As the weeks roll by we have become used to a very different way of life.  We take long walks instead of long drives or long sails.  We have enjoyed some great walks along the beach and have become very familiar with every rock and grain of sand.  Even the birds seem to recognize us as we pass by.  When the tide is out social distancing is not a problem, there’s room for a football team and probably plenty of supporters.  Whilst lamenting our very restricted activity we never really thought about the impact on our finances.  Never thought until it came to drawing our monthly pension.  My wife pointed out that we had enough cash and didn’t need to draw from the superfund.  We had not been spending so much.

Sure enough our grocery bills are higher as are our green grocery bills but we haven’t eaten out for weeks.  We haven’t dropped into our favorite coffee shops for a coffee and muffin.  Two coffees are only $8 but add in a couple of muffins and it is almost $20.  Not much but several times a week and it all adds up.  Having a meal and a glass of wine after sailing is no longer on the menu, and our regular Friday night restaurant excursions no longer possible.  It’s a lot cheaper making food and coffee at home.

Car trips have also stopped.  One of our cars stood still so long that it wouldn’t start and needed the battery charging.  Petrol bills are almost none existent.  Shame when petrol is so incredibly cheap.  No long weekends away.  It all shows just how cheaply we could live if necessary.  The next step would be to dig up the garden and plant it out with bock-choy, broccoli, lettuce, beans and peas.  We could keep a few chooks too.

We had planned a trip to Europe in the spring and would have paid thousands of dollars for our tickets by now, but that of course will not be happening.  Even a trip to NSW is still off limits.

The end result is that we do not need to take so much money from our superfund and that’s very good when the values are down.  The last thing you want to have to do is to sell when the market is low.  Continuing to draw a full pension during the GFC significantly affected our ability to recover.  I did not know Marcus at that time and relied on the advice that the recovery would be very quick.  It wasn’t and we suffered as a result.  Since then we have avoided that possibility by holding enough cash to pay a few months’ pension.  As I’m sure members know, there is a bottom limit to the amount of pension we must draw dependent on age, but some members may have missed the fact that this has changed.  The bottom limit has been temporarily halved to facilitate lower withdrawals when the overall value of funds has fallen.  The new limits are below.

We are not alone.  I noticed a report from the AlphaBeta financial analysis group that found that Australian weekly spending last week was down 20 per cent on what it would normally be.  That was led by a decline in discretionary spending, but essential spending was down as well.  The 20 % didn’t surprise me but the decline in essential spending was a surprise.  Obviously people are either feeling the pinch or are worried about their future income; probably both.

The market has fallen sharply and the value of our superfunds has fallen too but retirees are still in a relatively good position.  Being in ‘lock down’ does not affect our income.  We may have to reduce our pension a little for a while but we don’t have to worry about how long our jobs will last or where to find the next one.  We don’t have to worry about not having an income at all and pulling $10,000 out of our superfund.  I can understand why people are taking the option when they have no other source of funds, but it’s a big problem for the funds if they have to sell assets when the market is low to meet the withdrawals.  It will reduced their performance this year.  Once again I’m happy to be in our own self -managed superfund.  I am particularly happy with my holding in the Marcus Today SMA growth account.  At the time of writing it is less than 1% below its all- time high and above its pre COVID 19 level when the market is down around 20%.  Go Marcus!

We’ve seen the first moves to relax restrictions so we can now have dinner with our son and his family.  We can now walk on a different beach for a change and we can look forward to spending some time with our son in the Southern uplands of  NSW in the near future.  That will be a very different landscape from the last time we were there.  It’s nice to be able to look forward to something enjoyable for a change.  Maybe another holiday in New Zealand.  That’s going to be a popular place.

It would be good to be looking at a more rational stock market but I can’t see that happening until there is some stability in the US.

Harold

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