fought tooth and nail against laws that made advisors act in their clients’ best interests. So if they don’t want to work in their clients’ best interests, whose best interests do you think they’re working in?

  So what’s the solution?

  Tinder.

  Those of you who are married may not know of Tinder (although 43 per cent of Tinder users are married, so that blows that theory). Anyway, Tinder is a rapidfire hookup (as opposed to dating) app.

  Most people don’t go on Tinder looking for the love of their life.

  It’s totally … transactional.

  People are very clear about what they’re looking for (swipe right) and what they’re not (swipe left).

  While I probably wouldn’t recommend this for finding you the love of your life, it’s exactly how you should approach hiring a professional advisor.

  Find your financial advisor the Tinder way

  Don’t get me wrong.

  While you should never give up financial control, there are times that you need the guidance of an expert advisor.

  However, as with Tinder, that doesn’t mean you need to shack up and share your assets with them for the rest of your life. It simply means getting the job done and movin’ on.

  On the farm we have a saying: ‘right person, right job’.

  You don’t get the fencer to do the shearing, and you don’t get the shearer to cut your hair (actually, it is pretty much the same thing … I mean it’s all just hair right? Though my wife doesn’t agree.)

  When it comes to getting expert advice, the same rules apply.

  The Barefoot Steps will get you 80 per cent of the way there, and the following people will get you over the line. Even better, some of the most knowledgeable, independent, helpful people in this industry don’t charge you for their services. Crazy, huh? Let’s get swiping.

  If you’re in over your head and can’t pay your debts …

  Call the National Debt Helpline on 1800 007 007 and talk to or set up an appointment with a community based, not-for-profit financial counsellor. They’re free, they’re confidential and they’re the unsung heroes of the financial world. I like them so much, I’m donating 10 per cent of my royalties from this book to their peak body, Financial Counselling Australia.

  If you need help setting up and maximising your age pension …

  Call Centrelink on 132 300 and arrange a face-to-face meeting with one of their Financial Information Service Officers (FISOs). They can help you sort out your Centrelink entitlements and also give you unbiased general retirement planning advice that lays out your options without the hard sell. The service is free and independent — and it rocks.

  If you need help with your super …

  Call your super fund. They’ll have financial advisors who can help you plan your retirement. Your first meeting with them should be both fee-free and obligation-free. Thereafter they’ll charge you an hourly fee. Just like your plumber does.

  If you need help to buy some shares …

  Contact your bank. They’ll have a share trading service, or they’ll refer you to one. Buying and selling shares is simple: think of it as a mix of internet banking and eBay. You can even buy shares over the phone with an operator once you’ve set up your account.

  If you need help sorting out aged-care options …

  Again, call Centrelink on 132 300 and arrange a face-to-face meeting with one of their FISOs. The service is free and unbiased. They’ll explain the costs involved with aged care, impacts on the age pension, options with your former home and estate planning considerations. What have you got to lose?