By Isaiah Opiyo
In Summary
- Early retirement is not simple. Not only does it have financial implications, but it can also affect one emotionally or psychologically.
Ask a typical Kenyan worker what they would like to
do when they retire and you are bound to get pleasant answers like
“Resting and enjoy quality time devoid of work-related stress”
But alter the question slightly: “So, what will you be doing
when you attain retirement age?” The responses will likely reveal that
the majority of workers are not prepared financially to retire.
While many of us don’t have the option of delaying
retirement, there are many that do but have postponed their retirement.
The low confidence levels indicate unease among workers in securing a
financially secure and comfortable retirement.
This probably explains why the number of workers
expecting to retire at 65 has decreased while the number of those who
don’t plan to retire has increased. Workers who are not confident about
their financial security in retirement generally plan to retire later.
There are many benefits of working beyond the
retirement age. You have more time to save money and pay off debts
before your income is reduced. But there are plenty of good reasons to
retire early as well.
These reasons are often not highlighted because
early retirement is not popular. Majority of those who retire early
often do so for health problems or because of disability.
Early retirement is not simple. Not only does it
have financial implications, but it can also affect one emotionally or
psychologically. These two factors have to be considered in tandem.
Reasons?
It is certain that you may be financially prepared
but not emotionally ready for early retirement. This is stressful as one
has to struggle with the transition from a structured lifestyle of
reporting to work to days with no strict schedules.
The realisation of not returning to work after
early retirement may not sink in for many employees in the first few
weeks or months, as they feel to be on leave or vacation.
But as the months progress, the sad thought of not
returning to work begins to haunt them and, subsequently, emotional
stress sets in as the process of adjusting to the new lifestyle becomes
painful and regrettable.
Conversely, you may be emotionally prepared, but
not financially ready for early retirement. The challenge with early
retirement is that you need to be financially prepared since you will be
financing a longer retirement period.
This will ultimately cause you emotional stress as
you think of how to safeguard your retirement nest from the longevity
risk of outliving your income. But how do you ascertain that you are
both financially and emotionally ready to take early retirement?
Regardless of why you opt to retire early, below
are some of the things to consider as you deliberate and prepare to take
this step.
1. First, the choice for early retirement does not
mean that you retire from work. Instead, retire to do something else.
This will help you financially and emotionally.
When you retire early, it is certain that you have
built up less retirement income compared to someone who has retired
after the age of 60. You would need even more cash to last for a longer
period.
Therefore, to ensure that you are in good financial shape,
retire and go into business to generate additional income to bridge the
deficit— that is if you are not financially ready at the point of taking
early retirement.
Start a business that will generate income and also keep you
busy to help you in the psychological transition into full retirement.
At times, you may retire early, but you still have
debts to pay and dependants who still rely on your financial support.
Retiring to a venture that generates some income to settle these
financial obligations would be advisable.
Since operating a business isn’t a walk in the
park, it is advisable that you don’t rush to start one immediately.
Before you retire, get something to do on the side.
2.Second, where this idea may not prove viable
especially in a job with strict time schedules, instead of asking for
early retirement, you can request for semi-retirement. In this case, you
can continue working part time or for a few months of the year as you
make the psychological transition into full retirement.
During this semi-retirement period, you can share
with your friends or spouse as you bring them to terms with your
intended early retirement thus saving them from financial and
psychological distress.
It is advisable for every employee to prepare for early retirement starting now, regardless of age.
Mr Opiyo is a training manager & coach with Tolerance Employee Financial Advisors Ltd. E-mail: isaopiyo@gmail.com
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