“Open discussions with employees, holding workshops or offering on site financial advice clinics could all help with this transition,” she said.
Making adjustments
For Nick Earl, financial planner at London Money, it is also important to address the reality of retiring beyond the financial mechanics.
“Help them understand that stopping work may leave a gap in human contact. It sounds a bit over the top but to go from five days per week in an office of 100 people to just the two of you (or one) can be a difficult adjustment.”
He pointed out that some employers allow employees to retire slowly, for example going from five days to three days to one day over a period of six months to help with the adjustment.
“We would, of course, be more positive than this with our advice in terms of the freedom in retirement,” he added.
A paper published in the British Medical Journal in 2003, Is retirement good or bad for mental and physical health functioning?, looked at whether, as is often assumed, retirement adversely affects health.
The study found retirement at age 60 had no effects on physical health functioning and, if anything, was associated with an improvement in mental health, particularly among high socio-economic status groups.
But Ms Cardy argues more could be done to emphasise to people the benefits of an active retirement – and then inspire them to get involved in whatever interests or challenges them.
“Once clients have a more accurate picture of what this post employment period looks like, it is easier to plan financially to make it happen,” she pointed out.
The role of the workplace
Experts generally agree the above decisions are better made as early as possible, probably while still working full-time – so what is the role of workplace financial advice in helping people transition to a financially secure and mentally fulfilling retirement?
“It is essential,” London Money's Mr Earl says.
“Employers should be engaging with financial advice firms to arrange seminars and provide access to advice.”
He added employees should ask bosses to use the tax efficient advice allowance, whereby employees can sacrifice up to £500 per year taxable salary in exchange for a tax-free payment from their employer, as long as the money is used on pensions advice.
Since April 2017 pension scheme members have also been able to withdraw £500 a year tax free from their nest egg, up to three times in their life, to pay for financial advice.
