We all know how important retirement planning is to ensure that we have enough money to live a satisfying second life after leaving work. What many people overlook though, is that retirement planning is about a lot more than just money.
As time has gone on, the concept of retirement has changed a lot. People are now living longer and need to plan for a purposeful and fulfilling retirement that could last for several decades.
In this video, retirement planner and author NOEL WATSON talks through the key issues that people need to seriously think about.
Robin Powell: Leaving work and seeking a new life for ourselves beyond the workplace is one of the biggest changes we face in our lives today. Of course, much of planning for retirement revolves around money. But there are so many issues involved, for which many retirees are frankly ill-prepared. Noel Watson is a retirement planner and the author of a book on the subject. Failing to plan, he says, is a big mistake.
Noel Watson: If you don’t have a plan, there’s always the worry in the back of your mind that you’re going to run out of money, you’re going to be bored, or you’re just not going to have a purpose in life. So if you just - say, at age 60 - you walk into work tomorrow and hand in your notice, are you really confident that the next 30 years are going to be optimal?
RP: In historical terms, retirement is actually a fairly recent phenomenon. Previous generations worked until they died. But nowadays, it’s not untypical for people to live for 20, 30, even 40 years after finishing full-time work.
NW: The traditional model was: you work for one company for, say, 40 years; you put your feet up on the sofa when you finish work, and you probably get about 10 or 15 good years. But now, we look at the modern world, people tend to have good health further into older age and we typically now plan to age 100. So if you imagine someone coming up to the age of 60-years-old. They’ve got 40 years ahead of them. Prior to that, their life is quite well-structured with, say, children and jobs, etc. But at age 60 or 65, you’ve got potentially 20 years ahead of you of good health. How are you going to fill your days?
RP: So, how do you go about drawing up a retirement plan? Well, the starting point, says Noel Watson, is to work out the cost of your desired lifestyle, preferably with the help of a financial planner.
NW: So if you’re looking at what you’re spending now, you spend a certain amount, for example, on holidays, transport, etc. How might that change as you move into early retirement and late retirement? We break those bits down because hopefully you’ve still got your health and you’ve still got a sharp brain in the early years of retirement. What is it you want to do? Because you only get one chance to do that - it’s your chance to do this now. So, break the early and late retirement down. Think about the big-ticket items: you might want to think about, for example, do you want to help the children out in the property ladder? Think about the big-ticket items and how you want to help, if you can, the younger generations.
RP: Yes, of course, you also need to think about later retirement, and paying for long-term care in case you need it. But the priority is to plan to do what you really want to do, while you can still do it. Retirement presents a big opportunity to fulfil the dreams of a lifetime. You really don’t want to waste it.