How Do You Know When You Are Ready For Retirement? What does a successful retirement look like to you?
The most common questions that I get asked are:
– Do I have enough money to retire?
– How long will my money last?
– How should the money be invested?
What if I said that these questions should not be the first, but the very last items to be concerned about?
Your understanding and focus to prepare yourself for retirement may need to be turned upside down as a result.
Our experience shows that many people view the bottom figure of their superannuation fund statement like the speedometer on their car dashboard.
If there’s a high number, then you’re travelling fast towards meeting their retirement needs. As soon as that balance hits a magical number target, their destination is reached and off they step into retirement.
The concept of retirement is only a relatively new phenomenon and society has built many myths around what it means to have a meaningful and purposeful retirement. Money is an important part to fund your aspirations, but it’s not the answer to whether you are ready to launch into the next phase of your life.
Scientific evidence points to the fact that a healthy superannuation balance is not the benchmark for whether you should retire today or tomorrow.
According to the American Institute of Stress, retirement is one of the top 10 most stressful times of a person’s life. However, many people view it as a lifelong holiday or a thirty-year “long weekend”.
Let’s just touch on a couple of facts from a long list of issues, which illustrate our point further.
Recent research has shown that as people progress towards retirement it is also coinciding with a realisation that they’re spending more time with their partner and looking at their second half of life in a different way. As a result, divorce for this age group is growing fast.
The Australian Institute of Family Studies state that the proportion of divorces ending after 20 years has more than doubled from 13% (1990) to 28% in 2011.
Similarly in England and Wales, the Office of National Statistics have observed that divorce has tripled among people over the age of 60 which is in sharp contrast to the overall trend in other age groups. In the United States, recent research also shows that couples in their 60’s are divorcing at a rate faster than any previous decade.
To provide more perspective about the risks in retirement, the Australian Bureau of Statistics (2009) highlight that men over 65 have a higher suicide rate than teenagers.
The most famous suicide note was from Mr. Eastman Kodak. He was the gentleman that successfully founded one of the most successful businesses of all time, and at age 65, left behind a handwritten note ‘my work is done’.
All of these issues are rarely mentioned when it comes to society’s portrayal of retirement.
Psychologists advise that a key ingredient to a successful retirement is knowing what you are about to retire to, rather than just being away of what you are retiring from.
This may be a simple task of writing down thoughts on where you would like to live, how you intend to spend time with family and friends, where you would like to travel, what you will do to maintain your health as well as how you will fulfil your personal purpose, ie. what will be your reason to get out of bed every morning.
You may also wish to diarise a calender for the ‘ideal year’ (eg. starting with holidays is a good place to start), then an ‘ideal week’, then an ‘ideal day’.
This will give you the opportunity to crystallise how you wish to spend your time through fulfilling activities, rather than just time filling activities.
For those seeking greater guidance, a Retirement Coach service is a good idea.
A number of trained, certified retirement coaches are available in Australia (including myself), that can provide you with an online questionnaire that will examine the key 6 Life Arenas in retirement, and measure your preparedness in each area. They can then provide you with guidance to assist you towards your ideal retirement lifestyle.
David Reed - Retirement Adviser at The Retirement Advice Centre.
AFA 2015 Adviser of the Year, Certified Retirement Coach,
Co-Author “So you think you are ready to retire?”, http://www.smartretirement.com.au.
The information contained in this document is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice.