So are you psychologically ready to retire?
Too much literature and research on retirement readiness is centred around financial readiness. But what if you have the financial means yet can’t fulfil your retirement aspirations because of poor health? Or you don’t know what to do with the sudden abundance of free time on your hands?
A research on the psychology of retirement (The New Retirement Mindscape II Study by Ameriprise Financial Inc. – 2010) shows that people go through emotional roller coasters on their journey towards retirement. The study broke down the retirement journey into 6 stages.
A survey was done in 2010 to understand the retirement journey of individuals
(The New Retirement Mindscape II Study by Ameriprise Financial Inc.)
The study details six distinct stages in the retirement journey which starts 15 years before actual retirement age.
Stage 1: Imagination (10 to 15 years before retirement) (45 to 55 years)
Individuals start to have certain ideas and are positive about what retirement would be. They start to plan for it but because of other more immediate financial obligations, they can’t do much (lack of time and financial knowledge) and feel unprepared.
Stage 2: Hesitation (3 to 5 years before retirement) (56 to 60 years)
Individuals begin to visualize retirement but question their own preparedness – not just financially, but also their health status. As such they don’t just actively seek advice on health insurance, they also make a more conscious effort to keep fit if they had not done so previously.
Stage 3: Anticipation (2 years before retirement) (60 years)
Individuals are excited about retirement, feel most on track and ready to step off the corporate treadmill. This is the stage where they feel most empowered, happiest and hopeful, in anticipation of enjoying the fruits of their labor.
Stage 4: Realisation (Retirement day and the year following) (62 to 65 years)
Individuals feel let down. It is not what they had imagined it to be. The loss of job/income or identity is the hardest thing. They are also concerned about physical disabilities. They are being careful about initial spends to ensure that they do not outlive their savings.
Stage 5: Reorientation (2 to 15 years after retirement) > 65 years
Individuals, after coping with early feelings of disappointment, begin to adapt to their retirement lifestyles by modifying their goals and routines. They have better control over time. Concerns about health increase however.
Stage 6: Reconciliation (16 or more years after retirement) >78 years
Individuals begin to experience physical disabilities and sense of emptiness. Loss of social connection is the hardest thing.
Although this survey was conducted in the US, these emotions may also apply to many pre-retirees in Singapore. The estimated age for each of the stages is based on Singapore’s statutory retirement age and life expectancy.
“No other stage of life triggers such intense feelings of excitement and liberation, on the one hand, but, on the other, fear and anxiety. Retirement for many entails a leap of faith after decades of routine. It is a major transition that unfolds over several years, as we move from the life we know into the life we will get to know.”
So are you psychologically ready to retire?
Here are 3 things you can start doing to be psychologically ready to retire.
(1) Building Financial Discipline
How much is enough?
Probably most of you who read this can resonate. At every level of income and wealth accumulation, we think that just attaining the next level will give us the security and freedom we need and desire. But when we reach that level, we just raise the bar. We look over the fence, and the grass once again looks greener on the lawn of the guy who earns just a little more.
While money buys us time and options, wealth at a certain level will have diminishing value. We can’t simply trade time for money because our time is priceless. So, you need to set your financial end zone to free up time for the more important things in your life.
To achieve that, the concept of cashflow management is important. Building your retirement nest egg is more than just savings and investment. It’s equally important to have the right plans to mitigate your risk (insurance) and consuming sensibly (expenses).
“To help you build financial discipline, Autumn provides you a single view of your total assets and liabilities by consolidating your savings, investment, insurance, CPF monies and properties in one dashboard. Knowing what you have is a good starting point for you to plan and manage your cashflow.”
What’s more, with Autumn, you can share your account information with your loved ones, giving you peace of mind in times of emergency.
You want to retire with peace of mind.
(2) Finding A Deeper Purpose & A Retirement Mentor
Your emotional ‘glide path’ is as important as your financial plan. If you climbed the corporate ladder, you likely had a mentor and learned how successful people got that way by observing and asking questions. Do the same around your retirement. Find people with a few years of experience living the retirement life you want, and learn how they got it. Asking for direction is a sign of strength, not weakness. Talk to people who have successfully made that transition. And start talking to the “retirement mentors” at least 5 years before your planned retirement so you have some runway to build your own pathway.
“Instead of focusing on what you want to do during retirement, try visualizing the kind of person you want to become. Finding your purpose and ways to feel relevant and staying active may put you on track to live your best life.”
A clear purpose will direct you to find the right platform to serve. Start building your community or develop new hobbies and be socially engaged in areas you are passionate in to help you ease into retirement eventually.
Without a life purpose in retirement, you might have the means to retire but no meaning in retirement.
(3) Staying Active To Live Your Best Years
The average Singaporean can expect to live for 85.4 years in 2040, up 2.1 years from the average of 83.3 years in 2016, according to a new study “Burden of Disease in Singapore” which was prepared by the Ministry of Health (Singapore) and the Institute for Health Metrics and Evaluation.
However more time is spent in ill health across the population. A person born in 2017 would live an estimated 12.5 per cent of his life in ill health.
The top 4 causes of ill health are cardiovascular diseases, cancers, musculoskeletal; disorders and mental disorders. While these diseases may be hereditary, you can take actions to manage the risk of occurrence, through right diet and active living. It takes discipline and hard work but you get to enjoy more healthy years, it’s a positive trade off.
Maintaining good health as long as possible is essential to achieving many of the things you aspire to do in retirement – and living your best life. Staying healthy also allows you to make choices to continue working in some capacity as a way of staying active, as you approach retirement. Isn’t it great that you can choose to defer the time when you start to draw down on your retirement savings? This means, you probably may not outlive your savings.
Thriving In Retirement
Based on the research, people go through some form of emotional roller coaster in the years leading up to and after retirement.
To be psychologically ready for retirement, you need to thrive in 4 dimensions
- financial, physical, emotional & social wellbeing.
Autumn is an integrated wealth and wellness solution that easily helps you plan a healthier and more meaningful retirement, beyond financial planning. We want to make a healthy, wealthy and meaningful retirement accessible to more people.
We invite you to embark your retirement journey with Autumn.
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