15th Jul 2009 08:32
“I had to tell Ted – he’s the depot manager – that we were offering him early retirement. I thought he might be quite pleased, because he’s nearly 60 anyway, but he went as white as a sheet and just kept saying ‘what am I going to do?’”
As we mulled over what had happened, it became obvious why Ted was so distressed. Why now? Why couldn’t it have happened two years ago? By 2007, his savings had built up consistently, supplementing his redundancy package. He had paid off his mortgage in 2000, and his house had shot up in value. So he had the option of increasing the funds available to him in retirement, either by downsizing or through an equity release scheme.
Everything had deteriorated dramatically since then. If any of his savings were invested in the stock market, they would have lost over a third of their value. If they were in banks or building societies, they would hardly be earning any interest. And the value of his home would have fallen by 20% or more.
His pension was the biggest worry. Sylvie’s company had outsourced their scheme to an insurance company. Ted’s pot had lost a quarter of its value in the last 24 months.
This crisis of unwanted retirement will be familiar to many readers and is set to be repeated for a long while to come, in both the private and public sectors. So what can the SRA do to help people like Ted?
Firstly, we can help him to understand his financial situation more clearly, starting with the benefits to which he is entitled, including an accurate forecast of his state pension. Equally, he will come to realise that there may more productive ways to invest his savings, so that he can recover some of his losses. There could well be some unexpectedly pleasant discoveries; for example, downsizing might be a more realistic option than he thought, since although his current house may be worth less, the cost of the place he wants to buy will have also dropped. Secondly, the sessions on health, emotional wellbeing, relationships and networking will help him to overcome the stress of unwanted retirement and give him the self-confidence to build a new, secure and productive life, for himself and his family. He will know where to look for more information. He will be inspired to think about his interests and talents in new ways.
Such assistance is not only valuable to those who have to take early retirement. It also reduces the pressure on HR professionals like Sylvie Kaufman. For, whilst they will still have to deliver the bad news, they will know that the SRA is there to help them soften the blow.
Posted by: Steve Souhami
Category: Retirement
Coping with Unwanted Retirement
Sylvie Kaufman was a colleague of mine for several years, then left to take up an appointment as HR Manager with a builder’s merchant. When I met her for a drink last month, I was expecting a relaxed chat about old times, but she arrived looking extremely agitated. Her firm was closing its depot in Staines and most of the staff there were being made redundant.“I had to tell Ted – he’s the depot manager – that we were offering him early retirement. I thought he might be quite pleased, because he’s nearly 60 anyway, but he went as white as a sheet and just kept saying ‘what am I going to do?’”
As we mulled over what had happened, it became obvious why Ted was so distressed. Why now? Why couldn’t it have happened two years ago? By 2007, his savings had built up consistently, supplementing his redundancy package. He had paid off his mortgage in 2000, and his house had shot up in value. So he had the option of increasing the funds available to him in retirement, either by downsizing or through an equity release scheme.
Everything had deteriorated dramatically since then. If any of his savings were invested in the stock market, they would have lost over a third of their value. If they were in banks or building societies, they would hardly be earning any interest. And the value of his home would have fallen by 20% or more.
His pension was the biggest worry. Sylvie’s company had outsourced their scheme to an insurance company. Ted’s pot had lost a quarter of its value in the last 24 months.
This crisis of unwanted retirement will be familiar to many readers and is set to be repeated for a long while to come, in both the private and public sectors. So what can the SRA do to help people like Ted?
Firstly, we can help him to understand his financial situation more clearly, starting with the benefits to which he is entitled, including an accurate forecast of his state pension. Equally, he will come to realise that there may more productive ways to invest his savings, so that he can recover some of his losses. There could well be some unexpectedly pleasant discoveries; for example, downsizing might be a more realistic option than he thought, since although his current house may be worth less, the cost of the place he wants to buy will have also dropped. Secondly, the sessions on health, emotional wellbeing, relationships and networking will help him to overcome the stress of unwanted retirement and give him the self-confidence to build a new, secure and productive life, for himself and his family. He will know where to look for more information. He will be inspired to think about his interests and talents in new ways.
Such assistance is not only valuable to those who have to take early retirement. It also reduces the pressure on HR professionals like Sylvie Kaufman. For, whilst they will still have to deliver the bad news, they will know that the SRA is there to help them soften the blow.