I woke up this morning to this comment on a recent blog from Peter Wilson
I’m “at that age” (58) where I’m on the cusp of putting my pot(s) into drawdown and quitting the labour market.
Why? To a large extent because my job, like many others, have been willfully devalued over the last 20 years. In todays money, I was earning about 120K in 2000. Now I earn £60K and there’s very little interest in keeping older employees interested in the work and in remaining working.
Like many people my age I find my outgoings now the mortgage is gone and the kids have fled the nest are significantly lower than they used to be. I have enough savings for a modest income, a house I can downsize from if things get too tight and a host of fairly inexpensive hobbies I want to pursue.
I *could* work for a few more years and end up with a more padded retirement but what used to be a passion (my job) has become an under-appreciated drudge and I think that’s true for very many people. Without the pension freedoms that would be much more difficult, but only because of the pitiful annuity rates on offer.
I quit my job when I was 57 and now do something I find so satisfying that it doesn’t feel much like work. But I could, because I had both a decent pension pot and a pension behind me. I remember sending the instruction to my trustees to start paying me my pension was one of the biggest financial decisions of my life.
It remains so. For me, it marks the point when I accepted that the second half of my life had begun
It sounds like you’re one of many people I know who is on the “cusp” of retirement so I’m sending you a post from my friend Jim Hennington, a Tasmanian now living in Goring.
Jim- I’ve de-strined your post, but your message still comes on loud and clear. If you feel like Peter and you’re reading this, check out Jim’s retirement service – Jubilacion
Here’s Jim’s post.
Five Signs you’re avoiding your retirement
Considering retirement isn’t only a financial and lifestyle conversation. It’s linked to questions about our identity, purpose, and self-worth. Little wonder many people avoid the subject.
Leaving work and taking off on a dream holiday, spending more time with the family, or simply enjoying time to catch up on all those things you’ve been putting off for years – it all sounds so simple. Yet, being free of work and having the confidence to live the lifestyle you choose is a complex and frustrating exercise. It means that many people – head into retirement with more questions than clarity. Here are five signs you could be avoiding the subject and what you can do to fix it.
The too-hard basket
This is the easy one and the big one. For years, you’ve watched your pension pot grow. While the pension industry talks about retirement income, you have very little idea of how that big sum spreads across the years to come. Despite having worked hard and having a decent level of wealth, the question lurks in the back of your mind: can I afford to retire and live comfortably?
You talk about retiring but haven’t set a date
Always a bridesmaid, never a bride, goes the saying. It’s a fitting metaphor for retirement because you want it, you talk about it, you have clear ideals and expectations, but you don’t have a date. So you either avoid the question altogether or find yourself thinking, ‘just one more year’ to top up the savings.
Known unknowns and unknown unknowns
In 2002 Secretary of Defense Donald Rumsfeld shot to fame with a tongue-twisting explanation of the limitations of intelligence reports. He described known knowns, known unknowns, and unknown unknowns. Despite the linguistics gymnastics, the logic is sound and can be applied to retirement. You know you’re getting older, but you don’t know what health complications might arise. You know you’ll draw down on your assets, but you don’t know what the markets will do. If you’re continually asking yourself ‘what if’, then it’s those unknowns that are keeping you up at night.
You don’t love what you do, but you are what you do
This is an identity question. When you meet new people, your occupation or profession follows quickly on the heels of your name and where you’re from. It’s no surprise. You’ve likely poured your heart and soul into your work and perhaps made a decent impact. Who you are and what you do are intertwined. Start picking the threads apart, and you feel uneasy. It’s not just a question about what you’ll do in retirement. It’s a question about your purpose. And there’s no easy answer there. But you can start with understanding your financial position – for peace of mind that you’re free to choose.
Swings and roundabouts
Fans of Monty Python will be familiar with the sketch about The Ministry of Silly Walks. Absurd, yes, but hilarious because we’ve all at some point experienced the merry-go-round of trying to get a decent answer. When it comes to retirement, you’re either frustrated at the vague information or fed up with being sold some new investment product instead of being given solid answers. You know that it’s not swings and roundabouts. These are critical financial decisions that will someday, for better or for worse, come home to roost. The result? You’ve stopped asking. Yet that is not how a multi-billion-dollar industry based on funding our lives after we stop working is supposed to operate.
Thinking about retirement should not be in the too-hard basket or lost in vague marketing messages. Instead, it should be a time of clarity, confidence, and when a person can look back on their years of hard work knowing the next phase of their life is accounted for. So if you fit any of the five signs, please understand -there is a better way.
Was Pete Wilson an IFA?
No, I’m a software engineer. This article is thought provoking and I can recognise myself in parts. For many years I assumed I’d not have enough to retire earlier than my state pension. I’ve saved hard over the last few years though and in January 2021 (last year) I decided one more year and set a date for the end of this tax year. And now of course the markets are wobbling and I’m back at the “what if” stage. If I’m brave enough I’ll be handing in my notice about a month from now.
Peter I was an IFA in the UK but moved the licences to the EU when the 2016 changes were voted for. The conclusion I came to was that I could improve my discretionary spending power by changing my residence. At the same time I could enhance my wellbeing with year round sun, better diet and exercise. I took the view that equities was like surfing a bubble and bonds were an accident waiting to happen as after all they are just a promise to pay cash at a future date. Cash does not do well when inflation, resulting from excess debt, pandemic and brexit adjustments which are broadly negative. House prices in the UK at €17,000 sq m in Central London and buying at €3,000 Sq M releases even more capital to add to the “pension” pot. Inflation will be a bigger issue than the press are currently acknowledging. Taxes in the UK are only going one way adn social unrest could be the result of this caring Government. Spike Milligan was right The boy stood on the burning deck…..etc
If you can align your emotions, thoughts and actions into how you wish to make your money there is not a lot you cannot accomplish. However, nothing stays the same and the value of a job will change over time. Much of what the IFA does has nothing to do with investing but about navigating these changing values and limiting risk. There are more options than just equities, bonds and cash. The nudge of Government and Regulation add a direction to investment that may favour current policy or debt management at the expense of wealth accumulation for the individual