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‘Transition phase’: Five steps to mentally prepare for retirement


Seven months after her long-term career unexpectedly ended, Melbourne professional Carmel Murphy is coming to terms with retirement.

“It’s very different,” she says. “You don’t get the thousand emails. You don’t get the calls. You don’t get the staff who require your assistance. It’s taking me quite a while to get used to that.”

Now 65 and single, Murphy had worked for the same university for 28 years when she was told her position had been made redundant. She had expected to work for another couple of years but, in the event, she didn’t have much time to mentally prepare herself for the shockwave of retirement when she said goodbye to colleagues and left her job in May last year. Leaving full-time work is a massive life change for many people, but advance thought and preparation can help ease the adjustment to life in a slower lane. Psychological readiness for the end of employment helps retirees adapt to the loss of a steady income stream and, perhaps more importantly, to the loss of status and professional relevance and day-to-day association with like-minded colleagues.

1. Gradual departure from work

Murphy plans to maintain some of her professional links. “The way I’m looking at it at the moment, I’m retired from full-time employment, but I’m still doing some things to keep interested,” she says, adding she is keen to maintain her expertise, her relevance and her knowledge base. “I think I’m in a transition phase.”

For now, she is a member of a non-profit educational board, but the term ends this year, and she has also judged some UK education awards. She has set up her own company in case she needs it. Murphy sought retirement planning advice from Independent Wealth Partners (IWP) adviser Andrew Brown. Like many financial advisers, Brown recommends clients consider a gradual withdrawal from full-time work and possibly plan a shift to part-time work or consulting before retiring completely. He recently surveyed his company’s clients on how they felt about retirement. Their emotions ranged from excitement to apprehension and uncertainty, he says. Some were concerned about boredom, loss of relevance and loss of status.

2. Advance financial planning

Brown encourages clients to boost their psychological readiness for retirement by considering what their life after work might entail and how they want to plan for that life.

IWP has a focus on lifestyle for clients of all ages, he adds, including those with decades of work still ahead of them. “We ask: ‘What’s important to you, what do you value, what are your lifestyle goals?’,” he says. “Many of those have a financial angle, but we have more of a life-first approach. We ask: ‘How do you want to live your life – let’s build a financial plan around that’.”

Brown recommends early preparation to ensure mental readiness and a clear path to an enjoyable retirement. He suggests most clients, even those in their 40s and 50s, consider how long they want to continue working and what they hope for their life after work. “Planning for that lifestyle is very important,” he says. “For some clients it’s helping with grandkids, playing golf, or hobbies and volunteering.”

The retirement wish list might be long and potentially expensive, he adds. It might include regular overseas travel, but choices must usually be made between, say, the holiday house and the annual trips to Europe. For Murphy, retirement means she has much more time to spend with her children and grandchildren and her friends, and even to think about taking up a pursuit like pickleball.

Financially stable, she is now adapting to a life with substantially more leisure and substantially less income. “You’re so used to growing your portfolio, your resources, and all of a sudden you’re spending what you’ve got,” she says. “I found that a really interesting mindset.”

3. Make big retirement decisions early

Hundreds of kilometres to the north, Megan Martin says she was far more concerned about her financial position than any other aspect of retirement, and she knew she needed to find peace of mind before she left full-time employment. “I knew I wouldn’t be able to afford to rent in Sydney post–retirement,” she says. “I was terrified I would become a bag lady.” Two years before she retired, she consulted Financial Spectrum managing director Brenton Tong who showed her how she could use her savings and super to both buy an apartment (although not in Sydney) and secure an income stream.

“He showed me what was possible,” she says. “He created a framework I could understand and act on.” After she and Tong had sorted out her finances, Martin says she was psychologically ready to abandon her regular pay cheque and ease into a life of retirement.

4. Build a structure of activities

After renting in Sydney for more than 30 years, Martin left her full-time museum job in 2020 and bought a flat in Brisbane, a city where she had old friends. She says she has always been psychologically self-reliant, and now she is retired and financially stable, she is happy to spend quite a lot of time on her own reading and researching, as well as regularly catching up with friends for a coffee. Financial advisers often warn the pleasure of leisure can begin to wear thin – and boredom and loneliness can set in – after a few months of retirement. They recommend building a structure of activity for retirement life.

Martin was originally a little concerned about loneliness, but she sees old friends fairly regularly, and she enjoys spending time reading and researching, even choosing her Brisbane flat with an eye to ease of travel to the state archives and the state museum. “There’s nothing like going to an archival institution and ordering things up – you don’t quite know what you’ll find,” she says.

Daily life keeps her relatively fit. Without a car, she walks a great deal to shops and to use public transport and she goes to aqua-aerobics with friends a couple of times a week. “It’s healthy and a bit social,” she says.

5. Foster social connections

Financial Spectrum’s Tong says he spent a lot of time ensuring Martin would have a financially stress-free and pleasant retirement. As well as providing his clients with financial advice, he encourages them to mentally prepare for the end of work and to take care to have a full social life when their working life ends. He usually suggests they consider joining community groups, men’s sheds and senior sporting groups before retirement to have the structure in place.

“It’s important to surround yourself with a bunch of other people going through the same thing,” he says, adding that men usually have more trouble adapting to retirement than women, perhaps because many women have already temporarily left full-time work to raise children. “A lot of my clients really struggle emotionally and mentally when they hit retirement. All of a sudden, no one’s calling, no one’s emailing, no one needs your help.”

Tong says financial advisers should understand the potential depth and breadth of clients’ concerns. All Financial Spectrum advisers are well-versed in behavioural psychology, he adds, taking courses at Duke University in the US. Clients considering retirement in the short or medium term should read and consult widely before taking the plunge, he says. “It’s all about exposure and prep work, and admitting this change is bigger than almost anything you’ve ever done.”
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