The Realities of Retirement

The realities you face when you stop working might be a far cry from your retirement dream. For many of us, retiring broke or not being able to retire at all are among the worst-case scenarios. Even if your situation isn’t quite so bleak as the above scenario, there are plenty of other snags you might encounter. If you haven't properly prepared for leaving the working world and living without a regular salary, you'll have to face the ugly truths about retirement.

All of these ten parts have one thing in common, it’s about the planning and the one thing that we do, is help you plan. If you want to secure the very best retirement plan, come and talk to us.

Here are my pointers about the ten parts of retirement that no-one wants to talk about...

1. Many people don’t know how much they need to have saved

You might have diligently been setting aside money for the future and have a big nest egg now, but it might not last long in retirement when the cost of living is high.

Unfortunately, when people set retirement savings goals, they often do so without knowing how much they'll need each month to cover expenses in retirement. That’s why creating an income plan is so important to ensure you’re not left short when retirement comes.

2. Inflation Can Impact Your Retirement Income Needs

As you calculate your retirement income needs, you'll need to take inflation into account because inflation affects your purchasing power. Current times are a stark reminder of the power of inflation with everyone noticing an increase in food, interest rates/renting, petrol and more. This is where having a good retirement plan can work- where your investment decisions are made for the short, medium and long term

3. You Might Outlive Your Savings

Most people want to live a long, healthy life but this can be a downside to retirement for those without adequate savings. To be safe though, your plan needs to provide you with enough income to meet your needs for potentially 30 years.

It is also not uncommon for there to be an increase in health issues in ones later years which can prove expensive. Whenever possible, it is ideal to factor this unfortunate possibility in to your retirement plans to avoid passing on the cost of your care to your loved ones.

4. Medical Insurance Costs May Impact your Savings

If you need to cover the costs of unexpected medical treatment, this will likely impact your retirement savings, unless you have insurance cover. While insurance typically becomes more expensive as you get older and many look to go without, it should be considered if your retirement savings would be able to cope if you fall ill.

If you haven't factored healthcare costs into your retirement savings and spending calculations, you might have trouble paying for medical care in retirement.

5. You Might Become Bored

Getting your financial house in order before retirement is important. Don't overlook how you'll stay relevant or spend your time being impactful in your golden years. Consider a bucket list and cross off all the things you want to do. Many people in their retirement years want to travel or relocate in some situations in which case it is vital to understand how this impacts your finances and retirement plan.

6. You May Have to Keep Working

You might have to go back to work after you retire for a variety of reasons. And it might not just be part-time work.

There's a higher percentage of older workers who now work full-time rather than part-time in retirement, simply because they have to.

7. You Might Have to Move in With Your Kids

An overwhelming majority of parents don't expect any financial support from their children in retirement, but that doesn't mean you won't end up turning to them for help.

As referenced in points 3 and 4, those who move in with their kids are usually forced to do so because of economic distress. That’s why it’s important to make your retirement savings a priority.

8. You May Feel Guilty About Spending Your Savings

If you've spent years pinching pennies so you can build your nest egg, you might be ready to retire to enjoy the fruits of your labour. You could find that breaking out of your frugal mindset is difficult because you've developed an addiction to saving money.

If this sounds like you, we recommend creating a budget so you can feel confident that you’ve planned for this stage of life and are able to enjoy spending guilt-free.

9. Moving Might Be a Bad Idea

Selling your home and relocating to a cheaper property might seem like a smart financial move in retirement, but not if you have to move away from those that you are closest to. Starting again can also be very difficult.

10. Keeping Up with Your Friends May Be Harder

You might have more time to hang out with your friends in retirement. But once you start socializing more frequently and planning activities together, problems might arise.

To avoid having to feel like you must keep up with your friends, be the one who suggests things in line with your budget and don't be afraid to decline invitations to things that you simply can’t afford.