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Life in retirement: Expectations vs reality

In a historical context, retirement is a new idea.  The old age pension didn’t even exist in Australia until 1900, when people in NSW and Victoria started to receive benefits from age 65.

It didn’t exist because it wasn’t really needed.   Most people didn’t live that long.  A male baby born in 1890 was expected to live to just age 47.  And a baby girl would live to just 51.

But things have changed.  A man aged 65 today can expect to live another 20 years, and a woman to age 87.  Owing to modern medicine and better education, more people are reaching old age than ever before.  

So now we have a retirement phase of life.  A substantial period of time after work for most of us that didn’t even exist just a few generations ago.

Understandably, most of us approach retirement fearfully and cautiously.  The super funds, out of pure self-interest rather than any science, will tell you that you need more than a million dollars to retire.  But most of us don’t have that much.  And most people around the world don’t have that much either.  

So, what’s the reality?  Thanks to a recent survey in the UK, we have some clues.  Research conducted by CoreData for Interactive Investor’s “The Great British Retirement Survey 2019” asked questions of 10,000 UK adults.  This huge sample reached people in different stages of life, including those approaching retirement, and, even more importantly, people already retired.  So, what wisdom can people who have already retired share with us? 


You probably won’t get to choose when you retire

Unfortunately, we’re not usually in control of when we retire, so even the best retirement plans need to be flexible.  

In the UK, while only 20% of pre-retirees plan to retire early, in reality it happens almost half of the time.  According to the research the most common reasons given for early retirement were unexpected unemployment, health issues and the need to care for a loved one.  

It pays to be flexible.  Mike Tyson said it best when asked about Evander Holyfield’s fight plan, “Everyone has a plan until they get punched in the mouth”. 


You will probably maintain your standard of living in retirement

While less than a quarter of pre-retirees are confident they will be able to maintain their standard of living in retirement, the reality is different.  The majority (62%) of people who have already retired say they have successfully managed to maintain their living standard.  

Another 3 in 10 said that they almost achieved to maintain their living standard, albeit with some budget tightening.  Only 7% of people were required to change their lifestyle.

So, you’re probably worrying unnecessarily.  The Australian retirement income system is way more robust than the UK system.  We’re ranked ninth in the Global Retirement Index, well ahead of the 17thplaced UK.  

Many of us won’t retire at all 

While the cliché of retiring to the beach and buying a convertible might seem appealing, it’s not actually how retirees choose to spend their time.

Around one in four people who consider themselves retired are actually still in some form of paid employment.  And many of them choose to keep working for the social benefits rather than the money.  Another one-third engage in voluntary unpaid work, giving back to their local communities and engaging with the causes they feel most passionate about.


It’s actually about confidence and feeling in control

The reality of retirement is different to what many of us expect.  What the study doesn’t tell you is that the key to a successful retirement is not actually about money at all.  What’s more important is a sense of control.

As specialist retirement planners we have helped hundreds of pre-retirees in the North West and New England successfully transition to retirement.  

We help them understand what they can and can’t achieve. Life is complex, and it rarely goes the way you expect.  No matter your personal and financial circumstances, you always have options.  

We will give you confidence to make the bold decision to retire.  It’s not a matter of ‘if’ but ‘when’.


Michael Bowman and James McMaster are co-founders of When Financial Solutions


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