The Psychology of Retirement

 

These days the line between work and retirement is increasingly difficult to define. How, when and in what manner it occurs is less certain than in the past. Its very meaning has changed with many people continuing to work even though they claim to have ‘retired’.

And, despite its inevitability in one form or another, many individuals still fail to plan adequately for its arrival. For example, a new report from financial services company MGM Advantage claims that “three in five (60%) over 55s admit to being unprepared for retirement”.

Thus the relevance to those interested in older workers of a valuable and interesting new book: The Psychology of Retirement – coping with the transition from work*. It is written by Derek Milne who retired as the Director of the Newcastle University Doctorate in Clinical Psychology training programme in 2012.

Unlike most other guides to retirement which tend to deal with the practicalities of growing older outside of full-time work, this enlightening handbook tackles the unspoken issue that many people find the transition to a happy and fulfilling retirement difficult and stressful.

In response, the book draws on proven psychological coping strategies to aid the process of coping with retirement, ensuring that individuals are able to gain a better understanding of the realities of retirement and maximize their enjoyment of a key period of life.

Incorporating the author’s personal experience, real-life case studies, the latest research and well-established theories, The Psychology of Retirement provides many insights and much food for thought concerning the nature of retirement and the new challenges and opportunities it represents.

* published by Wiley (February 2013).

MGM’s Retirement Nation Report 2012: http://www.mgmadvantage.co.uk/island/wp-content/uploads/2012/11/Retirement-Nation-2012.pdf

The flat rate pension finally arrives.

At long last, and after many years of stalling, we are now close to having a flat rate, single tier state pension system. There has obviously been much coverage in the media and from various charity and support groups.

On the plus side they have highlighted how this will simplify an antiquated and largely unintelligible system so complicated and intrusive that many potential beneficiaries have chosen not to claim what they are entitled to. They have also drawn our attention to the transitional arrangements which are necessary and in which some people will appear to be winners and some losers (against expectations rather than against fact?). This is fine and necessary to make sure that in the changeover process all obvious inequities are dealt with and corrected.

As with all political initiatives such as this, first we get the good news regarding the move to a flat rate pension and then the not-so-good news that National Insurance contributions will have to increase to fund some of it. This does rather take the icing off the cake.

More worrying, though, are the views, already being expressed, that firstly the state pension is not enough (which we know or should do) and, linked to this, that not everyone should get this flat rate pension, that is a return to means testing. I had thought that for once, at long last, people had started to look at our demographic shift and its implications in a more statesmanlike fashion devoid of entrenched short term party politics – but it seems this is a very optimistic hope.

Such views totally miss the long term point of the changes. The flat rate state pension will never be enough on its own unless we tax people out of existence. However, by underpinning personal savings with this pension and then not confiscating it once individuals start to save for themselves we can give people the responsibility, the scope and the encouragement to plan themselves for their own financial well-being according to their own needs, choices and timeframes. And in what manner they choose, be it pensions, properties or direct investment.

No one ever expected the Spanish Inquisition, either

New research from Age UK Enterprises shows that apparently (surprise!) the majority of over 60s (74%) have made exciting plans for their retirement,from extended overseas holidays (26%), to home refurbishments (20%). However that optimism is countered by a lack of confidence in how far their money will stretch – with over a quarter of respondents (29%) feeling uncertain or negative about their current financial situation.

They state: “With tumbling annuity rates and poor returns on savings, securing a comfortable retirement has become an ever more challenging task. More than a quarter (27%) of those who feel uncertain or negative about their current financial situation feel that the financial crisis has heavily impacted on their financial plans for retirement, while more than one in four (29%) stated they didn’t earn enough money throughout their career to save for later life. However, the majority (81%) of those who are pessimistic about their finances believe that they didn’t spend enough time planning for retirement.”

The research findings in themselves hardly tell us anything new. In the current economic climate retirement planning is a bit like writing your Christmas list when you’re a child; you know what you’d love to have but you also realise that you’re unlikely to get it – certainly not everything, anyway.

However, the findings also highlight a glaring dilemma in mentioning “tumbling annuity rates and poor returns on savings”. This being the case, even those who have ‘planned’ and put more money into pensions and savings will hardly be dancing with delight.

Overall, this news item only adds fuel to the argument that says we need to stop thinking of retirement savings purely in terms of pensions and current accounts and start thinking more creatively. Also older people need the option of continuing to work longer on a part-time basis rather than expecting a period of full-time retirement that currently may last several decades.

…What was that saying about not being able to solve a problem using the same thinking that created it?

Deciding when to persist and when to quit

Harvard professor Rosabeth Moss Kanter writing recently in the Harvard Business Review blog provided twelve guidelines for deciding when to persist and when to quit.

I was attracted by the piece as it seems to me that this epitomises a common dilemma faced by many older people searching for work.

Often I’m asked for advice about how long older jobseekers should persist in sending out CVs and completing application forms in the face of employers’ general disinterest and lack of response. Where does the line lie in this situation between admirable persistence and perseverance and dogged stupidity and lack of acceptance of the situation?  

Although Rosabeth’s list (below) relates to projects and start-ups it nevertheless seemed to me to have some resonance for older people seeking work:

1. Are the initial reasons for the effort still valid, with no consequential external changes?
2. Do the needs for which this is a solution remain unmet, or are competing solutions still unproven or inadequate?
3. Would the situation get worse if this effort stopped?
4. Is it more cost-effective to continue than to pay the costs of restarting?
5. Is the vision attracting more adherents?
6. Are leaders still enthusiastic, committed, and focused on the effort?
7. Are resources available for continuing investment and adjustments?
8. Is skepticism and resistance declining?
9. Is the working team motivated to keep going?
10. Have critical deadlines and key milestones been met?
11. Are there signs of progress, in that some problems have been solved, new activities are underway, and trends are positive?
12. Is there a concrete achievement — a successful demonstration, prototype, or proof of concept?

Perhaps the unemployed over 50s would find it useful to have a similar checklist to help guide their thoughts. If so, what might it highlight? Are any of the above points relevant? Any views?

http://blogs.hbr.org/kanter/2012/10/12-guidelines-for-deciding-whe.html?goback=%2Enmp_*1_*1_*1_*1_*1_*1_*1_*1_*1

Good and bad news about retirement funding

New research from international investment management firm, Baring Asset Management (Barings) shows that nearly half (15.7 million aged over 18) of people do not currently expect to use a pension to fund their retirement. The findings are part of an annual research program Barings undertakes looking at pensions planning and how people are preparing for retirement

The research shows that many people are relying on property, cash and even an inheritance to fund their retirement.   The number of people expecting that cash will form part of their retirement planning increased from 26% in the last survey in 2011 to 29% this time (some 10.5 million people).  The number that selected property as forming part of their retirement fund also increased two percentage points to 29%, equating to some 300,000 more people.

Even more surprising is that 17% of people, or six million in the UK, said they expect inheritance to help fund their retirement.  However, with the average UK inheritance estimated at around £45,000 per person, many people may be overestimating the role inherited assets may play in helping fund a retirement.

The study also found that one in four (25%) – 8.8 million people – admit they simply don’t know how they will fund their retirement.

These findings are good news in as much as they demonstrate that public trust in pensions is no longer a given and that people are considering other sources of funding – providing a challenge to the complacency of the existing pensions industry. However, they are bad news in terms of demonstrating many people’s continuing lack of preparedness for what is likely to be a long, unwaged and potentially impoverished period of life.

Understanding the bigger picture on employability

One of the biggest responsibilities older people must surely have is trying to ensure that those who come behind us learn from our mistakes and benefit from the insights we’ve gained through having lived a greater number of years. While intergenerational conflict is a current flavour of the month for rationalising challenges and apportioning blame (“those old people stole our future – they don’t care about us”), in fact most older people are hardwired to care for and advise those coming up behind them, if only their own children.

A recent US article on the fastest dying jobs of this generation and those that have replaced them reminded me of the duty we have, more than ever before, to remind younger people of the inherent fragility and transience of employment. While as a nation we have embraced the aim of a university education for all, we have at the same time seemingly raised expectations for a comfortable and ongoing career for those who graduate based on the old notions of “careers for life” that no longer exist.

Although it is easy to see from the list in this article (and there’s plenty of other similar data around relating to the UK situation) that the major swing has been from manual to white collar occupations, the change goes much deeper than that. What the charts underline is that, today, no one can afford simply to secure a job and work hard in the expectation that this approach will earn them a right to employment for life.

Our current situation has been evolving for decades yet as a society we seem to have been slow to learn. The mismatch between what the workplace wants and what prospective employees have to offer seems to have increased. Despite high unemployment, employers report skills shortages – while economists, demographers and others predict that as older people retire, the situation will become even more dire. But, as we know, unemployed older people can’t get jobs either; a situation undoubtedly caused at one level by ageism but, for some, especially those who have worked in dying industries, a lack of sufficient “transferable skills”.

As working lives will now become ever longer we have a duty to stress to those coming up behind us to be vigilant about the nature of what constitutes “work” and “employability” throughout their career. It not feasible at an individual level to wait until the curtain comes down on a particular industry, job type, or even employer before focusing on “what next”.

Employability has now become an individual responsibility and to remain in work throughout life many of those just starting out may need to change direction and re-train several times. There’s nothing particularly threatening or onerous about that if we take it as the norm. Many older people now are starting to realise that if they want to continue to work into older age they will have to adopt this approach. It’s a challenge but it can be done. For many the biggest hurdle is getting over the mental barrier of “I’m over 60, what’s the point?”

Yet, with increased longevity a career change at 60 could result in 10-20 more productive and rewarding years. Of course, there’s a lot to consider concerning type and amount of work and motivation for taking on the challenge – and of course, overcoming the ageism barrier.  But, if old dogs can learn new tricks, then it demonstrates that career change is possible, making it even more acceptable and feasible for younger people to consider similar changes throughout their career.

To ensure more successful working lives we have to start making real changes somewhere. Let it start with us.

http://www.theatlantic.com/business/archive/2012/05/the-fastest-dying-jobs-of-this-generation-and-what-replaced-them/257154/

Is the recession good news for longevity-related issues?

On Monday evening I attended A British Library and Strategic Society Centre joint debate (at the British Library) entitled “Keep Calm and Carry On? Policy, Psychology and the Effects of ‘Economic War’”

The interesting but rather eclectic session examined the psychological effects of economic uncertainty and how policymakers should respond.

However, although this was not its intention, what it highlighted quite starkly is how today’s global economic crisis and the pending “longevity tsunami” have now come together in a perfect storm.

It is easy to imagine that were it not for the recent job cuts, intergenerational competition for employment and reduced incomes plus other economic pressures leading many people to have to work longer, the real issues surrounding longevity could have remained buried or blurred for an even longer period than they already have done.

As a society we have known about many of the impending implications of the new longevity for a long time and failed to address them adequately. Perhaps the recession is a good thing in now bringing them sharply into focus?

Any views welcomed on this…

You may also be interested in a forthcoming debate at the British Library entitled “Growing old: Something to Fear or Celebrate?” For more details click below.

http://www.inmyprime.info/documents/BLflyer12jun12.pdf

http://www.bl.uk/whatson/events/event131096.html

 

Time to get real about retirement

A press release which recently arrived in my inbox highlighted that millions of Brits are dreaming of a retirement they may never get to experience.  

Research with 2000 British adults conducted by Benenden Healthcare, a mutual healthcare society, found that most Brits have an idealistic vision of their golden years where they’ll enjoy glorious sandy beaches, rounds of golf, and glamorous city breaks on at least four holidays abroad a year.

The study determined how people expect their retirement to be, before measuring those expectations against results of those already retired. It found dreams of an ideal retirement have convinced 30 per cent of Brits that their standard of living will improve dramatically once they’re able to retire.

The ‘ideal retirement v real retirement’ report found that along with golf club memberships and exotic breaks people are also dreaming of countryside walks, regular spa visits and new cars. But in reality, just one in ten are saving enough cash to support a comfortable retirement with the reality for many being that retirement will be just as much a struggle as our working years – if not more so.

Despite the majority of those interviewed expecting a comfy and relaxing retirement, 45 per cent admitted they thought they weren’t saving enough for the future with, remarkably, a fifth saving nothing at all. Indeed, three in ten people confessed to a ‘live for the now’ approach to money, with little thought given to their pension or later years because ‘there’s plenty of time yet.’

But people currently in retirement were less carefree in their assessment of retired life – less than a third said they can afford the holidays abroad that were a key feature of the ideal later life.

Lack of time, money and health issues are also preventing retired people from carrying out what they want to do. Furthermore, 35 per cent claim that retirement has seen their standard of living decrease notably and a tenth said retired life was not at all like they’d pictured it would be.

While none of this is surprising in relation to our knowledge about the reality of retirement today it does underline how little this appears to be impacting younger people’s attitudes and beliefs about later life. At a time when we are also considering our attitudes towards and treatment of older people, which in general is abysmal, it’s time that people got real about facing up to some of the horrors that might come their way.

 

 

 

 

SOS – Financial education needed in the workplace

A recent joint report by the National Association of Pension Funds (NAPF) and the Pensions Institute (PI) at Cass Business School has found that half a million people retiring each year are being dramatically short-changed in terms of their total future pension income because of overwhelming obstacles that prevent them getting the best deal.

When they retire, people in the private sector saving in a ‘defined contribution’ pension – now the most common form of company pension scheme – use their pension pot to buy an annuity from an insurer. This gives them a regular income and is a one-off, irreversible decision that sets the size of their pension for the rest of their life.

According to the report, fewer than one in five people have the financial know-how needed to pick the right annuity at the best price. The rest lack sufficient understanding of factors like interest rates, inflation and longevity, and need some form of advice. And those savvy enough to ‘shop around’ for the best rate struggle to do so because the best shops are not signposted. It is virtually impossible to find a specialist adviser who covers the whole market and who is willing to help those with smaller funds.

The report also uncovered evidence of sharp practice and murky pricing in the annuity market, putting unsuspecting consumers at a huge disadvantage.

David Blake, director of the Pensions Institute at Cass Business School comments: “This report is a wake-up call to the pensions industry, the government and the regulators. If the annuity system is not radically overhauled, employees in defined contribution schemes in the private sector will continue to suffer massive detriment and the government’s new auto-enrolment regime will fail the very people it aims to help secure financial independence in retirement.”

However, more immediately it concluded that people get “too little support” from employers or providers when making a decision about their annuity – often they get nothing more than a leaflet pointing them to a website with a postcode-based search engine.

As ever, the workplace is the best place for providing education and knowledge – whether related to pensions, annnuities, general financial planning, health, or myriad other topics. Good employers will hopefully rise to the challenge in supporting their employees to reap the best rewards from a system that most have paid into with the best intentions and trust in future rewards.

And for those who are younger, financial education is definitely needed about the options available, aside from pensions and annuities, to provide for future financial needs and retirement.

For more: 

http://www.napf.co.uk/PressCentre/Press_releases/0176_Savers_left_short_changed_and_bewildered_by_unfair_annuities_system.aspx

Older learners – a new source of revenue for UK universities?

If it is to be believed that where the US goes, the UK will follow, academic governors ought to be paying heed to a recent article published in the US.

It suggests that many retirees are settling in towns that boast major universities. One survey of people 55 to 75 years of age found that more than half had a favourable view of retiring to a university town, and that in response a large number of campus communities have put out the welcome mat.

Retirees are attracted by the chance to take courses, find volunteer work at the universities, and enjoy the cultural activities that are part of the academic scene.

In the UK increasing numbers of older people are participating in the Open University and the University of the Third Age as well as enrolling in degree courses at mainstream universities. The question of the extent to which specific “third age” programmes should be designed for older people is open to debate but certainly a more positive drive to openly recruit more mature+ students could be a profitable move.

To see the full story:

http://www.middletownjournal.com/news/middletown-news/senior-citizens-attracted-to-campus-settings-1259893.html

Facing the future over 50

A one-day workshop  for anyone aged around 50 who is seeking  greater clarity about what they want from life and enhanced motivation around how to get it.

Being over 50 is one of the very best times of life. Many of the struggles of youth are behind us but with the likelihood of decades of life still ahead of us we still have time to realise our full potential and achieve our remaining dreams.

The choices surrounding what to do with the rest of our life are limitless. Yet age provides us with the wisdom to know that having choices means making changes – and change can be  both exhilarating and challenging.

This workshop has been designed to help you rethink the rest of your life. Using our unique development model, we help you identify and prioritise which areas you want or need to change, why you want to change, and what might be the outcome.

Saturday 28 January 2012 9.30 am to 5.00 pm

Room 354, Malet Street Building, Birkbeck College, University of London, London WC1E 7HX

 

For details click here

Educating older workers

News today from the universities admission service, UCAS, that there has been a 12% drop in applicants from the UK for university places in September 2012 compared to this time last year.

The decrease was predictable, varies according to course and university, and arguably can be commended at a theoretical level for starting to reverse the previous government’s economically unsound policy of university education for all. Regardless of the recession, this strategy was inevitably going to result in a generation of university-educated young people with unrealistic and unrealised expectations in respect of the post-graduation jobs market.

However, a figure which seems to be somewhat buried in the news story above is that mature students appear, understandably, to be particularly deterred by the new higher fees for 2012. The number of applicants aged 40 or older has fallen by 27.8%, and among those aged between 30 and 39 the number has dropped by 22.7%.

The implication of this in a climate when it is no longer realistic to expect one career and one set of skills to be adequate throughout life, particularly when working life may extend to well past 70, is potentially disturbing and should not be allowed to be overlooked.

Whilst the education and employment of the younger generation is, of course, a source of concern and a priority it is easy to overlook the changing career needs of those who are already in work. Many of these, from either choice or circumstance need to increase their qualifications or re-train as they move through working life; how this will be funded and the impact of withdrawing this option is equally as important as the situation of school leavers.