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BLOG - Retirement planning for the small business owner

01 Dec 2014

Pension ages are going up and people are carrying on in the workforce until well beyond their retirement age. Many retain vigour and enthusiasm for their work and this can add significantly to their personal identities, so why not?

For many, however, retirement is still a sought-after goal and one that many people work towards. This is not surprising. Many people have career paths that are limited. Their jobs are perhaps not as stimulating as they might be or increasing performance demands and the need for physical vigour perhaps militate against the years their bodies and minds have experienced and so people can look towards retirement as a release.

Retirement itself, however, poses a number of challenges. Many people are left without an appropriate level of personal pension and are still heavily reliant upon the State. The average public sector pension is between five and eight thousand pounds, which added to the state pension, which through various machinations of government will settle down to be around £140 per week on average; this is far from a king’s ransom on which to exist in a phase of one’s life that might extend for a third of the lifespan.

We’ve all heard the story of the person who retired and within two years was dead. There is no doubt for many, retirement is a shock to the system. Whilst chronic disease may already have formed in a person pre-retirement, very often, retirement itself can produce a somatic response as one must abandon the patterns of a lifetime that gave meaning, structure to one’s day, mental stimulation, a sense of belongingness and purpose and yes, also could physically stretch wind and sinew and make one motivated. It is some small wonder that many people experience depression and loneliness in retirement especially given the number of single person households we now have within the populous. Predictable patterns that gave structure, derived from productive workplace activity, give way to an unstructured environment where one is the master of one’s own destiny but one is no longer clear as to what that destiny may be.

The important of planning

All of this places a real premium on retirement planning. I know of some exemplary employers that prepare their staff for retirement with seminars, coaching and mentoring, and even have staged retirement processes that can span six months to a year between a person giving up full time work and being full time at home. In almost all of those cases, it appears the people fare better, retain greater mental and physical health and ease into what is a effectively a new personal identity. Such enlightened approaches are a far cry from the bottle of wine and the pocket watch on a Friday afternoon, the 30 second speech and a few cards, only to find the following Monday presents one with a gaping void!

Retirement also present new opportunities as much as it poses challenges and these need to be explored fully also. Relationships can change. Frequently the extra time together can be a renaissance in a close personal relationship. Just as easily, however, it can be a situation where partners are involuntarily thrust together without the 'buffer zone' of absence through work and this can take unstable relationships to a breaking point that never occurred during one’s career. Equally, there is a possibility for the single to find new relationships that perhaps were not available to them at other times, so it is no accident that in the over 60’s we are seeing unprecedented levels of sexually transmitted diseases and divorce.

What is sure is once retirement presents itself, it is a major life change and one which as a community, individuals, workers and families, do not necessarily take enough time to address. It is often treated as an abstract change of state, a veiled rite of passage which generates associations ranging from the possibility of 'golden years on the grass', through to effectively being economically 'scrapped and forgotten'.

Enlightened retirement policies can often bridge the gap on this and allow organisations to retain valuable skills that can be re-activated at times of need.

A challenge for many employers is to ensure that their corporate and social responsibilities extend to their staff in retirement ensuring that sensitive, appropriate and effective support and dialogue takes place with staff who are foreseeably within the process of ending their service with an employer. These approaches need to ensure that 'doors' are opened, kept open and never slammed shut in the process of an individual having to adjust to this major life change.

It is a path we are all on at some point however long we extend our working lives. The challenge is for sensitive employers to invest in their staff, who will continue to be ambassadors of their organisation and members of the community to which we all belong.

David Cliff is Managing Director of Gedanken and Chairman of the Institute of Directors’ Northern Sector Group.