Make it stop! But not for some
The DJ plays their latest selection from the playlist as the alarm clock kicks in at 6am and the cat runs from the bedroom, knowing that the shower and coffee will both be pouring soon as the household comes to life. Some leap to their feet at the thought of the working day ahead, and others hit the snooze button, perhaps more than once. But which one are you?
Retirement is a difficult one because it means such different things to different people
Historically, it has been noted that there are only two things certain in life, namely death and taxes. However, I think we all hope that there is time in the mix for retirement and some lengthy down-time to explore and do all the things that you want to achieve before the death part turns up.
The word retirement is a difficult one because it means such different things to different people. For a start, it doesn’t mean that you have to stop work; however, many do choose that route. It could mean drawing your pensions from their sources and bolstering your income, and perhaps taking a bit of tax-free cash to replace the car or kitchen, enjoy scenery with a long holiday or move house.
You might work part time, be a consultant, or just enjoy yourself. Only you have a real idea of what you want to achieve. And I think the word ‘achieve’ for retirement is very apt. You do have to ‘achieve’ retirement, otherwise you might be very bored for a few decades, as you will see below.
Let’s think about the most important part of retirement in every case
Now at this point, I could launch off with a list of the types of pension products that are available and how they work, and how they can be mixed, and the outcomes, and…stop! Let’s think about the most important part of retirement in every case. You: the individual.
What about you? Have a think about the following.
What type of person are you?
I don’t mean old or young, male or female and so on. What’s your attitude to work, life and its balance?
Some are workaholics, never far from their desks even when at home. Others are simply getting through each working day, with little commitment to the cause at hand. Some have a take it or leave it approach, and others just want work to stop as soon as is possible.
Don’t forget that there are no rules to say you can’t change your work/life balance. Inspiration to stop or be more involved in work can come at any time and from any direction. The pandemic has certainly seen many folks take an extra look, or alternative view, of their desires for the future.
The reason for the question is that your attitude to work may well have a bearing on the timing and ways in which pension benefits are drawn. Some rail against the thought of ever stopping work. Others have emotionally already left; they just turn up and do the job. By the way, you can guess that there are no right answers because we are all different.
‘You never do a day’s work in your life if you love what you do’, apparently. If you’re going to keep working, do you need your accrued pension funds, especially with the State Pension kicking in at 66-67 or so? Planning can help with some alternatives if need be.
Health, physical and mental
Health of the mind and body can play a big factor in the way we look forward, and our plans. This has never been truer than over the last two years or so. Past and current health issues and scares will focus the mind, and accidents and smoking habits if there were any might well give a view as to how long you’re going to make it.
The clever actuaries certainly have their tables to rely on, but notionally, if you knew that you only had, say, five years left, what would you change today, if at all? Would you work, travel, help the family, write and achieve your bucket list? Or would you remain as you are, doing (hopefully) what you love?
If you have a partner or spouse, this may also play a vital role in all that you do every day. And their health and wellbeing may be just as important as yours. All points to be considered when you look forward.
Is there enough money both now and later?
The best made plans are there to steer thought, rather than to provide an exact map. Life happens, and sometimes individuals find themselves out of work and effectively retired through no fault (or planning) of their own. Do they start again, or move to a similar role, or look to see if they can make what they have work sufficiently hard to see them through to their end?
The thought of retiring early is appealing to some. And the initial money position might indicate that sure, it’s possible. However, most in the south-east, with pensions, non-smokers, and good health, will live to say 85 or 90 years old. If you were 60, that’s thirty years ahead. One client recently said, ‘No way!’ to the thought of retiring with the ‘fear’ of being at home for three decades. And if the money ran out at age 76 for instance, what are you going to do? Planning your financial position for now, and into the longer-term future, needs careful consideration.
No products mentioned!
So, I have managed to write an entire blog on retirement and what to consider without mentioning one financial product, save perhaps the State Pension note.
I can of course point you to our Retirement Options Schedule on our website for all that technical info, however, I think you can see that the most important part of retirement has little to do with product, and everything to do with you, the individual.
When the alarm clock wakes you next, take a moment to have a think about all things you. Yes, it really is time to be a little selfish please. Perhaps, as you reach for your slippers, what does your world look like, and importantly, what do you want it to look like when the alarm clock does not need to wake you?
As Financial Planners, the most interesting part of our work is understanding the individual, how they got where they are, and what they want to achieve. A ‘past-present-future’ snapshot if you like. Understand yourself first, and then get to know a financial planner as to what can be realistically achieved with your financial position. Much can usually be accomplished.
No individual advice is provided during this blog.