Retirement is often something we look forward to. Leaving the world of work behind means you have more time to indulge in the things you enjoy after all. But giving up a lifetime career and moving into retirement can be more difficult than you think.
Often when it comes to retirement, we focus on the financial side of things; calculating how much income our pension will generate and what other assets we can draw on to fund our day-to-day expenses. It’s an approach that can miss out one of the biggest challenges of retiring, those that are psychological.
Your job makes up a large part of your social identity, you might feel a little lost without it. You’ve probably spent decades working hard to hone your skills and get to where you are. It’s understandable that work plays a large role in your purpose and identity. Giving it up suddenly may be something of a shock.
As an environment where you spend the best part of the day during the week, your work may also make up a large part of your social life.
The good news is, retirement has changed. You don’t simply stop work on the day your State Pension kicks in and purchase an Annuity. Pension Freedoms allow for the flexibility to continue working in some form, if you choose to, and create a retirement that suits you.
Whether you’re planning to retire soon or want to continue working past the traditional pension age, being prepared is really important. Financial security makes up a crucial part of this, but so do other key factors, including those that are psychological.
Among the steps to take as you prepare for retirement are:
- Understanding your aspirations in retirement: At the top of the list for securing a retirement that’s fulfilling is to understand what you want to get out of it. Setting out personal goals can allow a retirement that lets your priorities take shape. It’s the perfect opportunity to think about what’s important to you outside of the world of work.
- Decide how you’ll spend your new social time: One of the things many workers approaching retirement look forward to is having more free time on their hands. But without a plan, it can quickly become monotonous. Are there any new hobbies you want to take up or perhaps reconnect with now you have more social time?
- Meeting new people and staying connected with old friends: While we’re on the subject of free time, retiring can give you more social opportunities. But you’ll lack those everyday social interactions and meetings you had through work. Taking steps to remain in touch with those friends that are important to you, as well as meeting new people is vital to securing the social life you want once you’ve given up working.
- Setting out family commitments: Many retirees look forward to spending more time with loved ones once their time isn’t filled with work. For some grandparents, it can mean taking on a more hands-on role in raising the next generation. Alternatively, you may find that you’re able to offer more support to ageing relatives. If family is a priority for you in retirement, setting out commitments can help give you a greater sense of purpose.
- Whether you want to continue some form of ‘work’: If you’re not quite ready to leave the world of work completely behind you, the good news is there are plenty of options. From taking on freelance work in a sector you enjoy to setting up your own business, there are more options than ever before at your fingertips to provide flexible ‘work’ that suits you. Another option is to volunteer some of your free time to a worthy cause that’s close to your heart.
- Understand the support professional advisers can offer: Effective financial advice doesn’t just focus on the figures. It will help you understand what your retirement goals are and how the pensions savings you’ve made will support this. It can give you a clearer understanding of what’s possible, many clients are pleasantly surprised, and help ensure you’re looking forward to spending your retirement years without worrying about money.
Using cashflow planning to create a more fulfilling retirement
We’ve already said that finances shouldn’t be all that you focus on when you approach retirement. But there’s no denying that they play an important role and, when done right, financial planning can help you overcome some of the psychological challenges you may face.
Cashflow planning can provide you with a visual representation of your wealth and how it is forecast to change over the years depending on the decisions you make. It can help give you the confidence to use the retirement money you’ve saved to fund the lifestyle you’re aspiring too.
If you’d like to discuss your retirement aspirations and how you can achieve these, please get in touch.