Why planning your retirement needs to be about more than just money

Reaching retirement is no doubt a big life milestone.

It’s the time when you’ll stop working, and start enjoying a life of leisure when your time is your own and you won’t be ruled by the clock.

You’ll be able to start going through your bucket list, with long holidays the order of the day, along with perhaps more time on the golf course or visiting galleries.

The challenges of retirement

It may sound counterintuitive for me to ask this, but what are you going to do with all that free time you’ll have?

Or, to put it another way, how will you manage without being stuck in an office five days a week, homeworking notwithstanding?

Clearly, money will be hugely important once you stop working. As a financial planner, it would be rather odd if I were to deny that self-evident fact.

It will provide you with financial security, fund your retirement lifestyle, and offer you the priceless peace of mind that comes from knowing you will not run out of money. None of that is to be underestimated.

But as you enter retirement, there will be big challenges for you to deal with, and – most importantly – to plan for.

Work plays a big part in defining who you are

As you start to plan for retirement, you should not overlook the purpose and fulfilment that comes from working. This can include hitting business targets and launching new products, or even simply the personal satisfaction you get from a job well done.

Project manager, chairman, sales director, company owner; all of these can help define you, just as much as being a mother, father, husband, or wife.

After all, during your working week, you probably spend more of your waking hours at work than with friends and family.

Eventually, once you stop working and no longer have the routine of employment to fill your days, you’ll need to replace all that definition and identity.

Welcome to the age of 7-day weekends

As well as defining who you are, work also helps define your leisure time. Very simply, it’s the time you aren’t at work.

So, you look forward to and plan for weekends. The two days of uninterrupted time to relax and have some time to yourself are hugely important.

Likewise, your working life also means holidays are increasingly important and you spend time planning for (and saving toward) them.

But once you are no longer working, weekends can last seven days, and you can go on holiday whenever you want.

Initially, this will be a novelty that you’ll enjoy. But after a while, the thrill of endless free time can wear off when there’s no work to demarcate it.

In a previous article, I wrote about the four phases of retirement and I estimated that this “extended holiday” phase normally lasts a year or 18 months.

You’ll need to find new meaning once you are no longer working

A study carried out by the London School of Economics suggested that being involved in meaningful and rewarding activities can lead to increased happiness.

Without work to occupy your mind and provide meaning, you will need to take steps to ensure your retirement years are meaningful.

The best time to start planning for this is before you retire. You will then have the comfort of knowing that when you do finally stop working, you will be prepared for the new challenges you will face.

These activities may well be other items on your bucket list. These could include new hobbies you have hankered after trying, or activities you already follow but don’t currently have the time to do justice to while you are working.

Finding and nurturing a new social network

I recently read in the Atlantic about the Grant Study. This was a remarkable research project carried out over 85 years by Harvard University. It confirms that strong relationships are the most significant predictor of health and happiness throughout your life, including retirement.

Obviously, it’s subject to the work you do, but for the majority of people, your place of employment will provide you with much of your regular interaction.

Some of this may be structured – coffee at lunchtime, drinks after work, and social events. But much of it will be in an environment where you are with other people.

Losing all that will leave you with the challenge of replicating it, or at least finding activities and opportunities to provide you with a new social network.

Experiences could become more important than wealth

Once you’ve retired and are financially secure, you will need to find suitable activities to keep you occupied (both physically and mentally) as well as help you develop a new social group to interact with.

One other activity I would recommend and that I’ve written about before is accumulating “memory dividends”.

The idea of these stems from the concept of the dividends you can receive on certain investments. You will get the enjoyment of actually creating the memory in the first place, and then the subsequent enjoyment of thinking about them in future years.

Importantly, these don’t have to emanate from expensive holidays or require a big outlay of money. Your dividends will be personal to you, and could relate to something as simple as taking a grandson to his first football match.

See wealth as a means to an end, not an end in itself

Ultimately, a lot of your planning for retirement will involve more thought and planning than the simple accumulation of a pension fund.

A lot of that planning will be about ensuring you stay active for as long as you can. While money may be important for this, it will ultimately be down to you to decide how you will spend it to best effect.

I asked the question of what “wealthy” means in relation to your retirement planning in a previous article.

Ultimately, the move from a life of work to a life of leisure won’t be easy, which is why the sooner you can start to plan for it, the better your chances of enjoying a rewarding and fulfilling retirement.

Get in touch

If you would like to talk about your own retirement plans, please get in touch.

You can call me on 07769 156 250.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.