Do you have retirement anxiety?

Written on the 18 April 2023 by Parkside InvestorPlus

If you said yes, then you are not alone.

A recent study by Fidelity International, which surveyed over 1,200 Australians, found that while the average age at which Australians would like to retire fully is 64.8 years, the average age we retire is rather at 63.4 years.

Why do retirees have 'retirement anxiety'?

There are a key number of reasons, including;

• personal health issues (one in four)
• redundancy (one in four) and
• needing to care for someone suffering from health issues (one in eight)

Retirement anxiety can result from the need to start your retirement earlier than you had planned or expected.

Early retirement can leave some people reeling in shock from which it may be difficult to recover – the key point here is not having planned earlier enough for the moment of retirement or even the prospect of a forced early retirement.

If people had planned ahead for the unexpected, if they had a Plan B already in place, that shock would likely be much less.

They would more likely be much more ready for retirement compared to being forced into retirement, which ultimately is the cause of retirement anxiety.

Given the possibilities of having to retire earlier than you planned, it's then even more important than ever to start thinking about retirement plans as early as possible.

If on the other hand, your retirement has been planned, along with a financial/wealth advisor, then you’re most likely in a good position – i.e. you know, give or take, your retirement timeline, you know how much money you’ll have in your super, you will have planned for any age care needs in the latter parts of your retirement and you’ll be comfortable knowing you have enough money to last through your retirement allowing you to live the lifestyle you desire and even enough to leave behind for the kids.

What is the biggest fear of retiring?

Simply put - running out of money!

Followed closely by not having enough retirement income for a lifestyle that you desire.

How long your money will last in retirement essentially depends on three variables:

• How much you start with
• How much and when you draw income down from capital (spending)
• The characteristics of your investments.

If you have been forced into early retirement, you will not have full control over your starting capital, and it could be less than what you’d like it to be.

However, you do have control over a couple of factors.

The first being deferring or reducing expenditure, which could help preserve the savings pool for longer.

This strategy works well especially since it allows you to gradually ease into your new lifestyle.

This could involve working longer, part-time, to supplement your income without totally diving into your super savings.

Start retirement planning NOW

Regardless of where you are in your retirement journey, one thing is for sure, if you have not already done so, start planning now.

Knowing what you want to do in retirement and developing goals and aspirations that matter to you is vitally important.

Imagine going on an overseas holiday and not planning!  You would not.

So, start planning for your retirement.

Here are some steps to think about;

• Fully understand your finances and financial goals, e.g. will you be mortgage free, how much will you want in yearly income, how much do you intend to leave as inheritance etc.
• If you’re still working and your super balance is not enough, then you will need to start topping up.
• At some point you will need additional health care in your retirement – has this been factored in.

It’s hard to cover off on every single event – this is where your financial planner can help prioritise your actions.

If you’re approaching retirement or if you’re already retired, and you’re concerned about maintaining a comfortable standard of living in an environment of rising costs, come and see us at Parkside InvestorPlus for a review of your current situation, (02) 9899 489