How to have a test retirement (and why it’s a great idea)

You wouldn’t buy a car without taking it for a spin or move into a new home before you’d spent some time gazing through the windows from inside. So why buy into a whole new lifestyle without trying it on for size first?

Having a “test retirement” can help you discover whether you’re ready – financially and emotionally – to give up work, and whether a life of leisure is going to live up to your expectations.

So why is it a good idea? Imagine this: you give up work, looking forward to having more time to do all those things you’ve always wanted to do. You have the party, get the watch and celebrate.

Three weeks later, you’re bored out of your brains. That volunteer position you wanted? Turns out they were slave drivers. You’ve discovered you have no patience for watercolours, Bunnings is hell on earth, and that your neighbours play banging techno music all day.

No wonder the incidence of “unretirement” is on the rise! Recent Australian research has found the once terminal state of retirement is now far more fluid, with older workers hanging up their boots, then un-retiring a little while later.

Ad. Article continues below.

But the risk here is giving up your job, only to discover the doors to your profession are now closed and you can’t get back in.

Another very real possibility it that dive into retirement with great plans of all the things you’re going to do and achieve, then discover you don’t have the means to do so.

Martin Hawes, financial planner and author of Twenty Good Summers, said in an interview with Rev Bill Crews on 2GB, “You’ve got to plan the money. Maybe five years before you plan to retire, do a little mock budget, what is it going to cost to live? Where’s that expenditure going to come from? Do we have capital we can earn a bit of income from? Will we downsize the house? It doesn’t need to be all spreadsheeted out, but there definitely needs to be a few jottings.”

We say, take it a step further. Spend a period of time living as if you were retired. And by that we mean living on the budget you’ve worked out for yourself. This ain’t a holiday folks, its real life.

In addition to the financial side of things, there’s you. Because when you retire, there’s a lot of you that you’ll have to put up with (not to mention your partner).

Ad. Article continues below.

Investment expert Steve McDonald says, “The more I read about retirement, the less I understand why the heck we are in such a rush to get there.”

He points out that loss of social contact and skills, quickly affect our health and happiness, and that, for many, the loss of a professional identity can be traumatic.

“Most retirees won’t admit it but, according to the research, retirement isn’t any better than working. The American Institute of Stress reports that retirement is ranked as the No. 10 biggest stressor out of 43 possibilities.”

Will you be happy as a retiree? Will you enjoy unstructured time or are you going to need to move quickly into some kind of role or course to maintain your sense of purpose? There’s one way to find out…

How do have a test retirement

Ad. Article continues below.

To get a true idea of what life will be like post-working, you’ll need to take a decent chunk of time out of your life – if you have long-service leave, use it. Otherwise, negotiate at least three months off to test out your future lifestyle.

Unless you plan to spend the rest of your days on a cruise ship, don’t spend the whole hiatus on holiday. Instead, break the time up in a way that will give you more insight, for example:

  • Spend three weeks pursuing a hobby
  • Commit three weeks to a volunteer opportunity
  • Allocate three weeks to completing some of the tasks on your to-do list
  • And go on a three-week holiday.

Throughout your practice retirement, try to live within your retirement budget – and keep track of what you spend so you can get a realistic picture of how much you’re going to need.

Throughout the experience, ask yourself: am I happy? Could I do this for the rest of my life? If the answer is yes, then you know what to do. If not, reflect on the experience, learn from it and adjust your plans accordingly.

Are you in two minds about retiring? Would a test run help you decide whether to take the plunge?