While the thought of retirement might be blissful, retirement itself – which can span a period of 30 years or more, depending on when you retire – can be anything but. In fact, some of the most stressful life events are destined to happened to us during our retirement years, with many being a function of aging. In this article, we explore those events that cause stress at and in retirement, and how to deal with them.
Transition from work to retirement
After the smiles, handshakes and farewells – followed by a brief honeymoon period – the reality of retirement often sets in. Many retirees attest to going through an emotional adjustment from being an economically active, valuable member of a workforce to staying at home feeling unproductive. Many struggle to adjust from having a back-to-back routine which left them feeling pressured and ‘time poor’ to having an empty diary, zero time pressures and no external forces telling them where they need to be. This sudden transition can leave many retirees feeling directionless and void of purpose. Over time, however, most retirees succeed in building a new identity and purpose for themselves which defines who they are in their retirement years and helps create a new landscape for their future. That said, the transition period can be particularly stressful for many retirees, especially those who held high-powered positions or who had hectic pre-retirement schedules. To ease the transition, many retirees prefer to structure a phased-in retirement approach where they negotiate reduced working hours, three-day weekends, or more flexible working hours. This allows the retiree to get a feel for retirement before committing to the permanence of it.
Change from saving to drawing
The act of retirement marks the transition from saving towards retirement to drawing down from your retirement capital, and this transactional change can have far reaching emotional effects on retirees. Retirement capital is finite, the amount of time it needs to last is a huge unknown, and no one can predict the movement of investment markets over the long term – making the transition from saving to drawing a daunting one. There are many assumptions that need to be built into a retirement plan and getting them wrong can significantly impact your retirement outlook. Ideally, retirees should work closely with an experienced advisor in the years leading up to retirement to ensure that the retirement plan is robust enough to withstand its assumptions being tested. Detailed retirement scenarios and post-retirement cashflow modelling will help give you confidence that your retirement plan can hold up over time.
Death of a spouse
Death of a spouse is considered the single most stressful life event and, inevitably, most of us are more likely to lose a spouse during our retirement years that in any other life stage. Retired couples tend to be more dependent on each other in retirement as they rely on each other for care, company and companionship, which makes losing a spouse later in life particularly devastating. The loneliness and grief which many retirees feel after the death of a spouse can be overwhelming, which in turn can affect the health – both mental and physical – of the surviving spouse. Facing a retirement alone after dreaming of a joint retirement can completely change one’s retirement landscape and outlook, not least of all from a financial planning perspective. Ideally, your retirement plan should include what we refer to as ‘first-dying’ and ‘second-dying’ scenarios so that you and your spouse each have a clear financial picture of what retired life would look like without the other.
Selling family home
One of the most emotive decisions that retirees have to make is when to sell the family home and downscale to a suitable retirement home. The family home is often considered the last bastion of one’s pre-retirement life because it houses memories of one’s younger children, life as a complete family unit, and happy times of togetherness. In our experience, many retirees tend to hold onto the family home much longer than is necessary which makes letting go of it later in life even harder. From a retirement planning perspective, we always try to probe the underlying reasons for wanting to hold onto a larger property when in fact most retirees attest to feeling overwhelmed at having to maintain and upkeep a large home. As retirees age, many find it both physically and financially challenging to keep up with the maintenance needs of a large property at which point they begin looking for a smaller retirement home to downscale to. From a re-sale perspective, it often makes better financial sense to sell the family home while it is still in good shape and is well-maintained rather than sell it later on in retirement when its finishes may be outdated and in need of replacing. When doing your retirement planning exercises, ask your advisor to model a scenario in which you downscale your primary home early on in retirement as opposed to selling it later in your retirement so that you can see what the financial implications would be.
As a function of aging, death becomes more pervasive as retirees get older. Experiencing friends and acquaintances falling ill and dying is depressing, morbid and sad – and this can lead to what is referred to as death anxiety. The more we experience death around us, the more real the process of dying and death itself becomes, and this can lead retirees to begin fixated on their own reducing longevity and death.
Adult children emigrating
The emotional impact of adult children emigrating from South Africa was brought starkly into the spotlight during last year’s hard lockdown where the plight of many isolated and lonely old people confined to retirement homes was noted. Many older people whose adult children have left the country struggle without such a support system. According to the United Nation’s dataset, the number of South African-born persons residing outside of South Africa increased from 330 000 in 1990 to 900 000 in 2017 – an average of 21 000 South Africans per year. As retirees age, their capacity to tolerate long haul flights diminishes and the very real fear of never seeing their children or grandchildren again starts setting in. As their health and physical capacity diminished, retirees also fear being vulnerable, alone and unsupported in their old age. If you do have adult children who have emigrated or who are contemplating emigrating, it is essential that your own retirement plan takes account of this. Firstly, it is important to budget for overseas travel in the early stages of your retirement. Thereafter, you may want to consider budgeting for frail care or assisted living facilities later in your retirement.
Running out of capital
With the vast majority of South Africans being severely underfunded for retirement, running out of capital is a very real fear of most retirees. The stress of living off a fixed income amidst escalating costs of living and turbulent investment markets cannot be understated. The best way to allay these fears is to meet regularly with your advisor to review your plan and to ensure that your expenditure remains controlled and in line with your budget.
Boredom and depression
Many retirees are at risk of suffering from boredom and depression in their retirement years, especially as their friends and loved ones fall ill or pass on. This can be exacerbated when adult children move overseas or where they are forced to move into frail care. From our experience, pre-retirees need to give more careful thought and planning around what they actually intend doing in retirement. As a relatively healthy 65 year old, you have to consider the reality of being retired for 30 years and give careful thought how you intend to spend your time. If you haven’t carefully planned for an active, socially engaged retirement, boredom and depression could be realities for you. When drafting your retirement plan, ensure that your hobbies, entertainment and activities are budgeted for so that you do not find yourself in a position where you are unable to afford the lifestyle you wanted in retirement.
Physical incapacity can be enormously frustrating for retirees as it hampers their ability to get around, perform their daily activities, engage in exercise, and attend to their personal affairs. As retirees become less mobile, possibly even losing the ability to drive, they inevitably become more dependent on others to assist them. This can be enormously stressful particularly where their adult children live far away or overseas, or where they don’t have a reliable support system that they can rely on. From a planning perspective, retirees who suffer from physical incapacity may need to consider giving a loved one or close friend a power of attorney over their affairs as this will make it easier for them to transact and manage their affairs, especially when it comes to standing in queues at banks, home affairs or other departments.
A dementia diagnosis is devastating for all parties involved, but from a financial planning point of view there is much that can be done in terms of future planning. If you’re concerned about your mental acuity, it is better from both a medical and financial perspective to get an early diagnosis. Waiting until your mental faculties have substantially deteriorated may inhibit your ability to put effective plans in place to have your affairs managed – for instance, if you lack full mental capacity you will be unable to update your Will or enter into contracts. An early diagnosis will also allow you and your advisor to make provision in your plan for private nursing, home care or whatever type of care you envisage for yourself.
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