In many corporate organizations, 60 is the retirement age, whether you are ready or not, and even when you have so much more of your talent and experience to give. It can be quite disconcerting and unsettling to have to move on, particularly if you are not mentally and financially prepared. Research suggests that life after 60 can be one of the most challenging and uncertain times of life. If planned for, however, it can and indeed should be the most fulfilling and rewarding time.
What will you do? Will you take some time off as you consider your next steps? Perhaps you want to start a business of your own, travel, do something completely different, give more focus to your legacy, or truly retire in the traditional sense of relaxing and taking things easy and doing just what you wish to do.
Whatever you choose to do, life after 60 should be an exciting and fresh new canvas that gives you the freedom to follow your dreams. You have worked for so many years perhaps with not enough time to do all the things that you love. Now you are relatively free from intense family and career commitments; you can travel, focus on yourself, and enjoy new experiences, but only if you can afford it, or if your loved ones are willing and able to fund the lifestyle you deserve.
Financial independence typically means having enough income to pay for your living expenses for the rest of your life without having to work full time unless you wish to do so. Here are some strategies that successful sixty-somethings have applied to make the best of this time.
Health is Wealth
Good health is key to a successful retirement. The endless opportunities in retirement can only be attained if you have invested carefully and remained healthy. Healthcare costs tend to increase as you age, so preventive medical attention including regular screening and a healthy lifestyle is essential. Protect your later years by taking care of your physical and mental health with enough rest, regular exercise, and a healthy diet.
Ideally your medical insurance should have been in place for decades before now, but even if you have no cover, put something in place as soon as possible. Even the most elaborate retirement plans can be totally decimated if you find yourself in poor health and without adequate health insurance in place.
Cut back on your expenses
Entering retirement should force us to rethink every aspect of our financial situation. You may be forced to give up some of the luxuries that were accustomed to. Be prepared to adjust your lifestyle and spending habits as appropriate and if necessary, that is, if you have not put in place assets that pay you passive income for some 30 more years.
It can be particularly challenging where you have been a corporate executive for many years with perks that you took for-granted and never costed. Some of the most vulnerable are those retiring from senior leadership roles in the private or public sectors with all the attendant perks. For those still working, don’t be complacent; as you enjoy all the trappings, be sure to give attention to building your own assets by saving and investing, for a time that will surely come.
Be mindful of debt
While you are working, debt can be a nuisance, but can be managed with sufficient regular income coming in but it can be a huge burden particularly where you are no longer earning. Even if you cannot afford to pay it off completely, try to reduce it, particularly the high interest debt. With overwhelming debt, it will be impossible to retire in financial security, so this must be tackled head on.
Will your pension be enough?
Living solely on a pension is impossible for most people; you will need other sources of passive income from personal savings and investments to be able to maintain the lifestyle you have grown accustomed to, and to meet your obligations.
Your current income is a good starting point for calculating how much you will need. Experts suggest that one may need between 60% and 80% of current income to maintain your current lifestyle in retirement.
Give some focus to acquiring assets that can appreciate in value and generate passive income. Interest from your bank deposits is a reliable, predictable form of income. Property is one of the most dependable assets when carefully acquired with professional guidance. It is a great source of passive rental income when chosen right.
The stock market has a good long-term track record, and many successful investors have built significant wealth this way earning regular income from dividends or selling stocks that have appreciated in value. Every investment opportunity comes with risk so do seek professional advice.
It is not uncommon to work well into your golden years. If you cannot afford to retire just yet, consider easing into retirement by working part time. You may have to postpone retirement or revise your retirement goals downwards, particularly if your family members are not in a position to fully support you. A few more years of earning can make all the difference; this will give you time to accumulate and invest additional funds for retirement.
Many people are still fully engaged in some activity or other well into their seventies and even beyond and living a full and fulfilled life. But remember that the aim should be to work because you want to, and not because you have to.
Where can additional income come from?
What do you love to do that you are very good at? Can you monetize it? Explore opportunities that can earn you additional income without losing focus on your primary objectives.
If you left your former employment well, you may be able to offer your services on a project or consulting basis for a few hours a month. Remember you have garnered so much knowledge over decades; use it. Consider writing a book, getting into the corporate speaking circuit to impart knowledge. Such opportunities keep you mentally active, relevant and earning.
Are you a gardener? Are you a talented interior designer? Are you a great cook?
Do you love to bake? Do you have special subject skills that you can teach? There are so many opportunities to keep you earning from what you already know. Just start. Choose what you love.
Seek professional advice
A financial advisor will review your specific situation, taking into account your risk tolerance, financial status, your goals and your family situation, and help you develop a financial plan to include short term and long-term investments. But the onus is on you to develop your understanding of the basic financial principles, as you must ultimately take responsibility for your financial future.
Don’t be derailed by peer pressure
Particularly in a somewhat ostentatious society such as ours, many feel pressured to dip into their retirement funds just to keep up appearances especially after leaving a high profile or prestigious role. This is one of the surest and quickest ways to financial ruin. You cannot know the details of anyone’s journey. Stay focused on your own goals and plans and not someone else’s.
60 is a landmark, but a relatively short time in the life of a nation. Just as we must assess our country at 62, take stock, learn from our mistakes and failings, and strive to do far better, take a look at yourself and make the necessary changes.
As life spans are getting longer, it is not unusual nowadays to spend 25 or more years in retirement. Careful planning is necessary to build substantial savings reserves now to be sure that your financial resources can last as long as you hope to do.