Encore Age

Rethinking Retirement?

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By Bill Storie 

Covid-19 impacted people’s financial health in different ways, but it has taught everyone that budgeting and planning for the unexpected are crucial 

One of the most important outcomes from this past year and the pandemic has obviously been the health factor. However, the financial concerns for so many people have been of almost of equal importance. 

Perhaps none more so than those who are preparing for their retirement years. 

Prior to the advent of Covid, whether they were doing it or not, everyone knew that they needed to save for retirement, particularly in the ten years leading up to their departure from the workforce, and that this saving pattern should have addressed forward-looking expenditures such as health insurance, travel, home improvements, spending money on grandkids’ education and probably thinking about leaving an inheritance. 

But has the pandemic caused us to reassess our retirement financial planning, and more importantly, has it impacted how we evaluate our prospects for the future? 

In other words, while we acknowledge that financial planning and budgeting are critical as we approach our later years, has the pandemic shown us that ‘number-crunching’ is not just an exercise in arithmetic, but is truly an exercise in life planning, or perhaps life-adjusting, post pandemic. 

So, while financial planning is key, is it the only important factor in determining how we view life in general after the pandemic? 

My theory is that while we should live today, we should also ask what, if anything, we’ve learned from our experience, whether by force or by choice, that will change our behaviour and attitude toward money going forward. 

I spoke with a few local residents about their experiences during the pandemic and what thoughts they have as we are slowly, but hopefully, coming out the other side. 

Firstly, I enquired whether they are now thinking more about their lifestyle during and after the pandemic. They all said that while health and well-being has always been part of their life, it introduced a brand-new consideration that they never thought would ever arise, but did. 

A local director of HR said, “not myself specifically but definitely those more vulnerable in my family. Contrary to all the memes about people getting overweight during the pandemic I have seen the opposite, where my friends and family are exercising more and taking advantage of the time home to cook healthy meals.” 

Meanwhile, a female head of underwriting, said, “yes, although health and exercise-wise I have been extraordinarily lazy through the pandemic and have been unable to get back into a normal exercise routine.” 

The physical lockdown has had many complex and awkward situations for most of us. Not being able to go about our business as normal forced us to re-think how to manage our day-to-day routine as much from a time perspective, as from an economic perspective. 

A retired, over 75, male said, “I was reminded about post-war conditions in the UK that I experienced as I grew up. The surname-controlled access to supermarkets made me think of rationing when combined with having to queue up to enter the store.” 

A head of underwriting, said, “sadly, the lockdowns were necessary given increasing numbers of positive cases, but they are also destroying our economy and peoples’ lives”. 

Working from home was difficult to adjust to for all of us, but thankfully remote-access technology made all the difference. While we are probably ‘Zoomed-out’, we nonetheless recognise that we could get our work done if we were office-based employees. 

However, it was an enormous financial burden for those who work ‘on location’ in places such as shops and restaurants and it will likely take them a considerable amount of time to get back on their feet financially. Savings, if they had any, are completely depleted, meaning that those who are nearing retirement face a difficult choice between retiring without enough to see them through, or finding a way to keep working for the foreseeable future. 

Needless to say, apart from the health fear, the impact on our finances became frightening for many. With little money coming in, if at all, the panic set in. Thankfully government provided some relief and the banks provided mortgage relief. Many other organisations stepped up as well, but the simple things of feeding the family became very concerning. 

We asked our panel if their approach to their finances has caused them to re-think. 

The director of HR had some very upbeat comments: “Definitely! I saved tons of money when nothing was open and was very grateful and have made a commitment to sticking to a budget. I also gave my nephews, sister and husband budgeting tips which was very refreshing. 

A retired senior said, “unexpectedly I found myself spending less each month as a result of not driving around the island as much, not eating out as much. I now make it a point to have saved for the unexpected in any event.” 

My own comment on this, and one that has always made a big point in our workshops and webinars, is that the need for the ‘unexpected fund’ is crucial. I admit though that a pandemic had never come into that thinking. 

Finally, we thought it worthwhile to get everyone’s thoughts on how the island has changed and whether we are better equipped now to understand and appreciate the feelings of others in the community. 

Again, on a very positive and upbeat note our director of HR said, “I see a change for the better, with more support of small businesses, and more creativity in how people do business, it’s all very exciting. I am sure lots of positives will come out of this pandemic.” 

Interestingly, although the financial strain on everyone is tremendous at the moment, most of the people that I spoke with expressed optimism that the pandemic was also bringing about changes that would benefit the quality of their lives as they grew older. 

One senior islander commented, “I am sure that we shall see changes in business techniques, with a great deal more online shopping and communication. Government is forcing electronic communication to the fore. Work habits will change as people have adjusted to working from home. New forms of service business have already become effective, with delivery services, shopping services, opening up. 

“The government has also realised how important international business is to the community as a whole as it has sustained employment while other sectors were closed down.” 

But there is still lots of work to be done to rebuild the services that step in when older people are struggling. “Our charity sector has suffered big time and I hope that we have a better appreciation how much the community depends on this sector, as well as general charitable donations from business and individuals,” he remarked. 

There is no doubt that lifestyles have changed forever and while those in the workplace have time to rebuild, the problem for those either approaching retirement or who are in retirement is that rebuilding may not be a viable opportunity. 

Proper budgeting has never been so critical for those people, and while it may be too late to significantly increase their income – for example, their pensions are fixed – they will have to re-evaluate all their spending habits to ensure that their money lasts. 

We cannot predict how long we are going to live so the exercise can be difficult, but changes will most likely be required. We certainly can’t predict another pandemic and we pray another one doesn’t come along in our lifetime, but the ‘unexpectedness’ of it has had a lasting and telling impact on all of us. 

Life will get back to normality soon, but the question is whether the ‘new normal’ will be the same as the ‘old normal’. 

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