In less than a generation, retirement has changed. Your own parents probably spent their working life in a small number of jobs – maybe just one job for decades – before deciding to put their feet up.
There was probably a celebration on a Friday afternoon where the boss handed over a gift and shook their hand. Then they probably left the workplace for the last time, waking up on Monday morning with the rest of their life ahead of them.
These days, it’s not quite so simple.
Firstly, the notion of a “job for life” is almost obsolete. In the 21st century, employees change jobs (and careers) much more, with periods of freelance or self-employed work also much more common.
Secondly, the idea of “retirement” – giving up work for good – is also becoming outdated. Indeed, you only have to look at the dictionary definition of “retirement” to see how it no longer relates to modern life:
- The action or fact of leaving one’s job and ceasing to work
- The period of one’s life after retiring from work.
These days, people in their 50s and 60s are much more likely to take a phased approach to their retirement. They want to stay stimulated, enjoy the social aspect of work, and pocket the income it generates.
So, as times change, do we need to rethink the concept of “retirement”?
One in four people in the UK “unretire”
Research from the University of Manchester in 2017 shone a light on the changing face of retirement.
The study found that around one in four retirees in the UK return to work or “unretire”, mostly within five years of retiring. Men were 26% more likely to unretire than women, while those people in good health were around 25% more likely to return to work than those reporting fair or poor health.
And, interestingly, people whose spouse or partner worked were 31% more likely to unretire.
What does this tell us?
While the research suggests there can be specific reasons why retirees return to work – they have a mortgage to pay or there are other financial reasons for doing so – it also suggests that retirement is not exactly what many people expected.
When I speak to clients about their retirement, it can sometimes seem a long way away. If you’re a healthy 55-year-old enjoying your job, you might picture retirement being 20 or 30 years away, as you sit in your slippers, drinking tea and watching Countdown.
“Retirement” is not something you’re planning to do in the next few years, even if you give up the job that you’re currently in. What’s directly in front of you looks like something else.
This is where a plan becomes crucial.
What do you want to do when you retire?
In my experience, chatting to clients about what they will do when they leave their workplace can easily end up becoming a conversation about the financial implications.
- Have I got enough money to maintain my lifestyle?
- Can I afford to retire?
- Will I run out of money in the future?
These shouldn’t be the only questions you’re asking. Instead, the key issue is: what do you want to do next?
Do you want to go on regular long-haul trips, or do you want to spend time in your garden?
Do you want a new car every five years, or spend more time with your children and grandchildren?
If you don’t know what you plan to do, it’s impossible to work out what it costs! Plus, it’s vital that you consider what you want to do with your time. If you don’t, in two years’ time you might find that playing golf twice a week isn’t quite as exciting as you’d hoped, and you become one of those folk who “unretire” and go back to the workplace.
Think carefully about what you want to do when you stop work. Do you want to fly first-class when you travel? Do you plan to downsize? Will you buy a new or second-hand car? These may seem like small details, but they will inform all of your plans.
Remember too that while some of your outgoings might reduce – you won’t be paying a season ticket, for a start – some expenses may rise.
Do you want to give up work for good?
Another important question to consider is: do you really want to give up work?
While you may be happy to see the back of your current job, that doesn’t mean you want to give up work for good. Work keeps your brain engaged, has social benefits and, of course, provides a valuable source of income.
Many people are now considering a “phased” approach to retirement. This might include:
- Reducing your hours or working part-time
- Taking on a leadership or mentoring role, for perhaps a day or two each week
- A non-executive directorship.
You could even decide it’s the time to start your own business. A 2020 paper from the Centre for Innovation Management Research reported that there has been a “steady increase in the number of people over 50 starting businesses” and that these businesses tended to be successful.
Those over the age of 50 have a 70% chance of surviving their first five years in business, compared with only 28% percent of their younger counterparts.
The importance of planning
I talk a lot about how important it is to plan. When it comes to your “retirement” (such as it is), it’s crucial.
Let’s say that your dream is to give up work, get a non-executive directorship, and work for a corporate 12 days a year.
If you decide that a decade before you plan to take those steps, and make it part of your plan, you can take lots of steps towards that goal.
You can network and connect with individuals in the sectors you’re interested in. You can develop the key skills you’ll need for such a role. And you can put together a contingency plan that ensures you have sufficient income if that ambition doesn’t come to fruition.
To find out more about how I can work with you to help you to reach your goals, please give me a call on 07769 156 250.
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