Recent research has suggested retirement may not be good for our health. Having a financial and lifestyle plan in place as soon as possible can help to ensure this doesn’t happen. This month’s guest blogger, leading HR consultant Mara Thorne, looks at the issue and offers some tips on preparing for retirement.
According to research conducted by the Institute of Economic Affairs and the Age Endeavour Fellowship, retirement may not herald the halcyon days of leisure and relaxation on which so many working people are pinning their hopes. After an initial improvement in well-being due to a reduction in stress levels, retirement actually increases the risk of clinical depression, diagnosed physical illness and the need for medication.
The solution, according to the authors of the study as well as the International Longevity Centre UK, is to facilitate a better “work-life balance” and enable older people to remain in work for longer. Not only would this help older workers both economically and socially, but it would also boost the economy as a whole. PWC, the large accounting firm, has estimated that raising the state pension age to 70 rather than 68 by 2046 would add around 0.6 per cent to the nation’s GDP.
You may be surprised to learn that, according to official statistics, 980,000 people aged 65 and over are still in paid employment. So as we are all living longer, does the prospect of working until we are 70 appeal to us, or are we reluctant to relinquish our dreams of lazy days pottering in our gardens or improving our golf swings? Why would we choose to continue working into our late 60s or even 70s?
My guess is that the most common reasons are financial constraints and fear of boredom and isolation.
“I can’t afford to retire”
Some people continue to work beyond 65 simply because they need the money. Inadequate pension provision is likely to become an ever bigger problem with the demise of the generous final salary pension schemes that fuelled the comfortable retirements of previous generations. Many people aren’t investing enough in their pensions to provide a decent income in retirement. The trend for starting a family later in life also means that the financial commitments associated with educating children may continue well into a person’s 60s. Now that the default retirement age has been abolished, if your pension income is going to be inadequate, you may have no choice but to keep working for a few more years.
“I still enjoy my job”
Other people simply enjoy their work, either for its intrinsic interest and satisfaction, or because of the social aspects of attending the workplace. After a working life of 40 plus years, with its familiar routines and camaraderie, you may feel anxious at the prospect of suddenly having nowhere to go every day, no structure to your daily life. We look forward to our holidays while we are working, but not needing to get up at a certain time and go to work – so pleasant in small doses – can be quite disorientating after a few months. And boredom and social isolation can be positively damaging to health, potentially leading to the increased risk of depression which the researchers found. People need to do something, to get out of the house and engage with other people, in order to be happy and healthy.
One of my clients was telling me recently that after deciding to “retire” in his late 40s because he was financially secure, he got so bored with playing golf that he started another company. I am sure there are many entrepreneurial people out there who would find the traditional idea of retirement equally tedious.
The right approach to retirement
The key to a successful and happy retirement, I believe, is to plan for it, both financially by ensuring that you save in a workplace pension or in some other sensible investment, and in terms of hobbies and activities. All too often retirement is a sudden life change, like jumping off a cliff. One day you are working full-time, the next day you have nothing to do. One day you have a full-time salary coming in, the next day you are reliant on a vastly reduced income. The change is too abrupt.
In an ideal world, with your employer’s agreement, a gradual reduction in your working hours would be a much better way to ease your transition into retirement, allowing you to adjust gradually to a reduction in income, and to find other activities to occupy your increasing amount of free time. It would be good for your employer, too, because you could gradually hand over to a younger person, passing on your wealth of experience, which would help with succession planning.
Baroness Greengross of the ILC criticises employers for failing to do more to support older workers. She cites some good examples of large employers such as Sainsbury’s and BMW which have schemes in place to facilitate a “phased” approach to retirement, while others make the right noises but don’t deliver in practice.
We live in an ageing society and the problems associated with poverty and ill-health in retirement are not going to go away. It’s something we all need to think about and plan for, both as employers and as individuals.