Jun 21, 2023 Chitty Mahanivong
Retirement planning: it’s not all about the money
Retirement is often a massive life change for the majority of people who experience it. Most of us will have mixed emotions around the end of our working life and the beginning of our ‘second half’. For some it will be a relief, and something they have long planned for and are looking forward to, but for others it will be a source of anxiety. This anxiety could be due to many factors including, but not limited to, concerns around the potential for running out of money, feelings associated with a lack of confidence or a lack of control and other factors we will discuss here.
While individuals’ wealth and health are obviously important for anyone heading into retirement, we have found there are other factors that are usually more important in determining the life satisfaction for retirees.
Surprising results on retirement happiness
“Retirement: The now and the then” a survey of over 1,500 Australians over the age of 50 by Fidelity International, drilled into the many factors driving happiness for retirees, with some surprising results.
The survey found that the top four drivers of overall life satisfaction for experienced retirees – i.e. those with more than 10 years living in retirement – were:
- confidence, and
- emotional experience.
Emotional experience relates to the sense of optimism and contentment that retirees feel. It was the strongest driver of overall life satisfaction and significantly more important that health and wealth.
Positive emotional experiences often correlate with retirement journeys that have been well considered and planned, or ones in which despite retirees’ plans not having worked out, they had a Plan B or a backup plan. Negative emotional experiences are often felt by those people who may not have planned adequately and may have been forced into retirement through job loss or other factors out of their control.
Promoting a good life
In thinking about how best to prepare for a long and fulfilling retirement, we believe that there are six key building blocks that are important elements of any plan.
We call these the six Cs:
Firstly, there is capability, which is the agency and ability to act and adapt to optimise a good life trajectory. If a retiree has the capability, they have the potential to turn a negative emotional experience into a more positive one.
Then there is confidence, or the peace of mind and optimism to keep looking forward to a good life while still enjoying your existing life. We may all wish we had a bit more confidence sometimes, but this is more about inner confidence and the belief that you have made the right choices and are living, and will continue to live, a good life.
Control is another C. This is about feeling like the master of your destiny while avoiding the pain of uncertainty and failed expectation. Obviously being forced into retirement through a job loss or redundancy is a lack of control but having a plan B already in place can help regain that sense of control.
Circumstance is how we like to bundle health and wealth together. These are critical components for enjoying a good life. A major health problem can derail an otherwise planned retirement but if the other Cs are all there, the overall experience will be better.
Character refers to self-esteem and a person’s resilience. These factors can ensure a positive inner narrative which is important for a good life. Again, having the character and discipline to have a plan B already in place, to have a flexible disposition and a positive outlook significantly helps build resilience to life’s unexpected turns.
And finally, there is connection, which refers to a sense of connection with family and the community. Quality relationships and being able to look beyond, or transcend, a purely inward focus are central pillars of a good life. It turns out thinking of others is also good for us too.
Source: Reproduced with permission of Fidelity Australia.