The grass on the other side of retirement may not always be greener. Aging well and gracefully may be the goal, but getting there is often a challenge. After all, it can be traumatic to leave the working world particularly if ones self-concept is wrapped up in their job. It might feel like a loss of importance, a loss of vitality and grieving the loss of friendships.
Some people retire by choice while others are retired by the organisations they worked for. Either way, retirement is more likely to be successful when planned for. When a person retires by choice, they may have done some minor planning, or maybe even major planning.
However the question is whether the person has their financial resources set aside for that time of their life, whether they have planned some long-awaited vacations or other activities and whether they have plans of venturing into business.
A life coach Nabukenya Muwonge notes that although retirement is supposed to come at a time when most people are ready to rest, there are those who are forced to retire even though they are not ready. “For those people; retirement means a loss of a key part of their identity and the professional self. However these feelings can be managed by keeping a few things in mind,” she says.
Nabukenya says that firstly a person has to remind themselves that retirement is not the beginning of the end, but rather a transition to a different stage in life. “Actively plan how you will use your new found spare time and freedom. Would you consider volunteering your valued skills, could you take up a new hobby or would you learn a new skill?
You may also use your new found freedom to look after yourself in a way you never had the time to before this stage. Get active – join a local hiking group or better yet – start one, pay attention to your nutrition, nurture your spirituality, and prioritise time with your loved ones.
Finally if you were ready for retirement fill your time with your usual relaxing leisure pursuits that may have been neglected or forgotten before such as travel – get to know your country or continent, reading or gardening as well as other social activities which enable you to continue interacting with others,” she urges.
From a financial perspective
Managing ones income is always important, but it becomes even more critical during retirement, when the income comes from savings rather than from wages and earnings. However, because ones source of income which they saved so carefully during their working years is limited during retirement, they need to ensure that it lasts through the rest of their lives. This means determining your income needs in the years leading up to your retirement, and once you retire, efficiently managing your retirement assets.
A financial advisor and consultant, Afra Schimming-Chase says that the insufficiency of the pension to sustain retirees for the average 30 – 40 years that they may live post retirement is one big challenge “At retirement, in some of the best cases, you still end up with only about 70% of the final salary. This impacts lifestyle, having to manage on about 30% less income, balancing this with the psychological adjustments of retirement (a huge stressor, comparative to divorce) whilst great health may not be at the forefront in the golden years of someone’s life.
Considering 5 years into retirement is not enough at all, life expectancy has improved dramatically in modern times, you need to plan for more like 30 – 40 years. It is important to access less pension income in earlier (healthy) years, to ensure that there is enough to sustain over time. So here she cautions retirees against taking maximum income as soon as they access their pension as the chances that they will outlive their money are high.
In consultation with a financial planner, consider different scenarios of income and products, also draw up a budget and get a good sense of expected monthly expenses over a few years, and be mindful that medical aid membership does not necessarily follow into retirement, so medical costs can negatively impact monthly income.
Use the 1/3 portion that pays out tax-free and in cash very wisely. It may be valuable to reinvest these funds to supplement income (in a tax-efficient vehicle), unless you have outstanding debt at retirement in which case it is good to settle debt first. Many are not used to receiving large sums of money in cash; some have nothing to show for it within a year after retirement. This is why it is key to plan retirement in advance of actual retirement, start looking at scenarios at least 5 years before retirement to get an idea and then again before accessing retirement benefits,” says Afra.
Possible investments upon retirement
Afra says that there are various types of annuity products available from financial service providers to provide for the monthly or annual income in retirement. “If you were a member of a pension fund before retirement, or a retirement annuity policy, it would be compulsory to invest in a product such as an annuity. The modern version, which should be approached with caution to ensure that the retiree understands the implication of the investment, is the living annuity. It carries many advantages in that the investment value continues to grow whilst you receive an income and can sustain you for 30 – 40 years, if income levels are kept low, (minimum 5%) in early years and only increased (between 5% and 20% in later years),” she urges.
Having our fundamental needs threatened can happen pretty easily in our retirement years if we don’t have sufficient income or savings to satisfy our basic needs for food, shelter, transportation, healthcare, etc. Dealing with life after retirement may be a dilemma that many face at their career’s end, however whatever path you choose to find your meaning for life after retirement, have an open mind.