Transition to Retirement: Emotional and Financial Tips and Challenges

Transition to Retirement

While many people dream of the day when they’ll no longer have to work, making the transition into retirement can be difficult. According to a poll conducted by CIBC, 27% of retired Canadians regret retiring, with most of them looking to return to work. Almost 60% of those people wanted to return to work for the mental stimulation, while half of them needed the money.

Clearly, the transition to retirement can be a challenging journey, and many people approaching retirement can find themselves unprepared. In this article, we’ll answer some of the burning questions people preparing to retire typically ask: What does transition to retirement mean? How do I transition to retirement emotionally? And how do I prepare for my retirement journey?

We’ll also discuss the benefits of easing into retirement, share tips on transitioning from work to retirement, and review the psychological effects of the transition to retirement.

How to transition into retirement?

There are several steps to take before retiring, in order to ensure that you’re ready and that the transition into retirement is a smooth one.

Step 1: Start your transition to retirement

Ask yourself; what does the transition to retirement mean to me? How do I want it to happen? Also consider these other questions:

  • Do I want to stop work altogether, all at once?
  • Will I leave my job but take up a part-time role or become a volunteer?
  • Would I prefer to reduce the hours in my current role to help me ease into retirement?

According to the same CIBC poll, almost 80% of Canadians say that reducing their hours or moving into semi-retirement provided the best of both worlds. This tactic can certainly make the transition to retirement emotionally easier to cope with.

Step 2: Ensure you’ll have enough money to live off

When you’re considering how to transition into retirement, this is a crucial step. Working out exactly how much money you’ll have coming in, while taking into account your fixed expenses, will give you a much better idea if you can even afford to retire. It can have a big influence on how you respond to the questions in step 1.

If you’re able to delay retiring past 65, you’ll receive considerably more in CPP and Old Age Security payments (up to 42% more if you wait until you’re 70 to start receiving these benefits).

Step 3: Work out how you’ll spend your time

This is an important step to limit the psychological effects of the transition to retirement. Suddenly retiring with no idea of how you’re going to fill your days can lead to a number of issues; like boredom, a sense of insignificance, or even a lack of motivation to get up in the morning.

Take time to consider what you want to achieve when you retire. This could be travelling the world, spending more time with your grandkids, playing more sports or volunteering for a charity that you resonate with.

Feel free to let your imagination run wild. This is your time to enjoy your new-found freedom, so include any activities that you’d really love to get involved in. Knowing what you want to do when you retire will help you keep some level of structure to your life and ensure that you have a meaningful retirement.

Step 4: Put into place everything you’ll need to succeed

Once you know how you want to transition into retirement, being fully prepared for it is essential.

Set up a calendar of what you need to achieve as you count down the days to your retirement or semi-retirement. This could include applying for the Canada Pension Plan, Old Age Security or a work pension. You might need to transfer retirement savings into an annuity, which will provide you with a regular income, or you may need to work out the best ways to have your investments provide an income throughout your retirement.

You should also get the ball rolling on any activities you hope to take part in, such as approaching charities for volunteer positions, applying for a part-time job, starting up a side business, or joining sports or a social club. Doing research into the costs of trips you’d like to take will help you to have a good idea of how much travelling you’ll be able to afford. Booking a trip off-season, for example, could cost considerably less than travelling at peak times.

The more you organize what you plan to do when you quit work, the more you’ll limit the psychological effects of the transition to retirement. You’ll feel ready to retire, with a solid plan of how you’ll spend your days and how you’ll finance it all.

8 tips on successfully transitioning to retirement emotionally

  1. Work on your mental and physical health: Ensure that you include regular exercise in your retirement routine and make an effort to eat healthy. This will not only help you fully enjoy your retirement by keeping you in a good state of health, it’s also key to avoiding the mental health issues that many retirees encounter.
  2. Employ a financial advisor: This simple tip can reduce a lot of the financial stress of transitioning into retirement. A good financial advisor will be able to help you work out when you can afford to retire, the kind of retirement you’ll be able to afford and ways to provide a steady income from your investments.
  3. Talk to your retired friends and family members: Ask them how they found transitioning into retirement. Find out what they enjoyed about it and what they found challenging. Learn from their mistakes and alter your own retirement transition plan accordingly.
  4. Explore part-time work opportunities: Talk to your boss about the feasibility of working only a day or two a week, or even transitioning your role into a more occasional consultant type of position. If that isn’t an option (or you simply want to leave your current role) scout out other part-time work opportunities. Alternatively, you could consider setting up your own business that aligns with your interests.
  5. Build socializing into your retirement routine: It’s important to arrange regular visits with friends and family members to avoid feeling isolated and lonely.
  6. Redefine Yourself: You may have felt that you identified very closely with your old job and struggle to let go of that after you retire. One key step in how to transition to retirement is to discover a new identity for yourself. This could be as a volunteer, a grandparent, a student, a writer, or an entrepreneur. This way, you’ll maintain a sense of worth and be able to work towards new goals that provide a sense of fulfillment.
  7. Keep your brain active: Just because you’ve retired doesn’t mean you can’t keep challenging yourself mentally. In fact, learning in retirement — particularly a new musical instrument or foreign language — may help ward off memory issues and the onset of dementia.
  8. Set up a routine: One aspect of work that many people enjoy is the daily routine, which brings meaning to their lives. Having a retirement routine will help you to ensure that you include exercise, socializing, and work into your retirement days, and wake up knowing you have plenty to achieve.
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Key challenges in transitioning to retirement

When you first start to consider transitioning into retirement, it’s helpful to be aware of the difficulties that you may come across. For many people, the transition into retirement is not the bed of roses that they expected; by understanding the possible challenges you may face, you’ll be better prepared to not only make the transition from work to retirement, but also have a better chance of thriving in your retirement years.

Here are some typical difficulties that people face when transitioning into retirement:

  • Slipping into depression.
  • A sense of losing your identity, especially if you valued your job and the status it gave you; now that you’re not working, who are you?
  • Feeling stressed and anxious about having so much more free time but less income to enjoy it.
  • Struggling to fill those extra 40-plus hours every week and to find a structure in your life.
  • Finding it isolating without the constant contact with work colleagues.
  • Adjusting to spending more time with your spouse.
  • A sense that you’re becoming less valued.

Thankfully, there are many ways to help you prepare for the transition into retirement, so that the sudden switch in lifestyle doesn’t come as a shock and you’re better able to enjoy your retirement rather than struggle with it.

How to finance your retirement

For many Canadians, the main difficulty when considering how to transition to retirement is being able to finance a comfortable retirement lifestyle. Even with a financial advisor’s help, many people can find that they simply don’t have the necessary finances they need to retire when they want, how they want.

For Canadian homeowners aged 55+, there is a way to boost your retirement income which can help you in fully transitioning to retirement, without having to work. A CHIP Reverse Mortgage from HomeEquity Bank allows you to cash in up to 55% of the value of your home. You can receive this tax-free money either in a lump sum or in regular payments, to allow you to increase your retirement income to a level that allows you to live retirement on your terms.

A key advantage of a reverse mortgage is that you don’t have to make regular mortgage payments. You only pay back what you owe when you move out or sell your home, so your retirement income isn’t negatively impacted.

You can find out how much you qualify for with a CHIP Reverse Mortgage by calling us at 1-866-522-2447 or by using our reverse mortgage calculator.

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