There are plenty of misconceptions about retirement.
Part of my role as a Financial Planner is to help turn retirement from a series of perceptions into a (hopefully more positive) reality.
An issue with our perception of retirement is that we’re informed by the experiences of our parents’ or grandparents’ generations, or by cliched images of retired couples that appear in the media.
Close your eyes for a moment and picture an image of retirement. Do you imagine silver-haired couples smiling from the deck of a cruise ship or standing on the golf course?
A quick search of ‘retirement’ on stock photography websites generates plenty of images of wrinkles, walking sticks, and even wheelchairs.
In an attempt to address some of these retirement misconceptions, interactive investor has published their Great British Retirement Survey; a comprehensive study exploring the attitudes and experiences of 10,000 Brits approaching or in retirement.
Rather than reporting retirement as a time of pleasure, almost two-thirds of those surveyed said that financial worries are a big concern at this stage of life. Does this maybe mean fewer cruises and more time spent searching for bargains in Aldi?
One significant conclusion from the research was a need to address the ‘gender agenda’ in retirement. This finding shows that men are twice as likely to work into retirement for enjoyment, and women for money.
Meanwhile, retired women were found to be twice as likely as men to say they are just getting by financially.
The survey also found some real positives about the retirement experience.
One in 10 of those surveyed said they felt retirement was the time to resume studying, and nearly a third said they would consider starting a new business or taking up new hobbies.
More than half of those surveyed said they would do some voluntary work for their local community when they retire. More than a third are already doing unpaid voluntary work.
Providing free childcare was another positive outcome for retirement plans, with 18% looking after grandchildren, counting this as unpaid work.
Looking at retirement priorities, one in five of those surveyed said they travel and holidays were their biggest priorities in later life.
This priority was followed by spending more time with family and getting more exercise.
The biggest worries for those already in retirement included the impact of a stock-market crisis, running out of money, tax issues, and not being able to afford to help younger family members with large expenses.
All of these retirement worries can be remedied through the Financial Planning process.
We work with clients to model the financial impact of a stock-market crash (and subsequent recovery), so they can understand what this means for their long-term cash flow.
Running out of money is another worry address through the lifetime cash flow forecasting process. By making reasonable assumptions about the future, we can project forward to demonstrate a likely net asset position at age 100.
Tax issues are also dealt with when you work with a Financial Planner. While tax planning isn’t our primary service, it is part of the value we add, optimising your retirement plans in light of ever-changing tax legislation.
And helping younger family members with significant expenses is a scenario we often model for our clients, to demonstrate the impact of making substantial gifts or loans to the next generation.
What matters when it comes to your retirement planning is your goals and objectives, and not a set of perceptions about what retirement means.