Anne Fuchs: Hello and welcome to Super Insider, a podcast on all things investing, the economy, superannuation and retirement, proudly brought to you by Australian Retirement Trust. My name is Anne Fuchs, and today we’re talking about the psychology of retirement with an expert. Before I introduce this expert, I’ll just remind you that this is general advice, general information only. If you have any questions, please call your super fund or, if you’re a member of ART, call us or talk to your financial adviser if you have one. I’m thrilled to be able to introduce an expert on the psychology of retirement, organisational psychologist Professor Joanne Earl. Welcome.
Joanne Earl: I’m very pleased to be here.
Anne: Let’s face it, money makes people emotional, and I’m guessing with retirement people only ever think about the money aspects of emotion in retirement, but there’s a whole bunch of other components to wellbeing in retirement outside of money?
Joanne: That’s right, absolutely. When I first came in to do research in this area there were not too many people - a few people overseas - doing work in the area, exploring retirement planning and the connection with psychology.
Anne: How did your career come to this place where you’re now a doctor in psychology, organisational psychology and retirement?
Joanne: When I was doing my PhD, I was having a look at what predicts career outcomes for students. Does being really decided about a career make you a better accountant, for example? What I noticed when I was going into these organisations is just how much money organisations were pushing into graduates - graduate recruitment and retention. I started having a look while I was there at how much they were spending on employees at the other end of the lifecycle. I thought, “There’s an opportunity here to start working with mature workers and to have a look at the transition to retirement.” But there weren’t very many people doing work in the area. There was a real opportunity for me to open that up.
Anne: How long have you been doing this role at Macquarie University?
Joanne: I’ve only been at Macquarie University for about 7 years, but I’ve been working in this area of retirement planning for about 17 years. Before that, at Flinders University and UNSW, which is where I also did my PhD.
Anne: Have you seen a shift over that time?
Joanne: Yes.
Anne: You have?
Joanne: I have definitely seen a lot more interest, not just nationally but internationally. I think there’s still a lot of science to wrap around this. With the advent of, and improvements in, social media, we’ve got a lot of people talking about what they think predicts retirement adjustment, but they may not necessarily have the science behind it.
Anne: That’s interesting. I know you have spoken a lot about holistic planning.
Joanne: Yes.
Anne: Can you explain what that means?
Joanne: This was a model developed in the US. It’s called a holistic retirement planning model, and it’s also dynamic. I’ll explain what I mean by that. The model was developed by Mo Wang, who’s probably recognised in the world as the leading expert in retirement.
Anne: This person is in the US?
Joanne: He’s in the US, yes. We had a look at some of the theories that he had and at whether we could put it into practice, and we could.
Anne: That’s fascinating.
Joanne: Then what we’ve been building on from Mo’s work is 6 key buckets of resources that people need in retirement. Should I tell you about those?
Anne: You should absolutely tell me and our listeners about those.
Joanne: I’ll tell everybody about them. There are 6 buckets that we like to focus on in terms of what resources you need for a good retirement, for retirement adjustment. There’s wealth - money. There’s health. There’s social - social connections. There are emotions and your own psychological wellbeing. There’s goal setting and cognition. All of those components, those 6 components, are important for retirement adjustment. As those resources go up and down, so does retirement adjustment. But not all of those resources are equal. Some are more important than others.
Anne: ‘Retirement adjustment’ sounds like a technical psychological term. Does it just mean how you adjust to not working anymore?
Joanne: It’s how you adjust to a new lifestyle really. It’s how much you might miss work or not miss work. How much you feel like you’re making a contribution, being recognised, feeling satisfied that you’re enjoying life in general and that you’ve made a good decision to retire. It’s all of those components.
Anne: A lot of those things that you’ve just listed off with the 6 are all dependent upon each other. If one is out of whack, it could throw another one out of whack.
Joanne: That’s very true. When you have a look at those 6 different buckets of resources, they’re interconnected. The ones that are most interconnected are finances and health. We’ve found those to be equally important. If you’ve thought of it as a pyramid, at the top of the pyramid are finances and health, and they’re interchangeable.
Anne: Interestingly, I think you listed psychological wellbeing separate from health?
Joanne: I did.
Anne: Tell me about that.
Joanne: This is the model that Mo developed. He separated out emotions. We did find that emotions were important, but the physical health aspects of that were more important in terms of that health at the top of the pyramid. The reason is that if people have a problem with their health and they have to exit work early that might mean they’re retiring with less. Similarly, if they’re going into retirement and they’re ill, they may have to use some of the nest egg they’ve put aside to deal with health issues.
Anne: That can then create worries, which creates wellbeing stress, which can then flow on?
Joanne: Absolutely, into other areas.
Anne: Also, too, with probably a lot of these things that we’ve talked about that you’ve just referenced it costs money to be happy sometimes, too, to have societal connections if you wanted to go up to the pub and have a punt with your mates on a Saturday?
Joanne: Money gives you access to options, doesn’t it?
Anne: Yes.
Joanne: Whether or not that’s social, health, cognitive or housing aspects, all of those things are connected back in some way. There is an exchange between those different areas. But I think what’s most important to remember is that, when we’re having a look at those resources, people might have been focusing just on the finance component of it; if all of those other bits aren’t being attended to, that might reduce retirement adjustment.
Anne: Do you have a spider map? In my head, I’ve got a spider map with those 6 things around a circle and, as a person, you’re thinking, “How am I at in terms of wellbeing?”
Joanne: You could, but I look at it as a pyramid, as layered. Some of the resources are better at predicting retirement adjustment than others.
Anne: Tell me about that.
Joanne: At the top of the tree are finances and health. In the middle you’ve got social, and then at the bottom you’ve got emotional, motivation and cognition, in that order. Getting those things right at the top of the tree - health, wealth and social - will account for a lot of the retirement adjustment that we need.
Anne: From a weighting point of view, do they have a much higher weighting?
Joanne: Yes, they do have a higher weighting. Yes, that’s a good way of thinking about it.
Anne: If our listeners are thinking about retirement and this is making sense to them, how would you explain to somebody how to approach this, if this is resonating?
Joanne: We’ve developed some online modules that we have available with Macquarie Uni that people can do that will help them explore some of these areas, particularly the finances and health piece. What we added into the model that’s quite new is the careers area. When you leave work will matter. People need to start thinking about the resources they have, and thinking about how and when they’ll leave work, how they’re going to spend time when they go into retirement. That will be determined to some extent by their health. If they don’t have good health, that will be interconnected. And then also how much money they need to be able to fund the lifestyle they want to live. Some key important questions around those 3 areas are a great place to start.
Anne: You see on the news 99-year-old Esmae jumping out of a plane. She’s been volunteering for the RSPCA. Are there any reflections you’ve had about what keeps people healthy, alert and happy?
Joanne: I think the reason she’s on TV is she’s probably one of a kind. The reason people draw attention to those sorts of role models is they’re unique. If everyone wants to use Esmae as their measure of success, they’re probably going to be disappointed. For every one Esmae, there will be lots of other people who may experience ill consequences from drinking, eating the wrong foods, not exercising - all of the sorts of things that would keep us healthy. I think sometimes the reason those models get used as examples is that they’re extraordinary. I really hate images of people jumping out of aeroplanes, jumping on the back of a jet ski or just doing things that may not be typical activities. What’s wrong with pushing a trolley down the middle aisle of Aldi?
Anne: Nothing. My husband loves Aldi. He’s German; it’s his greatest national treasure!
Joanne: There you go.
Anne: With the cognitive element something that probably isn’t spoken about a lot is cognitive decline, particularly, and the impact on wellbeing. Tell us how this impacts retirement and people’s decisions?
Joanne: Let me just talk about cognitive decline in general to begin with. People can be fully functional with mild cognitive impairment and still enjoy life, but there are lots of different reasons. People automatically jump on the idea that it’s dementia. But we look at menopause as one potential source of change in cognition. The other one is mood - anxiety and depression. When people have low mood affect it’s likely to affect their cognition as well. We don’t necessarily think about that. It could be transient; these things may not be permanent changes. If you’re making a decision based on cognition that you don’t think you’re going to be able to continue the job that you do now because of cognition, it’s not a bad idea to eliminate some of the other possibilities before you jump to dementia.
Anne: Or before you quit work because you mentally can’t handle it anymore you actually go and validate what’s wrong with you; go to the doctor?
Joanne: Absolutely. Getting clarity on what’s happening is so important in that area. The other thing I see is people withdrawing from activities when they’ve got what they believe to be some cognitive impairment. These could be things to do socially and so they’re not engaging as well socially. One woman said to me one day, “I don’t play bridge anymore because I can’t count the cards. I’m worried that other people will notice and then they’ll drop me from other social activities as well.”
Anne: What did you say to her?
Joanne: I said to her, “How do you know that you’ve got decline?” She said, “It’s taking me longer to count the cards.” I said, “Haven’t you noticed similar things with your friends, that they’re taking a bit longer as well?” She said, “Maybe not as much as me.” But that’s what we would expect to see where people are putting a focus back on themselves and not looking at those other comparisons but, more importantly, not getting clarity from an expert. So, not going to see their doctor or not going to see a psychologist or a neuropsychologist.
Anne: When we were prepping for this show you referenced your teenage daughter forgetting something. That was a cracker of a story.
Joanne: I was at a community event. A woman came up to me and said, “I think I might have dementia.” I was talking about dementia and about not overthinking it. She said, “I put on my shoes, and I put my socks over the top of them. I think I have dementia.” I asked her what had been going on. She had just moved into a retirement village. Her husband had died not long ago. There were a lot of things happening in her life. I said, “I hear these stories all the time. I heard a story yesterday of someone who, when the sugar container was empty, put the scoop back in the sugar container and poured the sugar on top. Do you think that person has dementia?” She said, “It sounds to me like they might.” I said, “I better get going. I’ve got to go home and tell my 14-year-old daughter that she could have dementia!” It’s those sorts of things where you overgeneralise when something happens. If you’d been 20 years younger, you wouldn’t have even considered it as an option.
Anne: What impacts do social connections have? Volunteering in retirement gets put up on a pedestal but not many people do it, certainly in my circles. What are your observations?
Joanne: I think people are important in retirement. I’ll just say that I think loneliness is a chronic problem. I think being isolated socially can have negative consequences from a health perspective. What we do see is that when people retreat and they’re on their own cognition usually declines as well. So, people are important.
Anne: So, there is a link?
Joanne: Yes, there is. The loneliness thing is important. It’s finding where that new tribe is. Some people will overestimate the number of connections they have with people at work and not go out and explore and make new connections. I think it’s so important for people to connect with other people on a regular basis, even if it’s once a month.
Anne: Jo, you spoke about - says me, who doesn’t really do this - exercising a lot more. You speak about people who are planning for retirement saying, “I’m going to play golf” or “I’m going to do Pilates.” Can you give some advice to our listeners and viewers around this? If you’re 62, you’re planning to retire and you’re going to all of a sudden play golf, what should you be doing? But you’re not playing it now.
Joanne: That’s a good point. Well, 62 is an interesting number; 62 hours is the number of hours you’ll have free if you’re not working. What we have found when we’ve done research is, for every 5 people who say they’re going to play golf, only one person turns up. People normally return to activities they did before work got too busy. We do see a return and a reinvigoration of things that people haven’t tried before. I think this is a perfect opportunity to get out there and just try different things. Some of the things are going to be great or they’re going to be better than you imagined. Some of them are going to be worse. So, trying new things, getting out there and just giving it a go is the only way to really do it. And recognising that it is a bit hard. It is a bit hard if you’re the newbie on the block and you might have been the expert at work. But everyone is in the same position at some stage.
Anne: I think that’s why transition to retirement as a strategy is so fantastic. It creates the capacity to reduce your hours, and maybe that’s when you can start adjusting by introducing the new things you want to do?
Joanne: That’s right. You’d start small. If you think you’re going to be playing golf every week, maybe go 4 times a year to start with.
Anne: That’s better than not going at all?
Joanne: Or if you’ve got this big plan to go to the gym every day while you’re in retirement, maybe you should go once or twice now to see if you like it. If it falls over and you’ve got neither plans nor other things you want to explore, you might find yourself a bit disappointed.
Anne: So, final words of advice for somebody who is thinking about retirement? What are your strong words of wisdom as a woman who knows this phase of life inside and out? What would you say?
Joanne: Firstly, don’t just focus on your finances. Think about how you’re going to be spending those 62 hours and what you’re going to be doing, and make sure that that 62 hours includes a focus on your health.
Anne: And companionship?
Joanne: Hopefully, if you’ve got the right activities, you’ll weave that in so you’re not doing a lot of individual things but you’re doing group activities as well.
Anne: It’s been wonderful having you on the show. Certainly, for our viewers and listeners, we have plenty of information about things like transition to retirement. As Dr Jo just said, money is really important. So, if you’re trying to work out how you can fund your retirement, there are lots of educational episodes that we have on Super Insider to help you get up to speed with that. You can give us a call and do plenty of reading on the website, too, and reference Dr Jo and Macquarie University and the wealth of resources there.
Joanne: Yes, we have some online training modules.
Anne: Dr Joanne Earl; that’s where it’s at. Thank you to our listeners and viewers. Thanks for joining us on Super Insider. Don’t forget to subscribe. Tell your family and friends. We look forward to you joining us again soon.
