Rethinking Retirement

In the not too distant past, retirement was a very straightforward process for most working people.

The average middle class working professional would spend a substantial number of years (if not their entire working life) working for the same company.   When a certain, specified age was reached the employee was then waved off with a pension package that would be sufficient to allow him or her to maintain a decent standard of living as an official retiree.

All very reassuring, right?

Today, things are vastly different. For one, loyalty to one company or employer is a rarity, with people, on average, changing companies every 5 to 7 years. Many companies are no longer take responsibility for ensuring that money is going into a pension fund and even if they do, the funds are likely to be nominal when compared with what is really needed over time.

Secondly, many people are self employed or work for small, entrepreneurial firms, where there is no such thing as a retirement package.

Thirdly, and most critically,  people are living longer – which means that many don’t have enough money to fund their retirement (and pay for the medical costs which are often associated with old age).

So the reality that many are facing, as they approach their later years and in some instances, are forced out of their current jobs, is that they risk running out of money.   This is undoubtedly, very scary.

Looking Ahead

It’s not all doom and gloom though. If you are smart and proactive, and understand the benefits of planning ahead, running out of money does not have to feature on your list of worst nightmares. Let’s look at some solutions:

• Be imaginative, think out the box, and re-invent yourself before retirement. Johann Redelinghuys’ article, “Life Can Be Good in a Portfolio Life”, provides a great introduction to this idea, as well as some useful tips on where to start.

•  Start reducing your debt.  Make it your goal to be debt free by the time you retire, and speak with professionals who can get you started on the path to achieving this. Even changing small, daily habits and making simple adjustments can make freedom from debt a real possibility. Keep in mind that debt can be a serious drain on pensioners.

• Consult with your current employer (or previous employers) about potentially working for longer, or, changing your working arrangement to make this feasible. Technology has made working remotely a real possibility, and for some employers, it is more efficient than having everyone at the office. Consider flexi hours, or working part-time. The longer you can keep earning, the less pressure will be placed on securing a workable pension.

Peace of Mind / Psychological Benefits

It is also worth remembering that the benefits of working after your ‘official’ retirement are not only financial.

The psychological benefits, which include enhancing your self-worth and reducing nagging worries and anxieties around financial well-being, are indeed significant and can improve the quality of your every day life dramatically.

Particularly if one devotes time and energy to something that is personally meaningful and rewarding, such as consulting to small businesses, or advising students, mentoring, etc, while also earning an income (albeit a smaller one) – the prospect and practical realities of being a retiree can become far more palatable – and in some cases – even enviable!