Transitioning into Retirement

Transitioning into retirement is a big deal; a momentous occasion. Of course, for many of us, it is an occasion which is spread over months or years, if we opt for a gradual move away from working to live. But there will come a time when you find yourself retired. 

Firstly, I want to consider your psychological response to retiring, not from the perspective of an ACTUAL psychologist (because I’m not that) but from the perspective of having walked through this process with countless clients over the years. I’ve learned some things.

These first five blogs aren't so much everything you need to know followed by everything you need to do. It’s more a collection of lessons I’ve learned vicariously through my clients. I hope that some of these stories resonate and make you think.

You’re Still You

I spend a great deal of my time planning clients’ transition into retirement. In completing that work, we have to talk about spending patterns because ultimately, as I’ve said many times, financial success comes down to cashflow.

Some clients have a real handle on their finances, and know to the penny what gets spent on electricity or food or fuel. Others have only a general sense. When we ask clients to complete an expenditure sheet, the response we get tells us a great deal about them. Some clients’ eyes light up as they crack open their spreadsheet and transfer the figures. Others ask if they can round to the nearest £500 or £1,000 per month. Seriously.

But as I have completed retirement financial plans for hundreds of clients, I’ve noticed one thing that is always the case – people don’t change when they hit retirement, even if they think they might. And they often fear that they will change somewhat, which I find interesting.

But if people are in control of their spending before retirement, they will be afterwards. I’ve never yet met the person who drove sensible cars while working, suddenly develop a penchant for Bentleys in retirement. If you didn’t go on expensive holidays before, you won’t suddenly go on five-star cruises at £50,000 a pop.

While retirement is a massive change, you are the constant. You won’t change fundamentally. I’ve often thought that too much alcohol brings out an exaggerated version of many people, no longer limited by inhibition.

In a similar way, retirement can bring out a different side of people by giving the time to perhaps indulge in some of their passions more completely, but they are still the same people underneath. And that should hopefully be encouraging.

It’s weird that people think they’ll change when they retire, but generally speaking, they don’t. All the practical skills and application that you brought to bear to get yourself to the point at which you can retire doesn’t just desert you when you wake up on your first day as a retired person.

Sometimes, Transitions Change People

Sometimes though, transitions do have an effect. A particular example comes to mind of a couple who never managed their finances well. Fortunately for them, she inherited from her mother right as they were at the cusp of retirement – this inheritance was why they were referred to me.

It’s fair to say that it transformed their chances of a decent retirement – without it, they would likely have had to sell their home to support their lifestyle fairly quickly. In this case, though the initial signs were that they would continue their general lack of spending control, they actually managed to rein things in pretty well, but only after I showed them that the trajectory wasn’t great, even after the inheritance.

For them, they realised they had been thrown a financial lifeline by way of the inheritance, and were determined to make sure they could enjoy the money indefinitely, not just at a high level for a short period of time.

They effectively changed their spending patterns and are far happier for it. In this case, the clients did change, but generally, that’s unusual and I like to think I had a hand in that change as I helped them to see what lay ahead.