Close to retirement? You have got a big decision to make
New retirement research commissioned by Irish Life has indicated that three out of five people in Ireland approaching retirement are unaware they have to decide how to draw down their pension
25 per cent of those approaching retirement have never consulted a financial broker or advisor about their retirement plans
New retirement research commissioned by Irish Life has indicated that three out of five Irish people approaching retirement are unaware of the vital financial decision they have to make affecting their retirement income. While the majority are aware of the financial options to draw down their pension, most do not grasp the need to plan ahead to consider these options and make this key financial decision prior to drawing down their private pension.
This decision is of utmost importance as ultimately it will determine your retirement income and so warrants careful consideration. The best option will depend on individual circumstances so it is vital to get advice from a financial broker or advisor. However the research revealed just 31 per cent of those approaching retirement have spoken to a financial broker or advisor in the past year, while 25 per cent have never consulted a financial broker or advisor about their retirement plans.
To best prepare for retirement, independent retirement coach and author, Marianne Heron, recommends checking in with a financial advisor initially between five to 10 years before you plan on retiring to ensure you are financially on track. Retirement is one of life’s biggest changes and, like any milestone, needs to be prepared for both financially and personally. Heron advocates research and enrolling in a pre-retirement course to prepare yourself when that time comes. In her personal retirement lifestyle guide sponsored by Irish Life, ‘Rewire don’t Retire’, Heron explains that retirement isn’t a one-off event but an ongoing process of adjustment with several distinct stages:
- Anticipation/anxiety: Beginning to look forward to retirement and building your nest egg (you may not be paying attention to the non-financial aspects of retirement). You could also be dreading this event.
- The ‘Big Day’: With all the handshakes and celebration.
- The Honeymoon Phase: This seems like one long holiday (you may not have started planning some kind of purposeful activity or you may spend too much money or alternatively become isolated.
- Disillusionment: Otherwise known as the ‘Something is Missing Syndrome’ (SMS) which hits anywhere from six months to a couple of years into retirement The novelty has worn off and it is easy to slip into depression which affects up to 40 per cent of retirees.
- Renewal: You start to deal with the realities of retirement and begin building a new identity
- Rewirement: Reorientation and forging a new identity. You are now living a life of purpose.
Retirement tends to be portrayed like the ending of a fairy story but, in reality, is one of the top ten most stressful life changes. There are no warnings about the impacts retirement can have such as health and marriage problems alongside the financial strain many retirees experience. These issues, Heron notes, are not a result of retirement itself but a consequence of lack of planning. “Contrary to popular belief, research suggests your senior years, particularly those between 65-74 are the happiest days of your life. However, this happy stage of life is not a given – it requires forward thinking and active planning which can be as simple as putting a plan to ABC,” says Heron.
The ABC plan Heron refers to is based on three simple elements:
- A – Attitude: Having a positive outlook is vital for effectively dealing with change.
- B – Having a ‘bee in your bonnet’: Once retired it is important to find your passion such as a new hobby or volunteer work which will help you to form a new identity. Leaving work often removes our sense of ‘purpose’ and ‘status’ which now needs to be replaced.
- C – Contact: Social contact improves your wellbeing and protects your health. Those who maintain positive relationships are less likely to suffer from certain health issues in later life.
Heron attributes the delay in retirement planning to a negative association with old age. For many it becomes something to dread so they put it to the back of their minds, but Heron believes this shouldn’t be the case. “Retirement is a fantastic opportunity to be who you want to be and do whatever you want to do in life – the key is to be proactive and to take control of your own wellbeing.”
A significant awareness campaign is currently underway by Irish Life to help educate people on the steps that need to be taken to effectively prepare for retirement. For more information or to download or order a free copy of the” Rewire don’t retire” book courtesy of Irish Life, see here
Irish Life Assurance plc is regulated by the Central Bank of Ireland.
Research was carried out by RED C on behalf of Irish Life in June 2019.