Finances vs lifestyle – the ‘chicken and egg’ of retirement planning
Research conducted by LaterLife, part of Jelf, has found that 57% of employed people over 55 have already considered their retirement finances.
It’s certainly a concern that this means 43% of over 55s haven’t thought about this subject, but our research suggests even those who have thought what money they’ll have and/or need in retirement may well be flawed in their approach.
Although the 57% figure is not as high as we would like, far fewer people had considered what their life might actually be like in retirement. Other than hobbies and leisure, less than 50% of people had considered the wider lifestyle aspects of retirement; things like: travel and holidays, health, relationships and continuing education.
The importance of lifestyle planning
So, if employees haven’t considered their lifestyle in retirement, then how can they be planning their finances for retirement? How can you know how much you’re going to need, if you haven’t thought about the life you’re planning to lead? We can only conclude that when individuals are considering their finances, they are focussed on an amount of money but with no clarity as to whether that’s enough or they must be thinking about their current lifestyle. That’s obviously not the life they will be living in retirement, and in fact it could be vastly different.
For example, only 15% of people had thought about their relationships in retirement and only 4% believed this to be important in their retirement planning (Finances still rank as the most important aspect of retirement planning for 37% of people). However, we know that loneliness is a huge issue for older people: Age UK found that 1.2 million people are chronically lonely and a survey by Gransnet in conjunction with the Jo Cox Commission on Loneliness found that almost three quarters of older people are lonely.
Another aspect ranking low on the scale was continuing education – only 8% of people had thought about this when planning their retirement. Actually your retirement is a great time to consider continued education, but if individuals haven’t had the time to consider what they might do, it’s unlikely to have factored into their planning yet.
In contrast, health and fitness was a topic that nearly half of people had considered (48%). Although you may need to think about saving for ill-health later on in your life, looking after your health and fitness isn’t necessarily going to take up a lot of your financial resources when you first retire. So it’s clear that employees need to take more time to consider their changed lifestyle in retirement and how this will affect their finances.
How should you plan for your lifestyle in retirement?
In our work with clients we talk about the importance of physical fitness in retirement alongside financial fitness, but are also keen to impress the need to be mentally fit and socially fit (the importance of growing and maintaining a social network). These four pillars are all key to people being able to enjoy retirement.
What’s important for employees is that they are given an opportunity to plan for all the important aspects of their retirement, and that they are made aware of things that hadn’t necessarily considered previously.
For more information visit our Workplace Retirement Support section.