Adapt to Thrive

Patrick outlines these four key principles for making a success of retirement planning for this life stage, both financially and mentally:

Principle #1: Keep the plan and the planning holistic
“[Your plan] can’t be just about financials. It has to be holistic and structured within the means that are available to [you],” says Patrick. Holistic planning also takes into account how you manage your lifestyle, your own physical and mental stimulation needs, and those of your dependants. As these needs change, so will your plan.

Principle #2: Play open cards
Whatever your financial situation at the start of your retirement, don’t hide from it. Conversations with your partner, your financial adviser, your kids and with your life coach or retirement coach need to be honest and open. “You can’t change the past. You need to look forward, acknowledge what you have, and the lifestyle you may need to adapt to,” says Patrick. “Discuss it with your partner and start formulating your plan together – preferably before the retirement date.”

Principle #3: Don’t go it alone
Retirement can be overwhelming. Adapting to the changes ahead of you will take time and guidance, so lean on professionals who can help inform and guide the change management you’ll need to consider as you step across the retirement threshold. Your finances are also entering a new life stage, and you’ll need to make important decisions about these too. “You may not be able to undo many of these financial decisions,” cautions Patrick. “Invest in educating yourself about your options, so that when you have those conversations with your financial adviser, it’s not a one-way conversation and you can have a robust discussion about it.”

Principle #4: Stay involved in your plan
As your life changes, so will your plan, which is why it’s important to adapt it to keep it relevant. “Be alert to how your plan is performing against your expectations,” says Patrick. Have you factored in the time value of your money and whether your savings are protected from inflation? How can you manage your income stream for optimum longevity? Are your tax and estate planning needs taken into account? Asking these questions helps you stay involved in your retirement planning.

Living Annuities

A living annuity is invested in market-linked underlying investments – allowing you to benefit from the returns of an investment portfolio with market exposure. “Living annuities have many advantages including growth opportunities, flexibility and the ability to leave a legacy,” says Patrick. “But at the same time, you as the investor take on the risk in your personal capacity. This includes market risk i.e. a market downturn that could result in a drop in your capital, as well as longevity risk, which is the risk of outliving your money.”

The New Retirement Mantra: Stay Relevant…

In Andrew J Scott and Lynda Gratton’s The New Long Life, the professors of economics and management practice respectively at London Business School look at not just surviving but flourishing in a changing world. They suggest that our longer lives and greater technological disruption will mean more career shifts and transitions. “At times this will mean that you will need to upskill to safeguard your role while at other times you will need to reskill – to move into a completely different type of work,” write the authors. Other than to stay relevant, reskilling could be necessary if you don’t see yourself being able to meet the demands of your current job into your later years. “Physical activity and energy required, long hours or high stress levels are examples of factors which may not be sustainable in the long run for both physical and mental health reasons,” says Nike Wadds, Director at Stand Tall Consulting. “This will require a refocus and shift in your career to some degree.”

Whether you’re considering semi-retirement or continuing to work part-time, further education is what will keep you relevant for the evolving (and competitive) job market. “Since jobs will be displaced in the future of work, but not necessarily all the skills that make up a particular job, the way you think about what jobs you are able to do should change to what skills you have that can be employed,” suggests Lenwhin. Education into your later years not only ticks the upskilling box, but will maintain that all-important mental stimulation you’ve been used to throughout your career, which has its own rewards for your overall health.

The novelty of the new longer life expectancy is further layered with the constant challenge of youth unemployment, particularly in South Africa. Knowing that you need to continue earning to supplement your income, and are competing with those entering the job market, means you need to have a competitive edge. “You can’t take it for granted that your additional length in experience will clinch the deal,” says Nike. “If you want to succeed and remain competitive, you need to invest time in bettering yourself to ensure your expertise and skills remain current and sought after.”