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Ever heard of FOMO? What about FORO?

Despite the excitement that many feel at the thought of stopping full-time work, one of the most common challenges we help people through, is overcoming their fear of running out of money when they retire.

After a lifetime of working and receiving a near-stable income, the prospect of the funds they’ve worked hard to build beginning to decrease, rather than increase, proves a mental challenge and emotional rollercoaster.

With added threats of an active mortgage, or the growing cost of living still ticking away, it’s no wonder that close to 50% of Australians are concerned they don’t have enough money for retirement.  

A phrase has been coined for this:

Move over FOMO (Fear of Missing Out), we’re talking about FORO (Fear of Running Out).

Leading up to retirement, FORO can have a significant impact on your mindset and behaviour, as you worry about not having the resources to fund the lifestyle you’re used to or the big plans you’ve been looking forward to.

Here’s how:

  1. Oversaving or Underspending: In an attempt to alleviate the fear of running out of money, some people may adopt overly conservative saving and spending habits. They may prioritize accumulating wealth at the expense of enjoying their pre-retirement years, leading to a decreased quality of life, and missed opportunities for experiences and enjoyment.
  2. Difficulty Transitioning: For those who have built their identity around their career or derive a sense of purpose from their work, the prospect of retirement can be daunting. Fear of running out of purpose or meaning in life can make the transition to retirement challenging, leading to feelings of emptiness, boredom, or depression.
  3. Financial Anxiety: As retirement approaches, you may become more concerned about whether you have saved enough money to support your lifestyle in post-working life. FORO can lead to chronic financial anxiety, causing you to second guess your retirement plans.

Take a proactive approach

FORO has the potential to have a damaging effect on your retirement, but by taking a proactive approach to confronting it, it doesn’t have to be that way. Taking some simple steps will help you find the balance between accumulating and spending, and ultimately create a more fulfilled lifestyle in retirement.

  1. Focus on the benefits of spending: Instead of viewing money as a limited resource, see it as a tool that helps you achieve your dreams. By being mindful of how you spend money and aligning it with your values and goals, you can create a positive relationship with it and eliminate the fear of running out.
  2. Remember what truly matters: By becoming clear on your values and goals, you’ll also have a clear understanding of what truly matters to you, such as relationships and experiences, beyond money. This helps put things into perspectives, especially when you start to see your savings decrease.
  3. Gain a realistic understanding of how long your money can last: There isn’t a magic number when it comes to how much money you need in retirement, it’s very personal and based on your lifestyle, plans, goals, and life expectancy. By being realistic about all these things, you can make a plan and ensure you don’t slip into FOMO (fear of missing out) as well as FORO.

Don’t let the fear of running out stop you from enjoying life.

Confront it head-on. If you haven’t already, start by taking the steps above to help you transition more smoothly into your next phase of life.

Be sure to speak with a financial adviser who can guide and advise you through each step and provide you with the peace of mind and financial confidence you deserve. We are here to help.

 

Disclaimer: Any advice contained in this artcile is of a general nature only and does not take into account the objectives, financial ​situation or needs of any particular person. Therefore, before ​making any decision, you should consider the appropriateness ​of the advice with regards to those matters.

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