YOUR GOLDEN YEARS
The realities of retirement
THE REALITIES OF RETIREMENT WILL CHANGE AS YOU GET OLDER
The word retirement fills some people with fear. The thought of not having a regular income is daunting and they’re scared being retired is the start of a slippery slope downhill to old age.
For others, though, it is the light at the end of the tunnel. After decades of work taking up such a large chunk of their lives, it’s the chance to finally have some “me time”.
The realities of retirement are different for everyone and people’s personal circumstances – along with their outlook – can make a difference to whether these really are their golden years or not.
One thing is certain, life won’t be the same once you’ve clocked off for good. And then, as you progress through those retirement years, it will change yet again.
Diane Maxwell, the Retirement Commissioner and head of the Commission for Financial Capability, points out that because we’re living longer, we can be retired for 20 or even 30 years and a lot can happen in that time.
“Some people think you retire and that’s it, you’re old. But a lot of 65 and 70, and even 75-year-olds today are fit and active. But then, over the years, their situation changes, often because of their health. This is something we need to bear in mind and plan for.”
The commission has defined three different stages of retirement and chosen names for them from ideas submitted in a competition. The first stage, called Discovery, occurs from the age of 65 to about 74, and is the “doing” stage.
Newly retired people finally have the time to do those things they’ve been talking about getting around to some day, and they are still healthy enough to enjoy activities such as travelling and spending time on hobbies. In some cases, these retirees feel like they are busier than they were when they worked full-time.
Often this is the most expensive phase of retirement, especially if they travel. “You do have to be careful not to blow all your savings in these first 10 or so years,” says Diane.
The middle years of retirement, from ages 75 to 84, have been titled the Endeavour stage.
Focus tends to shift to more simple things in life, such as spending time with family. These people may find life starts falling into a familiar and comfortable pattern, and that they’re slowing down a bit. This may be the time they look at downsizing their home, as maintenance may become too much, or they may need to release some of the money tied up in their property. Declining health may also mean it’s a wise idea to move to a retirement village.
The third stage, for those 85 and over, is Reflection. Health and finances may limit their choices and they are likely to slow down even further. Their cost of living can drop because they’re not going out and spending as much money.
But if ill health is an issue and they need full-time care, this can eat into what’s left of their savings and mean they have to sell assets to pay for things like a rest home. They may also need to get financial help from the government or community agencies. It will help a lot if they have money in reserve to meet these costs, says Diane.
“Of course, none of us know how long we are going to live for, so it is hard to know how much we’ll need.
The more you are able to save, or to put into something like KiwiSaver, the better.”