10 signs you’re not ready for retirement

7 March 2022

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Retiring is the final life transition that we all have to adjust to and one that many people embrace or find daunting. Regardless of whether you’re the former or latter, the importance of having a detailed retirement plan still stands.

For those who are approaching retirement age, we have compiled a list of 10 signs that indicate you might not be ready to retire just yet.

1. You’re unsure of what to do with your free time

Going from years of working to suddenly having all the time in the world to do what you want, it’s important to think about how you’re going to use your free time. Some of the common challenges that a lot of retirees face include feeling isolated and struggling to cope with the lack of structure on a day-to-day basis. Creating a bucket list can help you overcome these potential issues and it also gives your retirement a purpose. Will you be on grandparent duty, travelling the world or simply enjoying your home comforts? Remember, mentally preparing for retirement is just as important as having your finances in check.

2. Not being financially ready

The saying ‘save early and save as much as possible’ is one we’ve all heard and still rings true - but for those who have neglected this practice throughout their working life, the reality won’t hit home until it’s too late. Put simply, retirement won’t be a dream unless you have the means to support your desired lifestyle. A financial adviser can help you invest and grow your wealth to ensure that you have a main source of income after retiring. As well as an income, you’ll need to continue contributing to a savings account and an emergency fund, beyond your working years, for those unexpected rainy days. Unlike employment, taking care of your finances and your health is a life-long responsibility.

3. You still have debts

Most will experience debt at least once in their lifetime and whilst certain types can be considered ‘good’, it’s nevertheless, a hindrance to your savings and buying power. A debt-free retirement isn’t always achievable and if you’re likely to carry over some debt, you’ll need to prioritise paying off any loans with high-interest rates. If paying your monthly bills is also a burden on your current income, your situation isn’t likely to improve after you’ve stopped working. A financial adviser can help you create a strategy to relieve the strain of debt without leaving you cash-poor.

4. You have dependants

Being a parent or carer can affect your retirement funds significantly if you haven’t planned for it. We all know how expensive it is to raise a family with the main costs being housing and education, both of which could continue through to adulthood. Furthermore, it’s not always possible to retire without long-term dependants - for example, you might need to care for someone with a life-limiting condition. If you find yourself in this position, continue saving as much as possible and also look to access any government support that’s available to you.

5. You and your partner aren’t on the same page

Although nothing seems better than retiring in bliss with the love of your life, there’s been an increase in older couples separating after many years together. The cause for “late life” divorces can be down to a number of things: having different retirement goals, being in each other’s space 24/7 or conversely feeling neglected if only one person is still working. The key to avoiding misaligned goals is discussing what to share together or manage independently in terms of budget, assets, hobbies and travel plans.

6. You’re not ready to stop working

Being employed gives us a sense of fulfilment and purpose, so the thought of suddenly taking your foot off the pedal can be daunting – especially if you’re a workaholic or enjoy having a steady income. Think about the aspects of your job that you enjoy, which could be the people, the challenges or the salary. There are ways you can re-frame your thinking to think positively about retirement - for example, many retirees join clubs and classes for socialising and others take up volunteering roles or part-time jobs for the added structure and extra money. At some point, you’ll feel ready to step back and enjoy your free time – but don’t leave it too late do to so.

7. You haven’t reassessed or rebalanced your portfolio

As you approach retirement, it’s important to start rebalancing your portfolio to protect the investments you’ve worked so hard to grow. Chat with a financial adviser who is best placed to help you diversify your portfolio rationally and reassess your attitude to risk. Diversifying into a mixture of stocks and bonds allows enough room for growth and that your investments are secure enough to ride out the highs and lows of the market. You might have been more willing to take risks a while back but you’ll think differently when the time comes to start dipping into the retirement pot.

8. You haven’t considered long-term health care or insurance

Soon-to-be retirees often forget about the importance of medical and life insurance, and the fact that premiums increase with age. As we grow older, we become more susceptible to injuries and health issues and this is why you need to have measures in place to cover any healthcare-related bills. If you received a private healthcare plan through your company, it might be worth asking your current provider whether you can have a standalone policy. Those who retire abroad should consider both life and medical cover, especially if they’re moving to a country that has different charges for expats.

9. You haven’t tried living on your retirement income

Setting a retirement budget is necessary if you want your savings to last but with an ever-changing economy, what you’d planned to live off might not be enough by the time you’ve retired. A general rule of thumb is that you should aim to spend no more than 4% of your amassed income pot for each year of retirement. Rather than chancing it, try spending a month living off your estimated retirement income and assess whether you would struggle to stick to this budget.

10. Estate planning hasn’t crossed your mind

Deciding on how to divide your assets once you’ve passed on, as uncomfortable as it may sound, is something you need to tie up before living out your golden years. As well as drafting up a will and testament, you’ll need to make a list of your tangible (e.g. household items, properties, antiques) and intangible assets (investments, pension, life assurance) – all of which will have different processes for appointing your beneficiaries. Having an estate plan in place - with the correct paperwork all in order - leaves no room for disputes when transferring your wealth and in some cases, your remaining debt.