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Remember, for every retirement dream you have, there's a budget that's seen you overlook a few details...
‘When I get older, losing my hair
Many years from now
Will you still be sending me a Valentine
Birthday greetings, bottle of wine
Will you still need me, will you still feed me
When I’m sixty-four.’ (The Beatles)
In their book, ‘The 100-year life,’ Lynda Gratton and Andrew Scott write:
‘It’s clear that many of our fundamental assumptions about life are changing. In place of a three-stage life of full-time education, work and retirement something a great deal flexible is emerging where the line between work and retirement becomes blurred.’
As the baby boomer generation move into their 60s and 70s, the proportion of older people remaining in work, either full or part-time continues to rise – and the trend is one way.
Take a look at the musical icons of the boomer generation, for example:
Of the surviving Beatles, Paul McCartney (81) and Ringo Starr (83) are still performing.
Paul Simon (82) has just released a new album, ‘Seven Psalms.’
Mick Jagger (8)) and Keith Richards (79) recently hinted at a new Rolling Stones album, and
Youngster Madonna (65) recently kicked off her latest tour at London’s O2 arena.
The number of Australians over 65 still in some kind of work has also risen.
In a recent report by Bain and Company, they conclude that, by 2031, a quarter of the work force in developed economies, will be age 65 or over.
It’s true that one reason the ‘R’ work could go out of fashion is, despite the trials and tribulations that work brings, many have no plans to stop.
But, working till you drop, isn’t everyone’s goal in life – and many look forward to a long and happy retirement.
So, for those of us who see some prospect (at some stage) of giving up work and enjoying the fruits of our labour, here are 4 key questions to think about. (And it really is a case of the sooner you start thinking about these things, the better.)
1) At what age are you planning to retire?
OK this might seem an odd question if you’re in your thirties or even forties, but the answer drives so many other factors.
2) How will you fund your retirement?
Go to ‘YouTube. Enter the word ‘retirement.’ You are presented with videos with titles like, ‘how much do you need to retire?’ Is $1 million enough? Or is the figure higher? The answer, of course is, ‘it depends.’
High inflation, low investment returns and the ending of gold-plated company pensions haven’t helped.
For those with kids, what about the Bank of Mum and Dad? Latest estimates are that 40 per cent of youngsters who buy their first home borrow from their parents. (Ouch) Will you need to support the kids? After all, the financial challenges facing younger people are hardly likely to ease.
Spending your later years skimping and saving isn’t an attractive option. Whatever your plan is to on how to fund your retirement, the sooner you start the better, seems sensible advice.
One of the problems of retiring too early is that you could be retired for a long time. Research by the Pew Centre finds that the average 65-year-old in developed countries can expect to live till their mid-eighties. A long time to finance your retirement.
3) What will you do when you retire?
Retirement can mean a loss of identity and purpose – and these are dangerous things, even to our physical health. That’s why people in their 60s and 70s want to remain a player as opposed to a spectator.
Many people who retire from their main full-time job, do volunteering or find part-time work.
Fact is that people of retirement age have great skills and experience – and can use them to create a ‘win-win’ solution.
For example, coaching or counselling are roles where a retired person can add great value and become involved on a flexible basis to suit themselves.
So, are there any qualifications or accreditations that you can obtain prior to retirement (or even start now) that will serve you well once you leave your main employment? It might be worthwhile getting these before retiring.
4) What’s on your bucket list?
We all know people who live long, healthy and active lives into their 80s and 90s.
Sadly though, many will start slowing down and encounter health problems in their 60s and 70s – so the expectation of retiring at 65 and enjoying 25 years to a full, active retirement never happens.
Although there’s a danger in not saving enough for retirement, there’s also something to be said for not saving too much.
So, are there things on your ‘bucket list’ that you’ll get more out of sooner rather than later and might not be able to do in retirement? (The week skiing black runs in the Alps?)
In his book ‘Your Future Self,’ Hal Hershfield, one of the world’s leading behavioural scientists, makes the point that we are so tied up emotionally with what is happening in our lives today, we neglect taking actions that make life better for our future selves.
We spend money now and neglect the needs of our future selves.
We eat bad food and neglect the outcomes for our future sleeves.
We spend our time on social media, when we could be investing in skills for our future selves.
We simply don’t do the things that make our ‘tomorrows better, today.’