Summary
When to retire is such a significant decision, it’s only natural that we plan for it. However, for more than a decade now at Verse, we’ve rarely seen it go to plan.
The myth of “the retirement date”
Most people think retirement will happen like this:
Work → finish on chosen date →start retirement.
Reality is messier.
Let’s talk about why.
1. Health changes
Health doesn’t follow your financial plan.
Some retire earlier than planned because they have too. It’s a forced retirement due to health, or perhaps the health ofa loved one.
Sometimes, they might not be ‘forced to retire’ but they decide to retire as a health challenge for them, or experiencing the passing of a loved one, sharpens their sense of how precious and fleeting life is. This often increases the desire to retire, sometimes immensely.
2. Work becomes harder (or easier)
This can go two ways.
Some leave earlier because:
· Stress increases
· Motivation drops
· Tolerance changes
Some work longer because:
· They still enjoy it
· They’re not ready emotionally
· They choose to go part–time (which makes easier to keep going)
It’s hard to know what your work and work environment will look like, and feel like, in 5 to 10 years’ time.
3. Markets and money change
The plan you made at 55 will look different at 60.
It might be that:
· You earned and saved more money than you thought.
· Markets had a long upward run, and your super balance is much higher than you could have anticipated
· Conversely, there may have been a market crash, and your super is looking smaller than expected
· You might have got an inheritance earlier than you planned. This probably comes with an emotional toll as you’ve lost someone, but also gives you more options financially
· You didn’t see a redundancy coming, but that’s what happened. Now, with a redundancy package, you’re thinking – ‘maybe, we have enough to retire.’
All the planning in the world is likely to miscalculate what level of financial resources you’ll have in the future – and retirement timing will often move with it.
4. Couples rarely align perfectly
Very under–discussed.
One spouse may be ready.
The other may not.
When it comes to our emotional and social preparedness for retirement – we’re all ready at different times.
For couples, this can mean retiring at different times (which tends not to last very long), or it creates a situation where compromises need to be made by the couple. Perhaps they agree to both retire at the end of the year or work another two more.
5. The “one more year” trap
Until the end of time, people will tell themselves, I will retire in ‘one more year.’
· One more bonus
· One more year of super contributions
· A little more portfolio growth
· A little bigger safety buffer
The truth is:
One more year often becomes three.
Or five.
The financial case for one more year is almost always easy to make. The life case is harder.
6. Identity
The hidden reason.
For many, retirement can mean losing:
· structure
· status
· routine
· social connection
Many people delay not because they need to build more wealth.
But because they need meaning – and they fear that without work they won’t have any.
What to do about it?
With so many uncertainties and variables – many outside our control – what is the point of planning at all?
Good question.
It’s still valuable to plan – just do it with some of the below in mind.
· Don’t get wedded to a retirement date
· Embrace the uncertainty of life
· Avoid the false thinking that there’s a linear path to retirement
· Recognise that none of us are good at predicting what our future selves will need or want
If you adopt these philosophies, you’ll find some liberation and are less likely to panic when the curve balls of life come your way.
Closing Thoughts
Retirement rarely happens exactly as planned.
And that’s not failure.
It’s life.
The goal isn’t to retire on the perfect date.
It’s to be ready when the right moment comes.
