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How to Mentally Prepare Yourself for Retirement

As retirement is a milestone that most of us reach, you may be wondering why it is something you should make time to mentally prepare for.

The truth is that too many pensioners have not given enough thought to their retirement, and as a result, they may not have enough money to fund it, or they may experience chronic loneliness as they have not planned what they are going to do with each day.

Just as you would plan how to spend your weekends while you are working full-time, and how to spend each day as you raise children, it is wise to plan how you are going to spend your retirement.

This does not mean you have to create a 30-year calendar and write down what you are going to do each day. However, it does mean that you should think about what your goals are for retirement, and strive towards achieving them.

For example, consider whether you want to start a new hobby, spend more time with family, work on your house, travel, or do something you have always dreamed of doing such as writing a book or learning an instrument.

It is never too late to start afresh, so retirement can be a great opportunity to challenge yourself.

That being said, if you want to spend your retirement relaxing and enjoying not having to work, that is also perfectly acceptable.

However you choose to spend your retirement, we recommend mentally preparing for it as it is a bigger transition than many people expect.

In this post, we are going to explain why retirement can be good for you, why it can be bad for you, and what you can do to get yourself in a good mindset for retirement.

How Can Retirement Negatively Impact People’s Mental Health?

Firstly, it is well known that loneliness is common amongst older people, and this is in part because they are likely to be retired. According to Age UK, 1.4 million older people in the UK experience loneliness often (1).

When you retire, if you do not meet up with people regularly, it is likely that you will experience feelings of loneliness and isolation. What starts with staying in the house more often can turn into not finding a reason to leave the house for weeks on end.

Secondly, due to later life poverty becoming increasingly common, retirement can affect people’s mental health as they find themselves worrying about their finances, which can cause stress and anxiety.

Sometimes, it can contribute to depression among pensioners.

As they are no longer earning a steady monthly income, they may worry that they do not have enough funds to cover the rest of their retirement, which can make them panic about spending any money they have.

Finally, the obvious reason that retirement may impact people’s mental health negatively is that they are getting closer towards the end of their life, and this may cause them to worry.

They may worry about the emotional side of this, such as leaving their family behind, and they may also worry about practicalities such as writing wills and eventually making funeral arrangements.

This would be more common for older pensioners, but it is still a problem that many pensioners face in the UK.

How Can Retirement Positively Impact People’s Mental Health?

On the other hand, some people experience much more joy in retirement. One reason for this is that they may have hated their job.

Once they retire and do not have to return to their workplace, they can spend most of their time doing things they actually want to do.

For example, they may find more time for hobbies that keep them mentally healthy. Perhaps they go on walks with their friends, which not only keeps them physically fit but helps them to avoid anxiety as they can enjoy socialising whilst also staying active.

Another reason retirement can benefit one’s mental health is that it often provides people with the opportunity to spend more time with their family.

Rather than working 9-5 every week and only having evenings and weekends to see their family, retired people have more free time to dedicate to their families.

If they have the funds available, they can pay for days out and holidays to make the most of the family time they may not have been able to have previously. What’s more, some pensioners are even able to offer childcare to their adult children, meaning they get to spend a huge amount of time with their grandchildren.

Finally, when you are not working, you may have more time to dedicate to helping others, which can be incredibly rewarding. There’s no better feeling than being able to make others happy without burning yourself out.

You may choose to do this in a formal way by volunteering at a food bank, a hospital, or a school. However, you could also keep it simple and do good deeds for your friends and family. For example, you could help them with childcare, or with certain chores.

This will of course depend on your physical health, as not every pensioner would be in a position to help out others.

How to Mentally Prepare Yourself For Retirement – 14 Top Tips

We have come up with 14 top tips to prepare you for retirement. If you take our advice, you will hopefully experience better mental health in retirement rather than worse.

1. Get Your Finances in Order

The first tip is to get your finances in order. This is incredibly important, as you can’t enjoy your retirement if you do not have the funds to do so. Here are some things you need to think about when it comes to saving up for retirement.

2. Putting money into a pension

If you have been making National Insurance contributions for long enough, or you have received enough National Insurance credits, you will be eligible for the State Pension.

This means you will receive up to £185.15 per week if you are on the new pension scheme (2).

Though this is not a huge amount of money, it can make a big difference when it comes to paying your bills and paying for food and transport. If you are not currently eligible for this scheme and you are still working, you could make voluntary National Insurance payments as a way of qualifying.

Another thing you could do is put money into a private pension. You can either do this by enrolling on a workplace pension, which is usually automatic or setting up a pension that you pay into on your own.

If you are self-employed, please do not overlook the importance of getting a private pension. You may not end up being eligible for the State Pension when you turn 55, so it is even more important that you save up what you can in a private pension.

The reason it is important to have a pension and not just savings is that the government adds what you save in your pension, so you end up with more money. You do have to pay tax on your pension funds, but this is standard for most schemes.

3. Keeping savings

As well as having a pension, it would also be wise to have emergency savings in case you enter a tricky financial situation while you are in retirement. You may have savings as a result of working or earning an inheritance.

You do not know how much the cost of living will increase in the time between you working and retiring, so it is very important to have savings to fall back on if you cannot afford your lifestyle.

Many pensioners are currently in this position due to the 2022 cost of living crisis, and the ones who had enough savings are reaping the benefits of it now.

4. Checking your benefits eligibility

If you do not earn enough money to keep savings, you should check your eligibility for benefits. You can do this by having a look at the benefits calculator on the government website (3).

You will need to provide information about your Council Tax bill, your outgoings, any existing benefits and pensions, your savings, and your income. If you have a partner, you will need to provide their income as well.

This calculator is very accurate, but it will not be as accurate if you are a student, if you live outside of the UK if you live in permanent care, if you are on strike if you are not a British or Irish citizen, and if you are a prisoner.

5. Continuing to work

We know that this is not the best option for everyone, as many over-55s do not have the energy to continue working, or they have looked forward to their retirement for so long that they do not want to delay it further.

However, if you are able to, continuing to work would be a great option as it would mean you were earning a steady wage, so you would be less likely to worry about money.

What’s more, for every 9 weeks that you delay receiving your state pension, you receive a top-up, so it can be a good idea to prolong working for a bit longer if you can.

6. Speak to People Who Have Already Retired

Next, it is important that you speak to people who have already retired to find out how they prepared themselves mentally for retirement, and how they are currently finding it.

Keep in mind that people’s preferences are different, so some people will say that delaying retirement was the best thing they ever did, whereas others will try to convince you that retiring early is the way to go.

Your individual situation is unique, so do not take the advice of one person and run with it. Instead, speak to a wide range of people, and try to figure out which style of retirement would be best suited to your needs.

7. Make Plans For Your Retirement

If you enter retirement without any plans, you are bound to panic. Suddenly going from leaving the house every day and seeing people to being stuck inside is not good for your mental health.

Firstly, we have the practical plans you need to make. This includes any holidays you want to go on, any new things you need to purchase (e.g. new car), and what you plan to do with your day-to-day life.

It is not essential that you plan the entire rest of your retirement, but it can help to have a few ideas. For example, you might sign up to volunteer on a weekly basis, to attend a club a couple of times a week, or to see a family member on the same day each week.

Having a routine can help you to feel stable in retirement, as you will always know what to expect.

Most people find this reassuring as they are so used to having a routine with work, and it feels too unfamiliar to go from such a structured lifestyle to having no structure at all.

8. Find a Community

One very important tip is to find a community that you want to be involved in, and spend time getting to know the people in this community before you retire.

This means that when you retire, you will already have people you are connected to, and places that you feel you belong. You can find community by starting a hobby, finding a social group in your neighbourhood, or even connecting with local people online.

Age UK has some wonderful resources for pensioners who want to get involved in social activities in their local community (4).

For example, their friendship centres help people to get involved with activities in their area and meet new people (5).

On their website, you can see that there are friendship centres in Blackburn, Preston, Chorley, Ealing, Nuneaton, and other places.

If your area is not included, you could do some research into clubs in your area by carrying out a quick Google search.

9. Learn How to Use Technology

If you learn how to use the latest technology, you could be much more connected with the world, even if you were spending most days inside.

Having a smartphone would allow you to video call your family whenever you want to, to order online shopping, or to catch up with friends who do not live near you.

If you are unfamiliar with the latest technology, perhaps one of your family members could teach you. There are also courses offered to pensioners to help with this.

For example, AGE UK offers IT training to help people stay connected (4). Head to their website and enter your postcode to find your nearest course.

10. Talk to Your Family About Your Plans

We recommend that people considering retirement speak to their family about their plans, as your family members can often recommend plans that you haven’t even considered.

If you are worried about the negative aspects of retirement, they may be able to reassure you and even put things in place to help you avoid loneliness.

For example, they could call you a few times a week, visit you in your home, and go on days out with you.

11. Transition Into Retirement

Have you ever considered slowly transitioning into retirement, rather than doing it all at once? There’s no need to jump from full-time work to no work at all. Instead, you could try to decrease your hours and enter part-time work.

This would mean that your transition into retirement would be much smoother, as you’d already be used to working a reduced amount of time.

However, not everyone has this kind of flexibility at work, so it’s something to speak to your employer about. The other option would be to quit your current job and find a different part-time job.

12. Set Boundaries With People

This tip is less obvious, but it’s useful nonetheless. When you retire, some people believe that you are available to help them as and when they need it, simply because you are no longer working. This mainly applies to family and sometimes friends.

Though we have suggested that you dedicate time to helping others, this is only a potential option, and you should not feel obliged to spend all your time looking out for other people.

You have already dedicated many years to work, so don’t feel bad if you want to relax when you retire.

Ahead of retirement, you could mentally prepare for this by having conversations with people about your plans, and explaining that you are looking forward to relaxing more and not being burnt out.

13. Practise Positive Thinking

Sometimes, positive thinking is an overused top tip, and it is possible that you feel disillusioned by it. For this reason, we want to preface this tip by saying that positive thinking can help you in negative situations, but it may not be the sole solution to your sadness or loneliness.

That said, if you take the time to turn your negative thinking into positive thinking, it could help you to better prepare for retirement. Try to counteract any ‘what ifs’ you have with ‘even ifs’.

For example, if you have the thought ‘what if I am lonely in retirement?’, you could tell yourself ‘even if I am lonely in retirement, I can solve this by getting out of the house more and telling my loved ones that I am struggling’.

Another top tip is to think about all the struggles you have had at work, and remember that you will never have to face these particular struggles again. This may be the busy morning commute, stressful projects you have had to complete, or complicated relationships with colleagues.

Finally, if any of your friends are retiring at a similar time to you, you could get positive about retirement by planning fun things to do with them, and discussing how your lives could change for the better.

You could even reach out to old-school friends who are likely to be retiring soon, and arrange to catch up with them.

14. Start Journaling

Many therapists recommend journaling to people who are struggling with stress, anxiety, or depression, and indeed this has been backed up by studies. We recommend doing this if you are heading towards retirement as it can help you to process your thoughts about leaving work.

Sometimes, when you journal, it is easier for you to get in touch with your feelings as you are forced to sit and think about how you feel. This can help you to figure out whether your attitude towards retirement is one of excitement, nervousness, or another emotion.

If your journal is full of negativity, you may realise that you are not quite ready to retire yet. In this case, you would have saved yourself a miserable retirement. You could reconsider retirement at a later stage, and maybe by then, you would be ready to give up work.

How to Mentally Prepare Yourself For Retirement – Consider Equity Release

When we recommended getting your finances in order, we suggested things like saving up and putting money into a pension. However, we missed off a very important scheme that could help to fund your retirement, and that is equity release.

If you have very valuable property but you do not have much cash, this scheme may be the one for you. It allows you to release funds from your property, provided that you are of State Pension age, and your property is worth at least £70,000.

You can find out how much money you could release using our free equity release calculator. It tells you what your loan amount could be, which tends to increase with age and property value.

Once you have used the calculator, you will see a box requesting your contact details. You do not have to fill this out, but if you do, we will be in touch to discuss how equity release would affect you.

In terms of how to mentally prepare for equity release in retirement, we would recommend speaking to a professional equity release adviser about how this scheme works so that you are not caught off guard.

You would need to be willing to commit to the scheme for the rest of your life. If you did change your mind, some lenders would accept this, but others would charge you to repay your loan and finish with the scheme.

We would also encourage you to discuss your plans with your close family members. This is even more important with equity release, as it reduces the inheritance you can pass down to your family, so they should be informed of this if they are still in your life.

However, you could protect some funds for your family, and we urge you to do this if you want to make sure they inherit some of your funds.

Finally, make sure you learn all about equity release so that you are in a position to select the best equity release plan for you. Have a look at the different plans here.

You will find information on the eight different types of lifetime mortgages, as well as home reversions, retirement mortgages, and retirement interest-only mortgages (RIOs).

How Can I Use My Equity Loan to Improve My Retirement?

Below, we outline how you can use your equity release funds to improve your retirement:

1. Saving for care

Many pensioners will end up in a care home eventually, or they may hire a live-in carer. To save for this essential expense, some equity release consumers put most of their loan towards care costs.

If you are planning on getting a live-in carer, you may even put some of the funds towards home improvements, as this would mean your home would be well-equipped for your needs, which is very important in your later life.

2. Paying the bills

If you think you would not have enough money to pay the bills and live comfortably with just your pension, releasing equity is a great way to ensure you always have enough money left for the essentials such as bills.

If you wanted to do this, you could request a lifetime mortgage that includes monthly payments. Each month, you would receive a sum of money to pay your bills, and this would be provided to you for the rest of your life.

3. Going on holiday

If you have the essentials covered, you may choose to spend your equity loan on a holiday, either for you and your partner or for your entire family. This could be a great way to celebrate your retirement and enjoy spending time with your loved ones.

What’s more, you would most likely have plenty of money left over after this, so you could have multiple options for what you want to spend your loan on.

What Happens If I Want to Take Out Equity But I am Not Retired?

Don’t worry if you want to release equity from your property and you are still working. As long as you are at least 55 years old, you can still get involved with the scheme.

Releasing money now would mean that you could rely on both your employment income and your equity loan to fund your retirement.

It also means that you would be more likely to afford the fees that come with taking out equity. This includes legal fees, administration fees, application fees, and property valuation fees.

You would not be dismissed as an equity release customer as a result of earning a high wage. This is because it is rare for affordability checks to be carried out with equity release.

The money that you borrow on this scheme does not have to be paid back until you go into long-term care or pass away, so you do not have to prove that you have the appropriate amount of funds for repayment.

What If I Am Not Old Enough to Release Equity?

The minimum age for equity release is 55 years old, and every single lender in the UK will request that their clients be 55 or over. This means that you are unfortunately not eligible for equity release if you are under 55.

However, you could still do your research into the scheme and speak to us about how it works in preparation for taking out equity when you turn 55.

If you live with a partner, they will also have to be at least 55 years old if you both want to take out equity.

You could file an individual application if your partner is younger than you, but this may leave them in a concerning situation when you pass away or go into long-term care, as they would not be entitled to continue to live in your home.

Contact Equity Release Warehouse Today

There is nothing worse than panicking about your retirement, whether it be because you do not have sufficient funds for it, you do not want to leave your workplace, or you worry about experiencing loneliness.

If you are not yet ready to retire, please do not feel any pressure to do so. It is easy to defer your State Pension, and you would benefit financially from doing this.

However, if you are on the other end of the spectrum and you cannot wait to retire, we hope that this article has given you some ideas on how to mentally prepare for retirement by completing essential practical tasks and adopting a positive mindset.

So, what is Equity Release Warehouse here for? We help our clients to release equity from their homes as a way of funding their retirement.

We offer a free initial consultation in which we explain how equity release works, and answer any questions the client has.

If any of our clients are not keen on the scheme and they express concerns, we do not pressure them to make an equity release application. We are honest about the drawbacks of equity release.

If you are interested in a free consultation, leave your details here for us to contact you and discuss equity release. We are also available from 8am-8pm every day if you would prefer to call us yourself.


[1] Loneliness research and resources

[2] The new State Pension

[3] Benefits calculators

[4] IT Training

[5] Join an older people’s group

[6] Friendship centres

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