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Saturday, June 22, 2024

Retirement Redesigned

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The Safety Net Paradox

This post is a duplication of our newsletter, The Weekly Reset, where we review a key theme each week. In the spotlight this week: The Safety Net Paradox. Are sufficient savings all we need to ensure a fulfilling retirement? Or do we need to prepare ourselves in other ways too?

A note from Johan

Retirement isn’t working

Trying to live off your savings in retirement is a misguided expectation

The fact is we are living longer. Retirement after reaching your sixties can last for another twenty-five or more years. The paradox that has to be resolved is that we see our savings as a safety net in retirement. The truth is that our life will outlive our savings. Maybe we cannot afford retirement.

Important as money is, it is the only platform from which to organise a satisfying retirement. The full issue is much wider. This was the key finding of a famous study on happiness conducted by Harvard University. The research started in 1938 and followed a group of 724 sophomore students throughout their lives. It assumed that a happy life would result from having built wealth, or that fame and prestige would do it. After 80 years, the finding is very different. It is that relationships and a good integration with friends and family is much more important.

Preparing for retirement, therefore, should not just be about saving money, but should also pay attention to several other critical factors. To be more effective in our relationships, which are often under strain in retirement, is important. Maybe we need relationship coaching and training to prepare for retirement. Lifestyle is also a major issue. So, of course, is health and how to manage mental wellness.

We have to give up the notion that retirement is a destination. Instead, we have to come to terms with the much more productive understanding of it as a journey. It is a stage of life that has to be negotiated just like the other stages of life. A better understanding of what retirement is will help to manage it more constructively.

Although I am working at it, I am finding retiring more challenging than I thought I would. I realise that there aren’t fixed guidelines to follow, and that I need to focus on what will make for a productive and satisfying life in my third chapter. I have to reset my retirement.


Our top pick this week:

3 Tips for a Smooth Transition into Retirement

Rocks with red carpet laid out on top
Matthias Clamer/Getty Images as featured in article by Harvard Business Review

“Like divorce and death, retirement involves an emotionally painful separation, where the basic challenge is around managing grief. Psychologists James Robertson and John Bowlby offer a useful description of the process based on their studies of children. The three stages they identify – protest, despair and detachment – lay out how we adjust to life after a separation. As is to be expected, some people go smoothly through these stages, while others struggle. For example, men living with a partner who is still working often experience retirement as a shameful and parasitic existence. Those feelings may well lead to depression and will even drive a few to early graves.

How can you make a transition less painful?

Invest in personal relationships. There’s no better place to start than home: spending time with friends and family. The famous Harvard Longitudinal Study is just one of many studies demonstrating that close personal relationships, more than money or fame, are what keep people happy.

Create networks beyond the office. Along with making time for personal relationships, people approaching the end of their careers should beging engaging themselves – if they haven’t already – in activities outside of the office. Volunteer work in the community, for example, can provide both a sense of bringing value as well as access to new relationships. Look also for opportunities to keep learning – for instance, by enrolling in a university program. Some find teaching to be an active outlet for their creative abilities. Guiding younger people and contributing to the success of the next generation can bring enormous satisfaction.

Find new outlets. Many retiring executives take on part-time or interim employment as consultants or board members for companies or nonprofits. You can also mentor budding entrepreneurs or young executives. As a mentor, you can provide answers to questions and offer suggestions that can make a big difference to younger people navigating the business world. And because networking is vital for company success, you can use your connections to give a jump-start to the people you are mentoring. You can even get actively involved in their ventures.

Click here to read the article on Forbes

Our Spotlight video:

The Safety Net Paradox

Every week we highlight a topic relevant to retirement and our third chapter of life. This week our spotlight was on The Safety Net Paradox. The focus on our savings safety net leads to neglect and under-preparation of other areas that are essential for our happiness and wellbeing in retirement.

How the focus on savings leaves many retirees unprepared and unhappy

Other highlights for the week:

A Happy Retirement is More Than Just Money

A man in a greenhouse
Nastasic | E+ | Getty Images as featured in article by CNBC

“Glossy financial planning brochures with couples in their mid-50s riding a sailboat notwithstanding, this is simply an unrealistic expectation for many households. Given our increasing life expectancy, accumulating enough money in 35 to 40 years of working to sustain us for the remainder of our lives is no easy task.

However, for many retirees, saving enough for those golden years is only part of the formula for a good retirement.

“The key to achieving an active, satisfying and happy retirement involves more than having adequate savings. It also entails interesting leisure activities, creative pursuits and mental and physical well-being.”

Click here to read the article on CNBC

Question of the Week

Do you know what will occupy your time in retirement?

Click here to answer the question in our Facebook group

Last weeks poll: Does your retirement planning extend beyond savings and financial issues?

Last weeks answer: Yes, planning for quality of life.

Most Popular Post of the Week

8 Things that matter more than money for a Happy Retirement

Click here to read the article on U.S News

Most Popular Quote of the Week

Often when you think you’re at the end of something, you’re at the beginning of something else.” Fred Rogers

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Quote by Fred Rogers - "Often when you think you're at the end of something, you're at the beginning of something else."
Fred Rogers Quote

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Johann is the founding partner of Reset Retirement where we focus on assisting people with planning for the non-financial aspects of their lives after full-time work. He had a long career in executive search and leadership as the founding partner and chairman of Heidrick & Struggles in South Africa where he was the head of the company’s board practice.