For many workers, retirement is something they look forward to and work towards for decades. It is seen as the stage in life for people to take a step back from working life, relax, and spend their time doing what they enjoy most.
However, the reality of retirement can often be rather different to these visions of stress-free, leisurely fun.
In fact, research by the Institute of Economic Affairs has found that retirement could increase the risk of clinical depression by 40%, while searches for ‘depression in retirement’ have increased by 117% this year alone.
Mark Gregory, CEO at Equity Release Supermarket, explains: “We are aware that loneliness, lack of mobility, and boredom are common causes of depression in later life. However, with the current cost of living crisis and alarming increase of energy bills, many people in, and preparing for, retirement, are facing significant financial stress that may be contributing to their overall wellbeing and mental health.”
To help people preparing for retirement, the experts at Equity Release Supermarket have shared their tips for addressing common issues in retirement before they begin:
Review your retirement funds
After likely spending decades contributing to your pension fund, it is important to review how much money you have saved for your retirement and then plan in accordance with this.
First, consider the big expenses you are likely to make throughout retirement based on your goals. This could be anything from a bucket-list travel destination to supporting a loved one in buying their first home. Make sure you have also accounted for a reasonable emergency savings pot, which you can use for any unexpected expenses.
Then, take the approximate amount needed for these big expenses and emergency funds away from your pension (unless you have saved for them separately). From there, work out what your average yearly budget should look like. While you should work to a conservative budget, be realistic about your expected outgoings and the expenses you can’t cut down on.
Evaluate your current lifestyle
If after reviewing your finances you are concerned your pension pot won’t stretch to your needs, or you simply would like to prepare for the continued cost of living crisis, then you may want to evaluate your current outgoings and where you may be able to cut back.
This could involve making changes to your day to day routine, such as scaling back on the weekly food shop, opting for public transport more frequently, or even swapping your current car for a more cost-efficient model.
If these changes to your outgoings are not significant enough, then you may want to explore alternative ways to fund your retirement.
A common solution for pensioners is to downsize their home. In situations where this is not viable or desirable, another option is to consider equity release. This lets older homeowners unlock the wealth tied up in their property, giving them more financial freedom to mitigate the stress of the increased cost of living and realise their retirement goals.
Make a retirement plan
Being able to do as you please with your time without a fixed routine can feel unnatural, often leading to feelings of demotivation and boredom.
To fend off those emotions, it is a good idea to make a reliable retirement plan, mapping out your days, weeks, and even years with goals and activities that will bring you fulfilment.
Start by thinking about your long term goals, such as places you want to travel to or learning a new skill. Then, consider what day-to-day activities you enjoy doing, such as visiting friends, as well as tasks you want to tick off your to do list. This could include anything from giving your garden a makeover to clearing out some old items from the loft.
By writing down these goals, activities, and tasks, you can create daily or weekly plans that ensure you are regularly occupying yourself.
Establish expectations and set boundaries
Whether it’s taking on child-care duties or running errands for friends, there is often pressure put on people in retirement to spend their newly-found free time on other people.
While you may be happy to spend your time in this way, it is important that you do not take on more than you feel you can, or simply want to. The same goes for your bank account, and how much financial support you can realistically offer others throughout your retirement.
Although it can be challenging to do so, it is important to set boundaries with your loved ones about how much time and money you are able to provide throughout your retirement. Clear communication about these matters will help to ensure you are prioritising your wellbeing and financial security throughout retirement.
Expand your social circle
While feeling lonely at times in your life is normal and often unavoidable, chronic loneliness is concerningly prevalent among the older population.
A recent study by Age UK revealed that 1.4 million older people are lonely in England, with the impact of the pandemic, poor health and wellbeing, and income being cited as major factors contributing towards this.
First off, ensure you are budgeting enough each week for socialising. This doesn’t need to be a major expense, especially if you’re happy to host people at your own home, but accounting for it within your budget will help you make it a priority.
Before you retire, take time to evaluate your social circle and make plans to ensure you will see people on a regular basis. This might involve trying to reconnect with old friends, joining a new club or volunteering group, getting a regular diary invite in for coffee with friends, or perhaps taking over your grandchildren’s school pick up once a week.
If you found Preparing for retirement – 5 tips to keep you secure in later life interesting, you’ll find more tips for planning retirement on our Finance channel.Tags: retirement Last modified: September 22, 2022