Planning for Tomorrow: A Guide to Retirement Planning

By Ashwell E. Thomas PhD.

Avoid the psychological, physical and financial woes in your senior years and ensure that your tomorrow is not left in the hands of others, but is guided by your thoughts and actions. This book will prepare you well for retirement by helping you learn:
• How to cope with the identity crisis retirement can bring.
• How to grow psychologically as physical resilience begins to slow down.
• How to determine how much it will cost to retire when you want, and to live the way you want during retirement.
• The role life expectancy plays in budgeting for retirement.
• What should be done in retirement with all the assets one has acquired during one's career.
• This book is dedicated to every working person; it is a must for every family.

• Language: English
• Publisher: BookBaby
• Release date: Jun 6, 2022
• ISBN: 9789769603820

Book preview

CHAPTER 1

UNDERSTANDING THE EFFECTS OF RETIREMENT

Defining Retirement

Arriving at a single definition for retirement proves challenging. It can take many forms, yet occur at different times depending on individual circumstances. Denton and Spencer (2008, p.3) express it this way, ‘retirement can be voluntary or involuntary; it can be gradual or sudden; and it can be temporary or permanent.’ Nonetheless, for the purpose of this book, the definition provided by Feldman (1994, p. 287) will be used: ‘retirement is the exit from an organisational position or career path of considerable duration, taken by individuals after middle age and taken with the intention of reduced psychological commitment to work thereafter.’

The Retirement Process

There are three conditions under which an employee may be offered retirement:

•First scenario – the employer advises the employee of their date of retirement, six or more months prior to their 60 th , 65 th or 67 th birthday (as applicable).

•Second scenario – the employer offers early retirement to an employee under 60, 65 or 67 years old, due to ill-health, consistently poor performance or based on the company’s staff rationalisation strategies (organisational changes) based on poor business results.

•Third scenario – the employee requests early retirement having passed age 55. Such requests may again be due to ill-health, personal reasons or a response to an employer’s call for voluntary separation due to poor business results or organisational changes.

Figure 1 illustrates a typical retirement process in both the private and public sectors.

Figure 1: The Retirement Process

Source: Thomas (2017)

Early Retirement

Early retirement is often triggered by dynamic circumstances which are usually treated differently, and introduces additional complications which may never arise with normal retirement.

Some employees may use early retirement as a way of fulfilling a hidden agenda (i.e. where their real, but undeclared intention is to move to a different organisation or career). There have been instances where individuals (usually managers or technical specialists) have been privately head-hunted and rather than simply resigning, they used early retirement as a way of maximising their personal gains.

Early retirement can offer a dignified way of leaving a stressful occupation.

Opting to leave through early retirement may also be a way of registering a protest. Individuals who have been struggling to keep up with the pace of change in their jobs, may reach the point where the level of stress they experience is no longer tolerable. In other instances where people have worked for an organisation for many years, they may feel as though they are no longer able to accept the changes which are taking place and apply for early retirement.

However, when early retirement has taken place due to redundancy or ill-health, there is need for further discussion.

Early Retirement and Redundancy

When individuals believe they have been forced into early retirement, (whether real or imagined), they are likely to feel abandoned and ignored by the company.

Some employees who have worked with an organisation for many years, sometimes set themselves targets. Attaining 30 or 40 years’ service may be something which is very important for them to achieve. If they feel pushed into early retirement or are made redundant a year or two before they reach their target, they often perceive it as a very real, personal failure. These individuals need to be treated very sensitively and will require skilled guidance to help them come to terms with what has happened.

Based on my experience, early retirement due to redundancy, occurs most often with middle managers in organisations undergoing massive changes. When early retirement is forced upon an employee due to restructuring, they may feel very angry. This anger can be manifested as reluctance or even outright refusal to accept any help offered. For those who have been made redundant, but still wish to find alternative employment, this can become an additional problem. Not only do they have to cope with feelings of rejection by their previous employer, but they may also anticipate similar rejection from potential employers. As a result, they may believe that they are of little (if any) value within society and underrate their skills and experience.

Persons responsible for coordinating training in organisations must be sensitive to such situations and find ways to help minimise any difficulties that may emerge. Likewise, company representatives (i.e. managers and supervisors) need to recognise that the structure which work provides, is fundamental for some people to function effectively. When the structure is removed, it can lead to a debilitating collapse.

To prevent this, it is important to:

•Respect how people feel and give them time and space to express those feelings.

•Help them appreciate their achievements in life so far.

•Reaffirm and encourage them to start believing that their skills and experience are never lost – skills may become a little rusty if not used, but they can soon be brushed up.

•Suggest that they look at other ways in which their talents can be utilised.

Early Retirement and Ill-health

Ill-health retirement can occur for many different reasons. An individual may have a long-term health problem which progressively affects different parts of the body (e.g., limb movements, sight, and speech), but may be able to continue working in the same job for many years. Others may not be so fortunate.

Where the degree of disability imposed by the illness, is such, that continuing to work in their normal job becomes impossible, employees should be encouraged to seek other employment which utilises their skills, without causing further health challenges. If other suitable employment cannot be found, then ill-health retirement may be the only remaining option.

Early discussions with management and exploring the pension options available will be important, so that alternative sources of funding can be arranged well in advance, if necessary.

It is very important to remember that ill-health retirement does not necessarily involve physical illnesses, but equally, mental illnesses and profound psychological problems.

Some of the circumstances under which ill-health retirement occur, are not always pleasant or controlled by the employee. Yet, it can be an eye opener and motivator to other employees, who must be reminded never to underscore the value of good health.

Retirement – A Major Life Transition

For all practical purposes, the expression ‘life transition’ may be referred to as a ‘life change.’ Everyone experiences such changes at some stage throughout his or her life. Some are major and cause significant upheaval in the way we live; others can be much less traumatic and are easily accommodated. Some occur as a result of growing older, and in this sense, cannot be avoided (e.g., starting and leaving school or retiring). Others occur as a result of choice (e.g., getting married or accepting a promotion at work). Similar transitions can take place for different people at different times (e.g., one might leave school at age 16, 18 or later and getting married could be anytime after adolescence). Nevertheless, as with any life transition, major changes come with retirement and negative reactions are common.

The first significant change one is likely to face is the economic impact of the absence of the pay cheque. You may feel uneasy as you wonder how much of the cheque will be replaced by income from pensions, investments, and savings. Will you be able to maintain your present lifestyle and do all the things you would have planned?

There are many things we can do to put our minds at rest about the financial impact of retirement (as referenced in Chapter 6).

The second significant change is the psychological impact of leaving the workforce. The level of impact (differing from person to person), would depend on how much the job has functioned as a source of identity, provided social contacts or occupied our time.

Many of us define ourselves by the work we do which may mean a loss of identity and self-worth in retirement. How often have we been asked or asked someone else, What do you do? If our work is perceived as a source of status and self-esteem, we may reply by sharing all the details of our jobs without revealing anything else.

We must take time to determine if it is only our work that defines us, or if there are other aspects of our lives that contribute to our status, identity and self-esteem.

We should be more concerned about being defined by our principles, standards and ethics which will remain with us as long as we live. The type of work we do, will have to be given up at some time.

When confronted with a major life change, there is a typical pattern one must go through to let go of the past and come to terms with the future. We can agree that this process is identified by a series of recognisable stages.

Stage 1 – Shock

The immediate reaction to major life changes is usually one of shock, disbelief and perhaps immobility. It is as if the enormity of what has happened is so great, it simply cannot be accepted by the individual. He or she may attempt to deny what has happened and refuse to acknowledge that anything has changed. Shock reactions may be perceived as automatic protective mechanisms, which we display when faced with experiences that we fear could be overwhelming.

Even when people have planned for retirement and are looking forward to it, the experience of the first few days will involve some measure of surprise. Although we may be aware that a change is about to take place, the experience is always nearly a little different from what was imagined beforehand.

With retirement, there are also other more extreme types of shock reactions. One