
What does retirement look like today and what does it mean for you?
For past generations, retirement was a fixed point in time. You knew years in advance when you were going to retire and worked right up until that date. Retirement is an industrial age concept, that suited industrial age purposes. Often, this meant retiring from work on a Friday afternoon and waking up the following Monday morning fully retired. This concept is often kept alive by the financial industry selling retirement planning.
Today the old concept of retirement suits some, but for many others it is an artificial finish line to their working lives. Modern retirement looks very different. It is a time of life when one has achieved financial freedom. People can then choose to continue working and still have time for leisure, family, volunteering, pursuing hobbies and travel.
Many of us are retiring later, in the sense of ceasing to work. In fact, according to research reported in FTAdviser, more than a third of British baby boomers aged 58 to 75 expect to retire later than the current State Pension Age of 66. According to the nationwide study, this group of people expect to work an average of 4.3 years beyond their 66th birthday and expect to work into their 70s.
The same report also revealed that the current average retirement age of this generation is rising steadily and now stands at 63.4 years.
Plan for the retirement you want
Life expectancy is increasing, and medical advances mean that many of us have more energy and vitality than previous generations might have enjoyed.
And with increasing good health and longevity, it’s perhaps little surprise that at an age when we would normally be considering retirement, more people are deciding to continue working.
Not only that, but some are also taking the leap to start new businesses. And, in doing so, are remaining physically active and mentally challenged, which has additional positive effects on both physical and social wellbeing.
Phased retirement can benefit employees and employers
Phased retirement, or flexi-retirement, gives employees the opportunity to gradually ease themselves into retirement. It can provide a useful period to become accustomed to having more leisure time and adjust to different earning and spending patterns. It can also give employees more time to help accumulate “enough” money for the different stages of retirement.
Read more: Why you need to ensure you have enough for all 4 stages of your retirement
While employers aren’t legally bound to offer phased retirement, it can be beneficial.
By allowing experienced staff the opportunity to step away from work commitments on a more gradual basis allows employers to retain employees with valuable expertise.
At the same time, they can save on salaries and open up fresh avenues of progression for younger workers and use skilled workers to pass on valuable knowledge and expertise to junior staff.
For entrepreneurs and business owners, stepping away from the business gradually can increase the value for sale, as it can operate without being so dependent on a single person. Alternatively, for those handing the reins over to their team, a gradual departure from the business can help smooth the succession process.
Another option is to take on a consultancy role. One reason this can be a popular choice is that it allows the opportunity to share the benefit of your experience while maintaining greater flexibility as a stepping stone to retirement.
Imagine what retirement might really look like
Phased retirement has the advantage of keeping you mentally, and perhaps physically and socially, active. But for those taking full retirement, it’s important to consider how you will spend your time and structure your days.
When considering full retirement, people need to decide how they will fill time that used to be taken up by work, and who they would like to spend more of that time with.
Try filling a day planner for seven days a week, mornings, afternoons, and evenings over one year, five years or longer. There’s only so much golf one can play before it starts to become somewhat monotonous! It can be hard to know what to do every day, when you have lots of time.
So, for example, some may want to coordinate retirement with their partner so that they can travel and experience the life they have been saving for as a couple.
Keep a sense of purpose and find a new routine
For most people, work has provided a strong sense of purpose and steady routine.
Prior to retirement, people are often concerned about whether they’ll have the energy and be physically fit enough to do the things they want to when they finally get to that stage.
Design your routine to support your physical and mental wellbeing to ensure you’re in the best shape for this next exciting phase.
Build social interactions into your daily lifestyle
Likewise, losing regular social contact is one aspect that people miss the most when they retire. But retiring can be an opportunity to invest in social connections in a way you’ve not had the time to before.
Build frequent social interactions into your lifestyle through things like joining a club, taking up a new hobby or enjoying a regular walk or coffee meet-up with a local friend.
For many, this can be the perfect opportunity to learn a new skill or spend more time on pursuits that you haven’t previously had time to commit to.
Perhaps more importantly, it’s necessary to decide how to finance your new lifestyle. Making key decisions about how – and when – to draw on your pensions, or other investments is vital and something that we can help you plan for.
Cashflow modelling can show you how retirement could look
By using sophisticated cashflow modelling software, we can help you visualise how your financial future might look. We can project how your finances might look over a set period of time with a variety of different retirement dates.
With a clear understanding of how much money you have in pensions, savings, investment, or property it’s possible to build a plan to achieve your desired retirement, taking every aspect of your circumstances into account.
We’ll also explore all the “what ifs” to see how different circumstances or decisions would affect your plans.
In the hands of an experienced financial planner, cashflow planning tools can pull all the variables together and build a roadmap of your finances and life plans so you know where you’re at and what you can comfortably afford.
Once you have your financial plan in place, we’ll revisit it with you once a year for a thorough review. This will help make sure you’re still on track and allow you to see how a change in circumstance might have affected things.
Read more: How to see into your financial future
Get in touch
The transition into retirement can be both exciting and daunting but investing the time to design the next phase of your life will result in a far more fulfilling and meaningful retirement.
Financial planning can help you make a smooth transition into retirement, however that may look.
When it comes to enjoying the life you want, guesswork will only take you so far. So, if you want to map out a robust, stress-tested financial plan for the future, get in touch. Email info@bmpwealth.com or call +852 3975 2878.