Retirement means big changes in your life, not just stopping work.
Saving money is important, but you also need to think about how retirement might make you feel. Some people find it stressful, others find it happy. Many of us worry about money, but if you understand how your money affects your happiness, retirement might be easier to handle emotionally.
Managing Your Emotions in Retirement
You’ve worked hard and saved hard, and now you look forward to enjoying life with family and friends. Maybe you picture yourself on a cruise, sipping champagne. So why do nearly a third of retirees struggle with depression?
Research shows that depression is more common in people who retire, especially if they were forced to retire, had health issues, or anticipated retirement with anxiety. This tells us that retirement isn’t always easy. We help people prepare for retirement every day, and we’ve seen that it’s a big change. Many people now ease into retirement by gradually reducing work hours instead of stopping suddenly. This helps, but there can still be emotional challenges.
Getting a handle on your money before retirement, moving from saving to spending, can help you manage those emotional ups and downs.
From Saving to Spending
Lao Tzu said, “The journey of a thousand miles begins with one step.” This can be applied to retirement planning. Breaking down this big goal into smaller tasks makes it more manageable.
Remember these important stages of retirement:
-
Before retirement: This is when you start making changes to your life and money to make sure the transition goes well. You might move to a smaller home or start thinking about what matters most to you, like writing a book, doing charity work, or fixing up your home. We help our clients make a money plan that matches their personal goals.
-
The day of retirement: Whether you are slowing down or stopping work completely, take a moment to celebrate this day. Celebrating big moments helps you break life into meaningful parts, making the change easier.
-
After retirement: At first, you might really enjoy having free time. But later on, you might feel a bit unsure and wonder, “Is this it?” With time, most people get used to it and find their way, but it’s something to keep in mind.
Mastering Retirement Spending
It’s one thing to save for retirement, but spending is a whole different skill. You’ll need to make sure you have enough income, while still protecting some wealth for your future or your family.
Remember these rules for managing your money:
-
Invest in assets with growth potential early on.
-
As you near retirement, start using some of your investment gains.
-
Once you retire, use your investments to provide income while also saving for future needs or leaving a legacy.
The big question everyone asks is, “Will I have enough?” Remember: many people who have saved for years feel hesitant to start spending. But transitioning from saving to spending is part of the process. It’s not just about using your money differently, it’s about shifting from hard work to enjoyment. Having a clear plan for what brings you the most joy can make this shift easier.
How to Fund Retirement
Remember, most people have different sources of income:
-
Private or workplace pensions: You can either take money from the pension fund or buy an annuity for guaranteed income.
-
Rental property: You can generate a regular income from these.
-
Investments: You can earn income from assets and you can also withdraw lump sums from them.
-
State pension: If you’ve paid enough National Insurance, you’ll receive £221.20 a week from the state pension.
It’s important to find the right strategy for managing this change from saving to spending since there’s plenty of flexibility in how you can do it.
