Episode 3 : When the Paycheque Stops

Michael Avery: Welcome back to Life Chapter’s Money Choices, the podcast where we explore life’s transitions through the deeply personal lens of money. As always, I’m your host Michael Avery, and today’s chapter: retirement, or more specifically, what happens when the paycheck stops but the need for purpose doesn’t.

I think for many of us, work is more than just an income. It’s identity, it’s structure, it’s validation in some sense. And when that ends, even by choice, I think it can trigger a surprising mix of emotions: freedom, yes, but also anxiety and loss and even boredom.

Well, joining me to unpack this is someone who knows that journey intimately: Ronelle Baker, who retired early and did what many dream of. She travelled, she enjoyed her time, but something was missing. And her story takes us from that excitement to a bit of emptiness and ultimately to a new chapter of profound joy and purpose at Waterfall Valley Mature Lifestyle Estate.

And of course, alongside Ronelle is a woman who’s coined the phrase retirement because she believes retirement is not the end. And it’s a great pleasure having you back on, Kim Potgieter.

Kim Potgieter: Thanks, Michael. Thanks for having us.

Michael Avery: Well, we’re going to start. It’s a great pleasure. And I mean, this episode is really for anyone wondering what comes after the career.

So, Ronelle, maybe you can take us back to that moment and what was going through your head when you thought, well, it’s time for me to retire. What was running through your mind in those early days?

Ronelle Baker: Well, it’s a bit tricky because first of all, we were never gonna retire because it was for old people. So retirement is not really for people like me because I’m special.

And I think my job, I identified with my work. So when it came time…

Kim Potgieter: Quick about it. I remember, you know, you go back to when she and Brian were first retiring and they came to see me and that’s always a conversation that I’ve got on my list of things that I want to talk to people.

You know, there might become that time in the next couple of years or decade where we’ll look at a retirement village. So I had had that discussion with Ronelle and Brian and in that meeting I had…

Unfortunately, Ronelle wasn’t somebody who didn’t mince her words and she told me clearly. Just like she said, she never thought she was going to be the one to be retiring. She told me clearly how there would never be a retirement village in their future. And actually, she was quite insulted that I thought to bring it up.

Do you remember that, Ronelle?

Ronelle Baker: No.

Michael Avery: But I think such an important point you raise, Kim, because there is often a myth or a perception around retirement villages. I mean, old age homes is what we used to call them, that you’ve got kind of one foot in the grave.

And I mean, to say that, “Oh, now I’m retiring and I’m going to this old age home and I’m basically being pushed out the door,” I can see how that is highly offensive.

But when you start reframing that, I mean, retirement for me doesn’t necessarily have to start with saying, right, 60, 65, whatever the date is, the next step is selling the house and going into a lifestyle retirement village, does it?

Kim Potgieter: No. The way I like to work with clients is to look at it in two different phases. Because I do think that your first phase, you haven’t even had an opportunity to enjoy your home. You’ve been working so hard, you’ve been doing all the things you have to do.

So I like the discussion in the beginning around dividing it up and not going and looking at it, “Oh, for the next 40 years, what is it we’re going to be doing?” So we divided up into those phases.

And the first phase can be where you’re not moving and instead you’re getting to enjoy your home. And for many people it’s the first time that they get to work in their workshops that they’ve been collecting. I know for Ronelle, I mean her husband Brian had been collecting and had so much stuff that he wanted to enjoy in his retirement.

So it becomes important that you do have these different phases and the way you look at it. So I think the only reason I like to bring it up is I do believe that it’s a good conversation to have so that your opportunities and your options are there. And that for me is part of this whole process of just having a look at what all of the different pieces are and knowing that when the time comes.

Because what I see is a big fatal mistake that people make…

Michael Avery: Yeah, we name shock.

Kim Potgieter: No, exactly. And why? I mean, it’s like when you’re planning or guiding people through saving towards retirement, you’ve got to explain that there’s market volatility, so that when we have a big market sell off, everyone’s not going to go and try and liquidate it, that you prepared for it and you don’t make those knee-jerk reactive decisions.

Michael Avery: But, Ronelle, back to that time, I mean, you had the time now, you had the resources, and I believe you travelled a lot. You’re like me, I cannot wait for that day that I can do a lot more travelling and a lot less podcasting.

But you said the excitement didn’t last. What began to shift for you?

Ronelle Baker: So you can travel up a storm for as long as you want and the older you get the more difficult international travel becomes. But it’s not just in where we live, it’s a very strong community and I have continued working, for want of a better word, in as much as I’m involved in admin on our estate.

I do newsletters, I do flyers, I advertise events, I help with events and with speakers and such like, because it’s important for me and for Brian to be involved. I’m very community spirited.

That I think also helps in the event that you start becoming weaker. You need to have built up a core of friends and a support structure, and also things to keep you busy. I mean, for example, we play bridge, we play mahjong, we have events, there’s not water polo, sorry, aqua aerobics. There’s gyms, there’s a pool, there’s golf, there’s all sorts of activity so that you are not left sitting on your own and waiting to die.

Because people perceive that to be part of retirement. So now you’ve stopped working, so you lose your perceived value, and then what?

Michael Avery: I mean, Kim, is Ronelle’s story common amongst clients that you’ve worked with, the sense of “I’ve stopped working but I haven’t really started living it” or kind of “what next”?

Kim Potgieter: So I do think for a lot of people they haven’t thought about what they’re going to. So when people do come in and they say to me, “Kim, we’re thinking of retiring,” generally the first hour of the meeting and the time that we spend chatting is about what they’re coming from.

So I’m always going, well, what are you retiring to? But for most of us, we’ve been so busy that we haven’t given time to thinking what it is we want to achieve.

So my first question that I’ll ask is: what will this next chapter look like if it turns out well? And most people can’t answer it.

So it’s what Ronelle’s saying. She didn’t have a concept of what she was going to. She knew she was retiring from something.

Michael Avery: But Ronelle, you did know you wanted to travel?

Ronelle Baker: Yes, absolutely, always wanted to travel.

Michael Avery: But that didn’t fulfil you.

Ronelle Baker: No, it’s not enough. It’s not enough.

Kim Potgieter: So I remember when we had the meeting and we were doing a concept called the bucket list and, you know, we’d seen a movie. It’s such a great movie and get excited, oh, we wanted, we need to go to China, we need to definitely go to Greece, we’re gonna do this trip, we’re gonna do that trip. And it is, it’s very exciting.

Now I know because I’ve been working with people for so long, that it’s not going to be enough. But I can’t tell somebody else that it’s not going to be enough.

And then I can remember it was about two years later when Ronelle and Brian came in to see me again. And Ronelle’s words to me were: “Kim, you have missold me on retirement. You have missold me retirement.”

And I went, like, what do you mean? She says, “This travel thing, it’s lovely, but it’s not enough. It’s not giving me meaning. And it’s not me for fulfilment.”

And what she’s talking about is she was missing the community, she was missing the routine. And then we kind of went with the balance wheel and we went, okay, Ronelle, we need to come up with ideas for you to do all around the balance wheel. And we called the concept the bucket wheel so that she could get involved in community, she could get involved in health things or exercise routines, rather than just thinking no more work means full-on play.

Michael Avery: Did that surprise you, Ronelle, that psychological impact of and your reaction to retirement and of leaving the workforce?

Ronelle Baker: So leaving the workforce was planned. So that wasn’t such a shock.

What was a shock, and it’s an egotistical thing, was that the phone stopped ringing. So then you kind of step back and you think, gosh, what am I worth in life?

And that’s when it became clear to me that I had to keep working. I had to keep doing stuff. And not just, obviously not being paid because I think people don’t employ seniors anymore.

Michael Avery: Well, which is, I mean, we can have a whole podcast on that which I think is fatal. We need mentors in South Africa. We need the skills and experience, and who’s going to do that if we’re chasing everyone out the door at a predetermined point?

Ronelle Baker: So the work had to continue for me. And so getting involved, as I said, in community and getting involved in organising things because I tend to be a little bossy, so just a tad.

Kim Potgieter: And maybe just to put them, Michael, one of the things to do when we are planning this is to do a personality profile.

Michael Avery: Yes.

Kim Potgieter: Because what I think people think is that in the work environment, when they come to the home environment, that their personalities are going to change. And they don’t.

And if you’ve been like Ronelle was, I mean, she was running her own company, she was delegating work to people all the time, she was coming up with ideas, I mean, I felt sorry for Brian because she was going to be delegating to him all day and telling, yeah.

So very important is just recognising that your personality type goes with you, whether you’re in…

Michael Avery: You can’t flick a switch.

Kim Potgieter: You’re not flicking that switch. So it is important, depending on your personality profile, if you’re one of those people that love helping and being around people, you need to surround and make sure that that’s an important element into your planning.

And I mean, Ronelle wasn’t the analytical one. Maybe we’ll come to the financial planning because I always used to tease her, you know, we get clients that are so analytical that if we don’t show them the exact cash flow and how their money is going to work and where it’s invested and how it’s invested, they don’t feel secure enough to make these decisions.

When I dealt with Ronelle, she was completely different. Maybe she can share a little bit about that.

Michael Avery: Well, how did you approach the financial element? Because I think that scares so many people that sometimes they’re just paralysed even to confront it.

Ronelle Baker: So one of the things that I used to do in my business, and it wasn’t just me, there were a bunch of us that were running this business, was I like to surround myself by people that are smarter than I am.

So one of the things I’m really bad at is money, or sums. And I actually don’t really care about it.

But Kim’s job and her company’s job is to make sure that whatever investments we have makes babies.

Yeah, I just want to see the bottom line.

Yeah, I don’t want to see it going down, I want to see it going up. And I only get tense when it’s going down, but very rarely it does.

So I don’t really want the detail. I really don’t want the detail.

Michael Avery: And how did that factor into the way you structured the transition, Kim, the fact that you’ve got someone who wasn’t like you were just describing, someone who wants to know the exact amount of the drawdown rate and how long is that gonna…?

Kim Potgieter: So what’s quite interesting is when we do this, we do the personality for the partners. Now, Ronelle’s partner, Brian, is very analytical and he needs the details to make the decision. So there we had the two of them with a completely different need out of the process.

But as Ronelle says, she respected the fact that she needed to work with an expert that would come with the details. So that’s your first thing: if you can respect each other, the one’s doing the one area.

And then for us, the way we would present it is we would come up in meetings with the ideas of all the things that they wanted to do as a couple. We call those the bucket wheel items. And we put financial values to that.

And as long as we could show Ronelle that you could do all those things and that they were still not going to run out, because as she said in the beginning they don’t have children. So she clearly said, “We don’t want to be dependent. We haven’t got people to be dependent on. Make sure that we never run out.”

So always the discussions were balancing her getting this return on investment and return on life, but we didn’t give her all the detailed facts.

Michael Avery: I was going to ask you how much detail does one have to go in. Do you say, right, I want to visit three European countries every year, now you know this is the lifestyle I want to lead? I mean, you need to at least have that kind of framework.

Kim Potgieter: You should be having that meeting at least twice a year, because life happens and life changes. And yes, it should be that granular. Because when it’s that granular, what I find is you don’t have an excuse not to do it.

Because I have more clients that I work with that don’t do the things because they have the fear that they can’t afford it and they’re going to run out.

So why working with Ronelle was a pleasure was because if she could see she could afford it, she would bring it in.

And we were on top of that a lot of generosity for family.

Ronelle Baker: So they do budgets, which I’m really particularly bad at. So they do this budget where they say so many years you have to wait then you have to buy a car, or so many years and then you have to do this.

And it’s like mind-bogglingly detailed, particularly what I hate.

And then I get into trouble when a year or two or three or five have gone past and we haven’t bought that car that they’ve budgeted for. So, you know, like, that’s not my scene.

Michael Avery: Surely there’s some flexibility to put surplus capital back into the fund, Kim?

Kim Potgieter: There absolutely is. And one thing I must just correct Ronelle on is, she calls it a budget. We call it a spending plan because we don’t want that word “budget” to come into the discussions. It’s where we allocate the funds to.

And if you don’t get that vehicle that we plan to get, your money’s still staying invested. So it hasn’t come out of the investment. It just hasn’t been allocated to it.

But I think the word “spending plan” is just so much better because I don’t want people to come into retirement and see it restrictive and “we can’t do this and we can’t do that,” but what we do need to know is how we’re allocating what you’ve got.

And, you know, I suppose that was where Brian wanted to see some more of the detail. But that really does come into how much you’ve saved when it comes to that point of retirement. And depending on how much you’re drawing down annually, whether or not you may be drawing 10 to 15%, you might hit a speed bump down the road.

Michael Avery: I mean that’s often put to me, Kim, in that we far too often draw too much from our capital.

Kim Potgieter: Well, I think the biggest thing that I see is the importance of not drawing too much too quickly.

Right. So with retirement, and, you know, some businesses saying the retirement age is 60, some saying it’s 65, and I do, I get some people coming in their late 50s and telling me that they’re about to. And I’ll go, you’re going to be funding this for 40 years minimum going forward. Because we want to plan to 100.

And if you draw down too quickly, you’re going to damage what you’ve got. And that’s why, and Ronelle can say that she didn’t like the fine details of it, but that’s why if we get that right, people can go way up to 100 and have money to leave without having that stress, because it’s actually been worked out and we’ve made sure that you’re getting the correct returns rather than just talking that 15 percent.

We’ve actually made it alive. It’s your plan. It’s not just an assumption.

Michael Avery: And Ronelle, for you, I mean as someone who didn’t need the detail but at least then got the comfort that you’re on the right path, what did that mean for you taking this kind of approach, looking at it as a spending plan, but also knowing that whatever happens you have the confidence in what you’ve mapped out?

Ronelle Baker: Well, I think it removes the fear because I think what I’ve always said is I don’t want to be a poor old lady because you see so much of that where planning hasn’t been part of the person’s life.

So for me the fear is gone and I can, and our financial advisor person at Chartered Wealth will guide us and we obviously, Brian and I have commitments elsewhere, family commitments that we have to worry about. So we’re blessed that we can afford to look after a relative.

So it’s that kind of thing. And that all gets factored in to the spending plan.

Michael Avery: And everyone’s situation is different, Kim, because some people may not have kids, others do, so you might want to fund those kids or even donate to grandchildren. And that’s why you really have to start this planning process very early on.

But Ronelle, I just want to come back to the decision then. Right, so you’ve travelled a couple of years, you’ve realised that travelling is great, but it’s not filling that well. And so at some point, you made this very intentional decision to go and revisit the bucket wheel.

Well, how did that conversation go? Because I think it’s a very courageous move as well.

Ronelle Baker: Well, the conversation, and Kim will confirm, was actually a little hostile, because I thought it was all a bit ambi-pambi. However, the stuff on that wheel is very key. There’s a spiritual element, there’s a work and a play. A lot of these elements, well, most of them are interlinked and you do have to do the work.