Retirement requires sound financial planning. If you have been looking forward to retirement it may come as a nasty shock if you discover you will have to keep working. Have you thought through the ramifications of retirement? Thankfully, Britannia can help.

Dr Nicole Maestas, associate professor at Harvard Medical School, who studies the economics of aging, health, and disability, says working after 65 can be both good and bad for you in terms of your physical and mental health. In terms of your financial health you may have no choice if you haven’t planned correctly in the first place. One of the most important things people forget is that we are living longer than ever before. As they say, 60 is the new 40! People are better educated and healthier now than they’ve ever been. Reaching the age of 90, or more, is no longer the exception, it has become the norm. Very few have sound financial planning that covers a retirement of possibly 35 years. And women live longer than men in most cases.

When your job gives you a sense of purpose and satisfaction, and you still have so much to give in terms of a lifetime of skills, wisdom and experience and being able to mentor younger members of staff, retirement can feel like a death sentence. Working also helps you maintain social contacts. In 2015, an American study was conducted of 83,000 older adults. The results suggested that, those who worked beyond 65 were nearly three times more likely to enjoy good health and fifty percent less likely to suffer from serious health problems, such as cancer or heart disease, dementia, and heart attacks.

Nicole Maestas, an associate professor of health care policy at Harvard Medical School who studies the economics of aging, health, and disability says that if you don’t enjoy your job, or you feel it has no purpose or meaning, then the recurrent stress of that can be a risk factor for ‘burn-out’, injury, coronary artery disease or stroke. Retiring from that job can reduce both mental and physical fatigue, as well as depression. Retirement in that case would be good for you and enable you to start your own company doing something you love or take up something more meaningful, like volunteer work.

Jean, a key member of our team who has passed ‘normal retirement age’, has kept working for reasons just like these. “I have been with Britannia for just over 10 years and have picked up quite a bit of historical knowledge. That can be of value to our members at times. Retirees who are coming up to 60 or 65, hang in there, age is just a number. You are valuable and still able to contribute. If you are able to keep working, the stimulation you receive from your work mates, plus working your brain to try and keep up with new things can be challenging but also extremely rewarding. It can also provide you with extra disposable income to enjoy and for spending on the grandchildren.”

If you are in Jean’s position, that’s great. But what you don’t want to do is keep working because you have no choice. What’s very disturbing is that almost half of New Zealanders plan to keep working to boost their retirement fund. In a 2018 BNZ Financial Futures survey of over 2000 people, it was discovered that 18% had no plans to retire and 30% intended to work part-time. Which, if it’s being done because they enjoy working, is great. If it’s being done because finances dictate it, that’s a financial plan unlikely to bring joy to one’s heart.

Money, though, is a major factor when it comes to your retirement choices. More than half the people surveyed used post-retirement age employment to pay for non-essential things like travel, while 31% said they needed the money to pay essential bills.

Aside from employment, the BNZ survey found the majority of New Zealanders had back-up plans: superannuation savings, either old-school workplace schemes, or KiwiSaver funds, to support an above-pension-level lifestyle. Another 34% had income outside superannuation, such as rental properties or shares. Approximately a quarter expected to generate retirement spending money by downsizing their homes.

Paul Carter, BNZ Director of Retail and Marketing, said the bank’s 2018 survey highlighted the fact that there’s a vast gulf between those who choose to work in retirement and those who have no choice. However, he also offered an optimistic view when he said, “There’s a real opportunity for people to narrow that gap by being more proactive about their financial planning.”

US financial giant JP Morgan suggests that retirees can manage both spending and income uncertainty by matching ‘dependable income sources with fixed retirement expenses, while coordinating other investments with more discretionary expenses’. They list annuities as one way to lock in a ‘dependable income source’. In New Zealand, our Lifetime Retirement Income Fund offers certainty around having a lifetime income.

What are your retirement plans? Will you need to keep working because you have no choice, or would you rather be over 65 and not worry about your financial situation? You can never start planning too early. It’s always a good idea to get expert advice on how to begin your retirement planning and to ensure you are still on track.

Call Britannia Financial today and make an appointment with one of our financial advisers to ensure your financial planning for your retirement is on track.

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Disclosure Statements for our Authorised Financial Advisers are available on request and free of charge. Product Disclosure Statements for the Britannia Retirement Scheme and the Integral Master Trust are available from the schemes’ issuer, Britannia Financial Services Limited, phone 0800 500 811
Britannia Financial Services Limited is a Registered Financial Service Provider.

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