Retirement no longer means entering your twilight years clutching your pipe and slippers. It is a new phase of life that can, with sensible financial planning, be rewarding and invigorating in many ways.
The Office for National Statistics estimates that aand a woman of the same age to 85. This equates to around 20 years in retirement, and that figure increases to around 28 to 30 years for a person .
With retirement now running into decades it is imperative that your pension isn’t the sole focus of your later years’ financial planning – it is only part of a wider picture that focuses on your retirement goals and whether it is the right time to retire at all.
It’s not about the pension
Your retirement isn’t about your pension; in fact it’s not about money at all. It is about setting and achieving new goals and ensuring you are emotionally ready to tackle the next part of your life.
Money is neither important nor interesting, but it does allow you to do important and interesting things, which is why taking control of your money and making it work for you to achieve your goals is crucial to your retirement.
Rather than seeing retirement as the end of your working life, it should be viewed as the start of a new phase of life, with new achievements and fulfilment.
Living your dreams
Retirees are already time-rich, something that we should all aspire to be, and this gives them the edge when it comes to achieving their dreams. The dream could be as simple as taking the grandchildren on holiday every year to travelling the world.
In fact, there has been a huge rise in the ‘grey gap year’, with over-50s refusing to use their retirement to take a backseat in life and instead flying around the world looking for new experiences.
According to research by Thomas Cook,and 40% of those people plan to follow in their children’s footsteps in retirement.
Experiences and relationships should be the key drivers of life, not the number of zeros in a bank account. It is essential when planning for retirement that the money so diligently saved throughout the working life is then used to enable retirees to live the life they want to live.
It is not everyone’s dream to cruise the Mediterranean on a yacht. Others use their newfound retirement freedom to set up new business ventures.
Figures from the Office for National Statistics suggest a growing trend for working after retirement age; over the past 20 years, the number of peoplehas doubled to 1.4 million.
While, for many, working beyond retirement is a necessity, there are others for whom it is a lifestyle choice. The number of self-employed workers increased 367,000 between 2008 and 2012, taking the total to 4.2 million. The fastest growth in self-employment has been in the past two years and has been driven by the.
If the idea of jumping straight back into work in retirement piques your interest, you should first ask yourself if you are ready to retire at all. Deferring retirement for a few more years may not only give you more time to build up your retirement funds but also help some people to phase in their retirement, at first moving to part-time work and then into full retirement.
Leaving work is an emotional experience as work is often equated with achieving goals; but there are new goals to be set, and achieved, in retirement.
Can I afford to retire?
Whether you plan to relax in your holiday home, run a new business or mentor entrepreneurs in your later years, every retiree must assess whether they can afford to live the life they want to live.
Defining the lifestyle you want in retirement is the first step to achieving it; it is not possible to jump into the life you want to live without making sure it is financially viable.
You must also look at when you want to retire and whether you are emotionally ready to do so, asking yourself if you have achieved everything you want to achieve in your working life and are happy to move on to the next phase of your life.
It is only then that a financial planner can help you to arrange your finances in order to support your plans, working out how much money you will need to do everything you want to as well as staving off the effect of inflation and ensuring your money retains its value.
There are, of course, risks to retirement; and the main risk is that you live too long and your money runs out. But by establishing a plan for your retirement, rather than jumping into it blind, a financial planner is able to ensure you can fund your lifestyle and spot any funding gaps that may be present. More importantly, they can close those gaps.
Setting a plan for the next two decades can seem like a daunting task. But the right financial planner can help you navigate the peaks and troughs in your life, not just the peaks and troughs in the stock market.
Retirement can be a daunting prospect but developing a financial roadmap to achieving your lifestyle goals can help put the decades into perspective.
The pursuit of a fulfilled retirement should not lie solely with the amount of money that you have access to. Yes, pension income and your investments will help you fund your retirement but they will not make you happy.
The only way to be happy and fulfilled in retirement is to ensure that you use that money to live the life that you have imagined for yourself and those closest to you in your later years.
Written by Alan Smith, CEO of Capital Asset Management