5 worries about giving up work and what to do about them
Retirement is a big change; following decades of work, your time is suddenly your own. While some daydream about long days on the golf course or lengthy holidays in the south of France, other people begin to worry about being able to afford to turn the heating on or having nothing to do. In no particular order, here are five big concerns people have as they approach and enter retirement.
Having spent many years at work, with a set schedule and specific tasks to keep you busy all day, retirees may worry about being bored without that structure. But as retired financial journalist Stan Hinden explained, "Retirement is also about a unique opportunity - providing you are well and active - to find new things that can add a whole new dimension to your life." It's a time in your life when you can immerse yourself in hobbies, spend time with the family, enjoy the garden or relax on holiday.
This may be especially true for people who held senior positions; the adjustment from managing people and making executive decisions to becoming a retiree can be a challenge and make you feel as though you've lost your worth. If you are concerned about this, it could be a better decision to retire slowly, reducing your hours and work commitments over a period of time rather than stopping completely. This will provide an adjustment period. But it's important to remember that worth is not defined by your job or authority, and retirement provides the time to explore new opportunities. Whether it's spoiling your grandchildren, starting an online business or doing tasks around the house, retirement has plenty to offer to keep you busy and happy.
Perhaps the most worrying of all is giving up a steady and reliable income. Although retirees can purchase an annuity, which gives a guaranteed income for life, the payout depends on the size of the pension fund and is likely to be considerably lower than the salary you were used to from work. There are a number of ways to tackle this worry. Firstly, aim to reduce or clear as many debts as possible, as this will reduce your outgoings and help your money go further. Also, many people no longer have car payments or a mortgage to pay as they approach retirement. Any reduction in outgoings will ease the transition to a smaller income. Secondly, moving to part-time for a few months before retiring will help you get used to managing smaller sums of money, as it could be a shock to drop from a big salary to your pension with no intermediary stage.
Whether it's time/letting go
Some people worry about how they know when they are ready for retirement. This can be heightened in people who have created their own businesses, or have a lot of responsibility in their jobs. Walking away may feel like turning your back on your entire life, and that can be the cause of a lot of anxiety. A big change is always daunting and a series of smaller changes will be easier to cope with, so winding down gradually and working with fewer responsibilities will help you get used to not being in charge of so much, but remaining a part of the business. This period may even spark enthusiasm for retirement, if you find you are happier and less stressed.
The size of a pension fund is very important, as a larger fund means you will have more money in retirement. It therefore goes without saying that a smaller fund can be the cause of a lot of stress, especially if it's still small as you get close to retiring. You may find you only have enough to cover essentials, but not extras like your car breaking down and needing repairing, or helping the children with house deposits. The best solution to this is to avoid it altogether, by saving for retirement as early as possible and being generous with the amounts you put away. Another crucial element is having regular pension reviews, which we provide for free, as you can then know what fees you are paying, the rate of growth and how much money should be saved by the time you retire. This gives you the opportunity to make adjustments if necessary, as well as have reasonable expectations of the type of retirement you can have. The worst scenario is never paying attention to your pension, and then discovering at the age of 65 that it's far smaller than you anticipated and your standard of living will take a big hit as a result.
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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new
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