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Fear of the unknown can be addressed by making a plan.
Fear of retirement is now one of life’s top stress-inducing events. For people who have a fear of retirement, an average of 40% fear it more than they fear death.
In fact, even the thought of planning for retirement is ranked more stressful than divorce by the 40-44 age group of a recent U.S. study.
A 2022 U.K. survey, the abrdn.com Class of 2022 Retirement Report, confirms that Americans are not alone in the fear of retirement. Indeed, more than half of the surveyed U.K. adults aged 40 or more are anxious about retiring. And, both emotional and financial reasons are driving the fear.
For example, U.K. citizens’ fear of retirement includes concerns about how they’ll fill their time, financial worries, and feeling a loss of their identity.
Furthermore, almost one in five say they’re planning to delay retirement due to anxiety.
Surprising age differences in fear
Interestingly, younger people have a greater fear of retirement than older folks.
When comparing the fear of death to of the fear of retirement, 52% of people aged 39 and under fear retirement more. Conversely, just 33% of the survey respondents aged 39 and older feared retirement more than death.
Although fear of retirement is significant for them, many younger people don’t even think they’ll have the opportunity to retire. They’re just as scared of not retiring at all.
Fear affects all aspects of life
The research reveals that the anxiety people experience about retirement affects all aspects of their lives:
- Nearly one in 10 have sought medical help for their retirement worries.
- 16% said that feeling anxious about retirement has kept them up at night.
- 13% say that their personal life and relationships have been impacted.
- 14% say that it’s affected their work.
As the fear of retirement reaches into the fabric of life, many find they are struggling with anxiety and depression. While these serious conditions affect millions of people across the world, older generations are shown to be the most affected group.
“It’s important to deal with stressors because your chances of a heart attack, stroke, cancer, or early death are lower if you have less stress,” says Amit Sood, a professor of medicine at the Mayo Clinic in Rochester, Minnesota and author of The Mayo Clinic Guide to Stress-Free Living.
Contributing factors to fear
The U.K. research carried out by abrdn found the things that are causing the fear of retirement. People could choose more than one factor, so the percentages don’t add up to 100.
- 58% attribute their anxiety to not having saved enough money throughout their lifetime.
- 57% blame the cost-of-living crisis for their anxiety.
- 45% cite worries about the current economy, and its impact on investments and pensions.
- 20% are worried about being pigeonholed as old.
- 17% are concerned about losing their identity when they stop work.
Additionally, people are concerned about their lack of retirement planning. More than a fifth say they’re embarrassed about their lack of planning. Unfortunately, 15% are nervous about getting advice.
Face the fear
The fear of the unknown greatly contributes to people’s fear of retirement, and of retirement planning.
So, by making the unknown known, anxiety is reduced. Here are some ways to do this.
Understand how much money is needed
A professional financial advisor can help identify the amount of money needed for retirement.
Granted, professional advice is the best. However, in the U.K., Citizen’s Advice has good information where people can learn what a financial advisor should do for their clients.
Also, there are online calculators that help people get an idea of how much they’ll need to save to meet their requirements in retirement.
Furthermore, in the U.K., ageuk.org.uk is a helpful site to estimate the monetary benefits you can plan on. The MoneyHelper website is a free and impartial source of guidance on pensions and retirement, including phone and online support from their team of pension experts.
Think about work differently
In order to ease the fear of retirement, many people decide to continue working past their earliest retirement age and beyond. For some, it’s because they need the income. For others, working makes them more social, more stimulated, and ultimately, happier.
It’s a trend that’s growing in popularity. A total of 66% of retirees in abrdn’s survey say they plan to do some form of work in retirement.
This work may not be full-time or high stress. For example, some people stay with their current company and reduce their hours. Alternatively, some get a new part-time job. Eventually, some decide to start their own business doing something they love.
Working while receiving retirement benefits can be tricky
Importantly, according to Ed Monk, Associate Director of Personal Investing at Fidelity International, “U.K. retirees who are considering going back to work part-time should be aware of the impact this could have on their pension. Especially if they have already, or are planning on, accessing it.
Because under the Money Purchase Annual Allowance (MPAA), once you take any money from a tax-efficient pension, you can then only contribute up to £4,000 per year to your pensions while benefiting from tax relief. Compared with the full annual allowance of £40,000, this could make a big difference to your future income in retirement.”
For Americans, the rules for working while drawing social security benefits are complex. A qualified financial advisor can help. The Social Security Administration explains the current rules here.
Prioritize mental health
The U.K.’s M&G Wealth Retirement Revisited Report shows that 42% of those surveyed are concerned that they’ll be bored in retirement.
Additionally, fear of loneliness in retirement affects 42%. And 23% are afraid that spending more time with their partner in retirement could lead to divorce or separation.
Sood says the keys to lowering your stress include creatively tackling your stressors, having an attitude of gratitude, accepting people, especially your spouse, for who they are, and being kind to others and yourself.
“Realize that your brain’s reward center likes variety, so give yourself a variety of experiences,” Sood says. “Let your best friends not be the TV, refrigerator, or couch. Let your best friends be real people, books, and sports shoes.”
Another stress-reduction strategy comes from Steve Brody, a psychologist in Cambria, Calif, who says to beware of ‘awfulizing’ and ‘catastrophizing’ your situation. Instead, Brody says to “Change your way of thinking. Instead of telling yourself, ‘You won’t be able to make ends meet’, think, ‘I don’t have as much money as I’d like, but I have $2,500 a month, and I can live on that.'”
Take advantage of help and support
There are numerous places to talk about the fear of retirement and the factors compounding that anxiety.
For example, one of the best places to start may be a general practitioner. Doctors are used to supporting people with mental health issues. They’ll listen, have knowledge of local support groups and can prescribe counseling, medication, or both if need be.
Those in the U.S. also have multiple sources of information to help ease the fear of retirement. For example, USA.gov covers many topics. Also, see the U.S.’s Department of Labor Top 10 Ways to Prepare for Retirement.
Consider getting professional financial advice
Ultimately, getting financial advice can help those thinking about their retirement feel better prepared. By identifying goals and resources, a solid plan can replace fear with confidence.
Aisa International, s.r.o. is a wealth management firm with an award-winning team who provides investment advice, financial planning, and asset management for U.S., U.K., and E.U. expatriate citizens residing abroad. Holding all current regulatory licenses, including the FCA license in the UK and the Investment Licence in the European Union, Aisa International is uniquely qualified to provide personal financial advice for U.K. pensioners living outside of the U.K. Headquartered in Prague, Czech Republic, Aisa International serves its global clients where they reside through its OpesFidelio network of highly-qualified advisors. For more information, please visit www.asiainternational.cz.
The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
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