To retire or not to retire - at 65 - that is the question
06 November 2017
By David Crossley, happy 64 year-old, CFP® and Business Manager at BDO Wealth Advisers
Historically, the age 65 has attained that almost mythical status of being “The” age at which people retire from the work place and fade away into the, once again, mythical connotation of retirement and living out the rest of their days in glorious leisure and contemplation.
This might have been the case in the 1950’s through to the 1970’s where retired people were subject to the ruling mortality of the age and were generally dead within 10 to 15 years of retirement, but a great deal has changed around the world since then and probably more so in South Africa.
In addition, the spectre of inflation and retrenchment was yet to become the challenge that they are today.
So, what has changed and why is the idea of retirement not so utopian as it was?
- Mortality – People are living longer and people in their sixties are likely to have a good twenty to twenty-five years of active lifestyle ahead of them. They are, by far and away, more mentally alert and able to continue working than their fathers and grandfathers.
- Financial security – Even in the western world where the State assumes a reasonable level of financial support when it comes to pension benefits, there are many people approaching this mythical retirement age without the necessary financial security to opt out of earning an income. This is more acute in South Africa where what little the State is able to pay is only available to people who are virtually destitute and even then the income is barely going to assist to keep the individual above the poverty datum line.
- In the corporate world of South Africa, there exist dynamics that are not necessarily present in western countries. We are struggling to balance the books when it comes to equality of employment and more and more companies are having to look beyond the traditional white male and female employee towards a more equality based employment philosophy. Employees approaching the 65 retirement age may find that to be retained by their employer, even on a contractual basis will not be possible.
- The economy – In times of economic uncertainty, companies are unlikely to want to hire new employees, let alone retain those who reach retirement age. They may even adopt a more radical approach and decline to renew any contracted staff, as well as to look at the older staff within the organisation with a view to offering them early retirement.
So where does this leave the likes of you and me, working in a corporate environment and approaching the stipulated retirement age?
In my opinion, there are a number of options that have to be considered before the inevitable date arrives and you are unceremoniously launched into “retirement.”
- Start to prepare yourself mentally, at least a year, before your official retirement age. Understand that your company may not have a place for you after your official retirement age and that you may have to “make a plan”. This will dampen the psychological aspect of working one day and then not having to go to work the next day – something which has catastrophic consequences for some unfortunate people.
- If you are in a professional occupation, your options will be far more varied and secure. Consider setting up a small consultancy and attract a select group of clients who would rather deal with you than with your company after you have left.
- If you are not in a professional occupation, consider whether your interests or hobbies could be turned into an income producing business. For example, if you are a keen gardener, why not turn your hand to landscaping once you have attended an appropriate course?
- Network your colleagues and friends and tell them about your impending retirement – you will be surprised at some of the opportunities that this can generate.
In my discussions with younger people, I always warn them that retirement, like death is something that will arrive at some time in the future and that planning for both eventualities will go a long way towards making the transition from full time employment to “part-time retirement” easier both from the financial and psychological point of view.
Have a discussion with a competent Financial Planner and share some of your hopes and fears regarding retirement – he or she is well qualified to advise you on the future from a financial and lifestyle point of view.
Happy 65 and beyond!
*With apologies to Shakespeare and Hamlet!
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