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Retirement Planning
Thursday, April 16, 2015 - 16:58
Plan of action

Personal finance articles on the need to save for retirement abound. We read articles ad nauseam giving projections as to how much we miss out on later on if we delay saving, articles extolling the importance of diversifying one’s risk and articles berating those who time markets, says Andrea Bezuidenhout, Advice Partner at The Wealth Corporation.

What many articles don’t say is that retirement is really about a whole lot more than just saving, diversifying and investing for the long term. Equally as important to a contented retirement is determining where you want to live, who you want to spend time with, the kind of lifestyle you want to enjoy, what kind of work – if any – you wish to do, how you plan to stay fit and healthy, and what you will do when your health eventually does deteriorate.

1.  Where will you live?

While some people would prefer to remain in the home where their family has grown up rather than downsizing in retirement, your family home may become a financial burden later on as maintenance takes its toll practically and financially, impacting on your lifestyle choices in retirement. On the other hand, the utopian idea of living out in the middle of nowhere, surrounded by nature and not a neighbour in sight becomes less appealing when you consider ease of access to amenities and proximity to friends and family whose company you will likely rely on more and more. Downsizing to a smaller home in a familiar area is therefore likely to be your best option in terms of a low maintenance kind of lifestyle that’s comfortably affordable and convenient.

2.  Who will you socialise with?

We often underestimate the importance of the relationships and the interaction that we have with colleagues whilst we are working and when this is this taken away upon retirement, it can come as quite a shock. Some retirees are quite happy to sit back and enjoy the slower pace of retirement whilst others feel overwhelmed with a sudden perceived lack of status, daily routine and interaction with others. It’s therefore important that where possible, retirement is a gradual transition whereby one increases time spent on hobbies and socialising outside of work and decreases time spent in the office. Some retirement communities boast active social groups and activities that can assist you when transitioning into that particular phase of life.

3.  How will you keep busy?

Are you going to be living the same sort of lifestyle during retirement that you did while working and therefore incurring the same sort of costs? Will you and your spouse want to downsize to just one vehicle as you spend more time together and save money that way? Are there new hobbies that you would like to try or places you would like to travel to that necessitate spending a bit more money? Do you want to live in a place surrounded by others in a similar stage of life as you, or perhaps in a place with people who have similar interests to you? These are all questions that need to be answered prior to retirement so that provision can be made to accommodate your wishes.

4.  Will you continue to work?

Those who work in retirement typically fall into two separate camps: those who work because they enjoy what they do and those who work because they have to. In either case, it’s worth considering the number of hours worked, the flexibility offered and the impact it will have on the other aspects of your life in your sunset years. If you have the choice of whether or not to work in retirement, consider Chris Brogan’s words: “The goal isn’t more money. The goal is living life on your terms”.

5.  Looking after your well-being

The typical retirement age in South Africa is currently 65. In this day and age, the notion of a particular age at which one should retire is being viewed more and more as an outdated assumption. With advancements in medical technology and procedures, the majority of us are expected to live much longer and more comfortably than our predecessors. This makes it all the more important that we have adequate retirement provisions in place. Many who retire in their early sixties are in good health and are able to lead an active lifestyle. Ensuring that you have the necessary savings in place to enjoy your free time should be a priority. Bear this in mind too, should you choose to take an early retirement package for whatever reason, as you will end up receiving less on a monthly basis and you will need it to last a longer period of time than expected.
Saving sufficiently for retirement is essential, but it is not the only thing you need to consider when planning for your retirement. As stated, a gradual transition into retirement is ideal. It takes time to find the right place to live, to cultivate relationships and social circles outside of work, to decide on the kind of lifestyle you wish to enjoy, and to get your work and health in order. Only when you know what you want tomorrow to hold, can you start to work towards it.
 

Copyright © Insurance Times and Investments® Vol:28.4 1st April, 2015
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