The Retirement Industry Speaks About Money,
Retirees Live Life
There are two things worth recognising as we approach retirement, and through retirement.
First, there is much more to retirement than the money we have saved. Second, we have every reason to expect retirement planning that considers the life we actually want to live.
For most of our working lives, we are encouraged to save for retirement. We hear about pension funds, investments, inflation, investment returns and the need to make our money last. These are important matters. Financial security gives us choices and can make life considerably easier. But there is another question that deserves just as much attention:
First, there is much more to retirement than the money we have saved. Second, we have every reason to expect retirement planning that considers the life we actually want to live.
For most of our working lives, we are encouraged to save for retirement. We hear about pension funds, investments, inflation, investment returns and the need to make our money last. These are important matters. Financial security gives us choices and can make life considerably easier. But there is another question that deserves just as much attention:
What kind of life are we preparing to live?
Two people, very different retirements
Imagine two colleagues retiring, with similar savings and roughly the same monthly retirement income.
Five years later, their lives look very different.
One has found new interests, kept in touch with friends, become involved in the community and developed a daily routine that brings satisfaction. The other misses work terribly. Former colleagues have moved on.
The days feel long, family relationships have become strained, and there is a growing sense that something important has been lost.
Both may be financially secure, yet their day-to-day experiences of retirement are worlds apart.
The difference cannot necessarily be explained by their pension statements. It may have much more to do with how they prepared for the changes in their lives.
Five years later, their lives look very different.
One has found new interests, kept in touch with friends, become involved in the community and developed a daily routine that brings satisfaction. The other misses work terribly. Former colleagues have moved on.
The days feel long, family relationships have become strained, and there is a growing sense that something important has been lost.
Both may be financially secure, yet their day-to-day experiences of retirement are worlds apart.
The difference cannot necessarily be explained by their pension statements. It may have much more to do with how they prepared for the changes in their lives.
What happens when work ends?
Work provides far more than a salary.
For many people, it provides a reason to get up in the morning, regular contact with others, a sense of belonging, challenges to solve and the satisfaction of being useful.
When work ends, some of these things disappear almost overnight.
For others, retirement comes as a welcome release. They have interests to pursue, people to see and plans they have been looking forward to for years.
Neither experience is unusual. And retirement rarely stays the same.
Health may change. Relationships may develop or weaken. A spouse may retire later or have very different ideas about how to spend the years ahead. Adult children may need assistance. We may discover new interests or find that familiar activities are no longer possible.
This is why preparing for retirement should involve much more than deciding how much income we need.{
the question that deserves a place in retirement planning
Consider the following questions:
What am I retiring to?
What will give structure and meaning to my days?
Which activities, interests or responsibilities do I want to continue, and what would I like to explore?
Who will share this part of my life? Which relationships matter most?
Have my spouse or partner and I spoke about our expectations?
What happens if we want different things? How might my health affect my choices?
What would I like to keep doing for as long as possible?
How could changes in my health, energy or mobility affect my home, activities and independence?
How will I remain involved in decisions about my life?
Who do I trust to help me when necessary?
How do I make sure that receiving help does not unnecessarily mean giving up my say?
What will an ordinary Tuesday look like?
Holidays and special occasions are wonderful, but most of retirement is made up of ordinary days. What will make those days satisfying? How will my money support these choices?
What can I comfortably afford?
What flexibility might I need later?
What commitments could limit my choices, and what financial arrangements would give me greater peace of mind?
There are no standard answers. Two people of the same age, with similar circumstances, may want entirely different lives.
And our own answers may change as we grow older.
What am I retiring to?
What will give structure and meaning to my days?
Which activities, interests or responsibilities do I want to continue, and what would I like to explore?
Who will share this part of my life? Which relationships matter most?
Have my spouse or partner and I spoke about our expectations?
What happens if we want different things? How might my health affect my choices?
What would I like to keep doing for as long as possible?
How could changes in my health, energy or mobility affect my home, activities and independence?
How will I remain involved in decisions about my life?
Who do I trust to help me when necessary?
How do I make sure that receiving help does not unnecessarily mean giving up my say?
What will an ordinary Tuesday look like?
Holidays and special occasions are wonderful, but most of retirement is made up of ordinary days. What will make those days satisfying? How will my money support these choices?
What can I comfortably afford?
What flexibility might I need later?
What commitments could limit my choices, and what financial arrangements would give me greater peace of mind?
There are no standard answers. Two people of the same age, with similar circumstances, may want entirely different lives.
And our own answers may change as we grow older.
Can we change the retirement planning conversation?
Yes. A useful starting point is to change the order of the conversation.
Before asking whether we have enough money to retire, we should also ask what we are trying to prepare for.
Describe the life you want to live. Think about the people, activities, interests, responsibilities and opportunities that matter to you. Then consider what financial arrangements will support that life. This changes the questions we bring to a financial adviser.
Instead of discussing only how much income an investment or annuity might provide, we might ask:
• What choices will this arrangement allow me to make?
• How much flexibility will I have if my circumstances change?
• What financial risks am I taking, and how could they affect my everyday life?
• What commitments am I making that may be difficult or costly to change later?
• How will I know when it is time to review my arrangements?
A qualified financial adviser has an important role in explaining financial risks, costs, alternatives and consequences. But financial advice is only one part of preparing for life after work. Sometimes the most useful conversation may be with a spouse, a friend, a healthcare professional or someone who knows us well.
The important thing is to recognise how these different parts of life connect.
Describe the life you want to live. Think about the people, activities, interests, responsibilities and opportunities that matter to you. Then consider what financial arrangements will support that life. This changes the questions we bring to a financial adviser.
Instead of discussing only how much income an investment or annuity might provide, we might ask:
• What choices will this arrangement allow me to make?
• How much flexibility will I have if my circumstances change?
• What financial risks am I taking, and how could they affect my everyday life?
• What commitments am I making that may be difficult or costly to change later?
• How will I know when it is time to review my arrangements?
A qualified financial adviser has an important role in explaining financial risks, costs, alternatives and consequences. But financial advice is only one part of preparing for life after work. Sometimes the most useful conversation may be with a spouse, a friend, a healthcare professional or someone who knows us well.
The important thing is to recognise how these different parts of life connect.
Retirement planning should continue after retirement
It is tempting to think that retirement planning ends when we leave work and begin receiving our retirement income.
Yet someone who retires at 60 may live another 25 or 30 years, perhaps longer.
What matters at 60 may be very different from what matters at 75 or 85. During the earlier years, we may want to travel, study, work part-time or spend more time with grandchildren. Later, being close to friends, remaining mobile, managing our health or living in a suitable home may become more important. Our priorities change, sometimes gradually and sometimes unexpectedly.
That is why it makes sense to revisit our plans regularly, and particularly when something important changes. A retirement plan should remain useful as life unfolds.
What matters at 60 may be very different from what matters at 75 or 85. During the earlier years, we may want to travel, study, work part-time or spend more time with grandchildren. Later, being close to friends, remaining mobile, managing our health or living in a suitable home may become more important. Our priorities change, sometimes gradually and sometimes unexpectedly.
That is why it makes sense to revisit our plans regularly, and particularly when something important changes. A retirement plan should remain useful as life unfolds.
what should we expect from the retirement industry?
The retirement industry manages an important part of our future. Retirement funds, investment managers, insurers, administrators and financial advisers all have responsibilities that can affect our financial wellbeing.
But the people they serve have lives that extend far beyond their financial accounts.
A retirement fund may meet its investment targets while some of its members struggle with the transition out of work. And while the retiree may receive the income promised, they may continue to feel isolated, lose confidence or find that important decisions were never properly considered.
That does not mean the financial arrangements have failed. It means that financial success alone cannot tell us whether someone is living a satisfying retirement.
Research on healthy ageing, including work by the World Health Organization, recognises the importance of being able to make decisions, maintain relationships, participate in society and do the things we value. These matters deserve greater attention long before retirement begins.
Perhaps the most useful measure of progress would be whether more people reach retirement knowing what questions to ask, understanding their choices and feeling better prepared for the life ahead.
And perhaps retirement communication should spend more time asking people about the lives they want to live, before explaining the financial products intended to support them.
But the people they serve have lives that extend far beyond their financial accounts.
A retirement fund may meet its investment targets while some of its members struggle with the transition out of work. And while the retiree may receive the income promised, they may continue to feel isolated, lose confidence or find that important decisions were never properly considered.
That does not mean the financial arrangements have failed. It means that financial success alone cannot tell us whether someone is living a satisfying retirement.
Research on healthy ageing, including work by the World Health Organization, recognises the importance of being able to make decisions, maintain relationships, participate in society and do the things we value. These matters deserve greater attention long before retirement begins.
Perhaps the most useful measure of progress would be whether more people reach retirement knowing what questions to ask, understanding their choices and feeling better prepared for the life ahead.
And perhaps retirement communication should spend more time asking people about the lives they want to live, before explaining the financial products intended to support them.
where do we go from here?
We do not need to wait for the retirement industry to change before improving the way we prepare.
Start with your own life.
Think about what you enjoy, what worries you, who matters to you and what you would like the years ahead to offer.
Consider your health, relationships, daily activities, home, opportunities to contribute, and the financial security needed to support your choices. Talk to the people who matter. Ask questions. Seek professional assistance where it is useful.
Reconsider your plans when circumstances change. Above all, remain involved in the decisions that shape your future. Retirement is something we live, not simply something we finance. The purpose of retirement planning should be to prepare us for bot
Consider your health, relationships, daily activities, home, opportunities to contribute, and the financial security needed to support your choices. Talk to the people who matter. Ask questions. Seek professional assistance where it is useful.
Reconsider your plans when circumstances change. Above all, remain involved in the decisions that shape your future. Retirement is something we live, not simply something we finance. The purpose of retirement planning should be to prepare us for bot
BetterLived explores retirement through seven connected areas of life and the changing circumstances we experience as we grow older. Its purpose is to help people ask better questions, understand their choices and remain involved in decisions about their lives.
This article provides general information about retirement and life planning. It does not constitute personal financial advice. Discuss financial decisions with an appropriately authorised adviser.