Making retirement work

Viele träumen von einem glücklichen Rentnerdasein. Doch wann ist der richtige Zeitpunkt dafür und wie bereitet man sich am besten darauf vor? JULIAN EARWAKER über die Geheimnisse eines erfüllten Lebens im Ruhestand.

“Like most people of any age, you think retirement is nirvana… . But after three or four weeks it hit me that I could sit here looking at these four walls unless I personally took charge, took responsibility and did something,” says 70-year-old Jay Cassie. Speaking to the charity Age UK, the former exhibition organizer and businesswoman says she felt lost when she retired at 63. “When you plan for retirement, you plan financially, you plan where you’re going to live, whether you want to upsize, downsize, move to a different country, move to the sea,” she explains. “But the one thing you don’t plan for — I didn’t and many of my friends said the same — is what you’re going to do with all the free time you’ll have on your hands.”

Cassie is not alone in her dilemma. Retirement seems to promise so much time, and yet, in the final stages of life, there is less of it remaining — which means that it needs to be used wisely. But how? “The questions people ask … become more profound at these later stages: am I living the life I want to live? What is most important to me? Who is most important to me?” explains Professor Stewart Friedman from the Wharton School of Business at the University of Pennsylvania. Research suggests that those who choose to “give back” and find a sense of purpose to their lives have the happiest retirements. “It’s critical to reflect on what matters to you,” says Friedman. “You need to actively inquire of yourself: what do I want to leave behind?”

Across the world, people are living longer. But with the World Economic Forum projecting a global pension asset shortfall of $400 trillion by 2050, the future is uncertain for many. In the UK, 12 million people currently have inadequate

pension savings. It’s a similar story in the US, where 31 per cent of Americans have no retirement savings or pension.

There are three main pillars for financing retirement: government benefits, workplace pensions and personal savings and investments. There are significant differences between countries in the balance of these three pillars. The self-employed and those working in the so-called gig economy are most at risk. Long-term planning and regular monitoring is essential.

“Some people will have set their retirement date when they were in their 20s or 30s and a great deal will have changed since then, including their state pension age and perhaps their career plans,” says Jamie Jenkins, head of pensions strategy at Standard Life, in a Yourmoney.com report. “The date that you set for retirement on a pension plan … will often dictate how your money is being invested and the communications you receive as you get nearer to that date.” This, he explains, influences pension risk, investment strategy and returns.

It’s not all about money, of course. As Jay Cassie discovered, the psychological effects of retirement can be profound. Loneliness, boredom, and a lack of structure and meaning to life can be traumatic. Retirement experts at Retirehappy.ca say that it’s important to make retirement a process rather than an event. Their top tip is to pay off debts while you are still working.

For some retirees, losing the structure of work is simply too much. “You went to work, your day was defined. You remove that, all of a sudden, what did you replace it with?” Robert Roy told the Financial Times. The 79-year-old American initially spent his retirement fishing and writing, but missed the challenges and discipline of working life. So, he joined the growing number of the “unretired” — people of retirement age who return to the workplace. Roy now works in mental health services and consultancy.

Organizations also overlook the impact of retirement, especially when losing business-critical, experience-based knowledge, what the Harvard Business Review refers to as “deep smarts”. It reported that one large organization facing 700 retirements in the near future would lose 27,000 years of experience.

This partly explains the changing attitudes to older workers. Ten per cent of British workers are now working past the age of 65, double the number in the year 2000. Many take positions that are parttime and involve flexible working. Most are motivated by factors such as sense of purpose and job satisfaction. The Financial Times reports that only 12 per cent of workers aged 65 to 74 work because they need to earn money. The key word here is “choice”. According to Money magazine, people who choose to work past 65 are happier than their peers and enjoy better health. For those who have no choice but to continue working, the opposite is true. One thing is certain: getting retirement right can be hard work.

“You need to actively inquire of yourself: what do I want to leave behind?”