In recent decades we have witnessed huge shifts in the way in which we fund our retirement.
In the past, people were able to rely on a pension funded by the employer they had worked for (in exchange for 40 years of service), topped up with a state pension to provide a reasonable standard of living in retirement.
This approach remains the norm for much of the public sector, but it is increasingly rare in the private sector.
Most people now are reliant upon investment linked pensions to top up a state pension which is unlikely to provide the sort of retirement most of us aspire to.
However, compulsory retirement has been outlawed.
Apart from in exceptional cases, an employer cannot force you to retire at a particular age.
As most people now rely on investments to top up their state pension in retirement (either through an investment linked pension or investments which they have made themselves), a comfortable retirement is linked to the value of investments at retirement.
In a perfect world, our investments would rise steadily as we approached the day when we stop work. Annoyingly, investments don’t behave like that!
Most investments go through periods when they fall in value and it can take time (often several years) for investments to recover their original value.
Nobody knows when investments will fall in value.
Job satisfaction can make an enormous difference. Here’s why:
If you hate your job and are desperate to retire but markets fall just when you wanted to stop work, then you might feel that you have no choice but to retire anyway and to accept a less enjoyable retirement than you had been hoping for.
Your unhappiness with your pre-retirement job may also result in 30 years of unhappiness in retirement.
The obvious answer is to have a job you retire as you approach retirement.
So, if the markets fall at the point when you were considering retirement, it might be inconvenient to carry on working, but you won’t be forced to carry on doing something you dislike for 7 or 8 hours a day, 5 days a week.
We can’t all find the perfect job, but as we approach retirement, many of us can be more flexible about the work we do.
Personally, when I made the connection between job satisfaction and a happier retirement, I ended up changing jobs! So now I can spend all day on retirement income geekery with people who share the same values as me and who I get on with.
My experience of 25 years of retirement planning has taught me that job satisfaction in the run up to retirement gives you control over the timing of your retirement.
In a world where most of us are reliant on unpredictable investments to fund our later years, job satisfaction may well be the missing ingredient in the recipe for retirement success.
