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What are you retiring to?

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When I meet clients for the first time, they often share similar concerns about their future and their plans for retirement.  “Will I have enough money to retire?” “Will I be able to afford the lifestyle I imagine?” “Will my money run out before I do?” These are common questions with no one size fits all answer.  Everyone is different, and we all have different ideas about what our lives might be like when we retire.

For some, retirement is about leaving the workforce permanently, and taking some time to travel around the country or overseas. For others, it may involve taking care of extended family or other dependents, while for others it may not involve leaving the workforce at all.

While retirement means different things to different people, generally for most it means the financial freedom to pursue passions and pastimes we’ve always dreamed of. However it doesn’t necessarily mean leaving the workforce altogether.   The empowering quality of sound retirement planning is feeling secure in the knowledge that you could retire whenever you want to, or reducing your workload to pursue other activities that interest you.

However financial considerations are but one part of retirement planning.  Moving from full time employment to a new life in retirement is a significant life transition for most of us.  However few of us are prepared for the emotional upheaval that follows. Making the transition from full time employment in a busy career to a new life in retirement can be quite an emotional and stressful experience.

For many of us, our career of choice is a significant focus in our lives.  We spend a great deal of time at work, and we form meaningful professional and personal relationships along the way and often develop new friendships with people we may otherwise would not have met.   There’s also the daily interaction with colleagues and associates as well as the camaraderie that follows from working on shared projects and team goals.

It’s not uncommon to feel a sense of loss or grief when these personal and professional connections are removed from your social experience.  For this reason, I often advise clients who are contemplating retirement to consider reducing their hours of employment rather than leaving work completely.  This can also help with the transition to retirement financially, as well as in terms of lifestyle.

For example, rather than leaving your job permanently, perhaps approach your employer to see whether you can reduce your hours by one or two days a week.   This allows you to explore new hobbies and activities outside of the working environment while still receiving a source of income.   Being open with your employer regarding your plans also helps your employer to plan ahead for the day when you finally decide to relinquish your role altogether.

For those who choose to continue with some form of employment, the benefits can be considerable.  For example, a couple who choose to work part time for an extra 3 years earning $20,000 per annum each could add $8,000 – $10,000 of additional income every year to their post-retirement years.

Retirement isn’t always about building the largest pot of money, it is about reaping the benefits of decades of hard work and planning for the lifestyle you imagine in the years ahead. For this reason, I encourage you to consider, when you’re thinking about retiring, make sure that you are retiring to something rather than simply from something.

Contribution by David Sharpe CFP®, Director – Globe Financial Planning david-sharpe-blog