The fear of retirement

As we make plans for our retirement years, many of us give little consideration to how we’ll feel about retiring, other than believing that nothing will be better than no longer having to set an alarm for Monday morning. The fact that this huge change into the next phase of your life could be daunting may not occur to you until you are on the brink of retiring yourself.

The past year, however, has been a turbulent period for everyone, so it is little surprise that many of us have been giving greater thought to our working options moving forward and in fact some may have fast tracked retirement plans.

The decision to retire is one of the biggest decisions you will make, both personally and financially, knowing that once you make that decision to give up working for a living, your primary source of income will stop.

It’s understandable therefore that many of us are hit with common fears, including:

  • Do I have enough money to see me through my retirement years? Or will it run out? 
  • What about my family - can I still support them if needed?
  • How can I retire without affecting my current lifestyle?  
  • And frankly what will I do with my time in retirement?

Do I have enough money to see me through my retirement years?

This is by far the most common concern and is a question which encompasses all financial aspects of your retirement, from paying your bills and maintaining the lifestyle you want, to being able to afford the potential one-off larger expenses such as cars, home repairs or holidays. 

The key to peace of mind and a stress-free retirement, is planning. It’s essential to make sure you plan as early as you can, to forecast if the money and assets you have set aside for your retirement will be enough to see you through. By having these plans in place, you won’t be walking blindly into your retirement years. 

Planning also allows you to spend the money you have saved without fear that you’ll run out. Having spent your working life building up your savings, it can be a daunting prospect to start drawing on dyour wealth for fear of spending too much and therefore running out of money. Knowing how long your money will last and how much you can afford to spend is vital. That switch from using income to build capital to using capital to provide income can be daunting.
This process of drawing on your wealth to fund your retirement is known as Decumulation. An important step in creating a Decumulation plan is understanding how much wealth you have and where this is held. You can learn more about how to locate your pensions pots in our article ‘where are my pensions and what can I do about them?’.

Be tax savvy 

The majority of people will not hold all of their wealth in one place or product but, rather, multiple places such as pensions, cash, ISAs, in a business or property. Different aspects of your wealth can be treated differently for tax purposes, so it is important to draw down on your wealth, in retirement, in the most tax efficient manner, to minimise your tax obligations and maximise your wealth. 
Decumulation can be complex, depending on your own personal circumstances, but with the right forward planning you can ensure you maximise your wealth throughout your retirement. This is where a financial adviser can play a valuable role of course, as your adviser will help you navigate every financial aspect of your retirement and will even discuss factors you may not have thought about or factored in, such as tax treatment, the psychology of retirement and inflation. A good financial adviser will work with you to build an in depth cashflow forecast and help you to develop a plan for your retirement to suit your individual needs.  

We’re currently offering anyone with £100,000 or more in savings, pensions or investments a FREE cash flow review worth £500.

What about supporting my family? 

The fear of not being able to provide for family during your retirement can be another worry, especially if you provide the main source of income in the family. 

How your partner or family will be provided for, should you die, is another concern that becomes more relevant the older we get. There is also a concern that private medical insurance becomes more expensive the older we get. 
What about long term care costs? How will this eat into your wealth should you need care in later life? How could this affect your finances and any wealth you’d hope to pass down to your family?
At TPO we understand these fears and place an emphasis on intergenerational financial planning, meaning that where possible we encourage working with the whole family as a group. This approach allows all aspects of financial considerations to be discussed and will help alleviate fears, so you and your family can enjoy your retirement together.

How can I retire without affecting my lifestyle? 

It is never too soon to plan for retirement – the sooner you start to plan the more likely you will be able to design your ideal retirement. You may find you’re in a stronger position than you thought and can retire earlier or it may be that you have to be realistic about the cost of your dreams and the lifestyle you can achieve, or work longer than you’d hoped. 
It is important that your adviser works with you, taking into account all the wealth you have already generated, as well as applying a holistic approach to help you maximise your retirement plans. For example; exploring possible scenarios such as working slightly longer, or increasing savings before retirement to achieve your goals. 

Advice should only be given based on your own individual circumstances. 

What will I do with my time in retirement? 

While we can help you with your financial planning, dealing with the personal issues are somewhat more complex. 

This is an issue which will be different to everyone depending on personality and financial position when approaching retirement. Many of these concerns may not be just financial, but more the emotions involved with having a lack of purpose and direction. This is not uncommon and it is essential to plan for this change in lifestyle, as well as with your finances. 

You may be thrilled and excited to have all this free time ahead of you! Why not, by this time you’ve more than likely worked for it - so it is important to enjoy it.

If you are thinking about, or looking towards your retirement, do not hesitate to contact us to speak to a financial adviser to discuss your personal plans, ideas and concerns.  As stated, we’re currently offering anyone with £100,000 or more in savings, pensions or investments a FREE cash flow review worth £500

We can look at your future financial plans and show you if you’re on track to achieve a stress-free retirement. 

Find out about FREE cash flow