No matter how well you plan for retirement, life can throw you a curve ball forcing you to farewell paid employment earlier than you had hoped. Thinking ahead and creating a well thought out retirement plan is vital to ensure your personal wellbeing is as close to what you had imagined as possible in your golden years.
Firstly, before we get into the finer details, there are some factors you should be aware of when it comes to predicting whether or not you will adjust well to this new stage of life. This includes what planning is undertaken before and during retirement, how much say you have about how and when you leave work and what’s known as mastery – the belief that you have everything you need within yourself to take action and make things happen.
How and when people leave work is a very individual decision. You have to weigh up whether or not you have enough money to live comfortably and how you will spend your retirement. It’s important to consider your expenses and expectations, but also to think about how you plan to spend your time and who you’ll spend it with.
According to the Australian Bureau of Statistics, there are three main reasons people leave work permanently: having enough money; being able to access pension, disability or illness; and redundancy. The last two reasons are generally not ideal as they’re often unexpected. And research indicates that having a say about how and when you leave work is very important for both your physical and mental health.
If you’re required to leave work prematurely, the more factors you can take control of the better the adjustment to leaving could be. This most likely relates to the sense of mastery you feel over your own fate.
The good news is, when you’re planning for retirement you can take steps to future-proof yourself, with four main factors to help mitigate your risks. Firstly, take a good look at your finances before you jump. Thinking you have enough money and actually having enough money to maintain your lifestyle are two entirely different things. You need to figure out how much you will really need to maintain your current lifestyle or be prepared to settle with less.
If finances aren’t your thing, don’t stress. MoneySmart is a great resource available with tips on all things money related, while seeking the help of a financial adviser could also be useful. Alternatively, you can begin to manage your expectations – what can you do without or less often? Running out of money is one of the main reasons people try to re-enter the workforce after retiring, and while it’s not impossible to find another job, the reality is it may be more difficult than you think – even with lots of experience under your belt.
Secondly, if you feel the nest egg has shrunk or won’t be enough to maintain your lifestyle, examine why it is you want to leave work now – what’s putting you off staying longer? We know the timing of colleagues exiting work, job stress, job satisfaction, HR policies, organisational pressures and pull factors from family are all good reasons people re-evaluate their work life.
But, leaving work entirely may not be your only option (or the best one financially). Perhaps working part-time is worth considering, and not just for three days a week, but for part of the year or in blocks of time.
Thirdly, you need to look after your health as much as you can. It may sound obvious , but getting regular health checks, eating well and exercising might end up enabling you to extend your working life, and help you to make the most of retirement when that time comes. Unfortunately, I hear plenty of stories from people who wish they had taken that overseas trip before they developed health problems.
And lastly, make sure you have a plan in case your position is made redundant. If you haven’t considered the possibility that you might be displaced, think again. Even pre-Covid-19 I recommended to managers aged 57 and above to have a plan in the top drawer in case they were served notice unexpectedly.
You might want to consider re-training or making new connections as part of your safety net. This could entail a degree, or a quicker short course that can help to re-position your expertise if required. For example, if you were a marketing guru you might consider short courses in digital and social media.
As Louis Pasteur – a French biologist – once said, “chance favours the prepared mind”. Think through your options with a clear head.
This article as co-written by Professor Vivianna Wuthrich and Professor Jo Earl from the Centre for Ageing, Cognition and Wellbeing at the Macquarie University.
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