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Many people want to retire comfortably or have the option to retire early.
The latter is a popular trend and one problem that is often not talked about is having too much free time in retirement.
Imagine retiring right now. What will you do tomorrow? 🤔
Think about it for a moment.
Sure, you’ll probably tell me that you’ll make plans to watch your favourite shows on Netflix?
Or you’ll spend time doing various staycations?
Or perhaps you’ll travel and see parts of the world?
These are all great things to aim for and do, but what happens 6 months from now? 1 year or even 3 years from now?
How will you use all that free time you’ve got?
One thing I love doing is spending time with the older generation and listening to some of their challenges.
I’ve always found it super useful to soak up that wisdom and ask myself what it means for me?
A good example is that I’ve seen both my parents retire in the last 5 years and their life experiences have inspired this post.
I also took the leap from my corporate job 18 months ago and am enjoying a form of semi-retirement, which I’ve learned so much from and it has redefined my expectations from retirement.
Should you aim to retire early? Yes. But should you stop working altogether? No (in my personal opinion). Let’s explore this further.
Why You Should Aim To Retire Early But Not Stop Working
Here are some reasons why you should aim to retire early but not stop working.
1. Boredom From Retirement
Boredom is a real thing when you retire.
Try watching daytime TV for one whole day and you’ll vow never to do that again. So what next?
I cannot count the number of times that I’d either call my parents or go to see them, that they said they were bored.
My parents are in their late 60s and live in a 3-bed house with no children.
Although they have a decent retirement pot, boredom is the biggest issue for them.
It is even more so in the current covid environment.
My mum has been an entrepreneur most of her life and my dad worked in medicine.
Those jobs gave them a routine and some purpose, which they’ve found lacking in retirement.
The solution to this boredom has been for my parents to reverse their retirement a little and start working 😀.
My mum now works 2 days a week in a nursery business that she co-founded about 15 years ago.
For someone who spent decades managing people and resources, doing this gives her that sense of being in the game again whilst partially curing her boredom problem.
On the other hand, my dad now runs a small niche food business, where he gets joy from travelling to source food produce at wholesale prices, and now enjoys sitting at home to package, seal, and deliver African food produce to small shops in and around London.
My parents are essentially working in retirement, doing something they love.
Although I’m not at the typical retirement age yet, I currently don’t have a conventional job as I did when I worked in Finance.
Running The Humble Penny occupies my time a lot and I do it because I love it (even though it gets full-on at times).
My point here is that a decent part of your retirement planning should focus on what you’ll do to occupy your time.
You can get a part-time job, or you can begin now to create something you love that will occupy your time.
If it also makes you an income each month, even better.
2. Insufficient Savings
For many people, retiring comfortably (financially) will never become a reality.
Given the average UK savings rate, typically between 7% and 11%, most people will need to continue working out of necessity.
The above savings rate is pretty similar to the situation in the US too.
Not saving and investing enough money is one of the reasons why most people will continue working past the typical age of retirement.
Although this is not necessarily a bad thing, the frustrating part of this outcome is that those people don’t have the option to stop if they want.
Many people might need to stop working for various reasons e.g. ill-health, supporting a family member or parent, or simply because they just want a break for some months.
Knowing this, there has never been a better motivation to begin preparing well for a good retirement financially.
One common trend as people work towards retirement is having multiple pension pots from previous jobs.
On the surface, this might seem like nothing to worry about.
However, one significant risk worth highlighting is that people could over time lose track of elements of their retirement income.
One way to overcome this is to begin consolidating your pensions.
PensionBee offers this service and has helped over 600,000 savers to take control of their retirement.
If you choose to go down this route, you can consolidate your old pensions in 3 simple steps:
Step 1: Sign up in minutes, for free.
Step 2: Tell them about your older pensions.
Step 3: Leave the rest to them. They’ll start contacting your older providers for you.
Other things worth doing to prepare for a better retirement is to increase your savings rate.
One reliable way of doing this is to think of your monthly income in segments and start saving according to certain defined percentages.
A pension calculator can also help you visualise the impact that increasing your contributions could have on your retirement pot, based on the information you provide and a few assumptions.
Being able to do this though will most likely require a lifestyle change, whilst also being diligent to budget consistently.
3. Mental Health
I previously highlighted boredom as a real issue at retirement.
A knock-on effect of boredom is that it starts to adversely affect one's mental health.
Think about it, boredom leads to us seeking connections, and bizarrely, one way people seek to do that today is to go on social media.
I don’t know about you, but I never visit social media and come off it feeling happier.
There is something about seeing only one aspect of people’s lives (often the positive bits) projected online that leads to a comparison trap.
And of course, with comparison comes booking that holiday that you didn’t plan for or making that unplanned purchase because you saw an ad online.
It can get worse as this gradually spirals out of control as one has in effect adopted bad habits at retirement.
I say all this from experience.
There is no day that I look at my WhatsApp and don’t see random things shared with me from people who are either jobless or are in some kind of retirement.
Having a job plays other important roles beyond just making us money.
We get to mix with real people (although largely virtual these days), and it gives us something else to focus on rather than adopting bad and often expensive habits that do nothing good for our mental health.
According to the BBC, research from the Institute of Economic Affairs suggests that:
“While retirement may initially benefit health – by reducing stress and creating time for other activities, adverse effects increase the longer retirement goes on.”
Planning for retirement is an excellent thing to do and the more of your income in your younger (more lucrative) years that you can commit to retirement, the better.
That said, a future retirement with no plan for work isn’t a good idea in my opinion.
A good way to have the best of both is to increase your savings rate and invest more now so that you can have the option to retire whenever you want.
However, layer that economic plan with a plan for your future purpose and wellbeing derived from doing meaningful work in some capacity when you retire.
What’s your personal experience of retirement? Do you know others who have retired without work? What has been their experience? Comment below and share.
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