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How to handle financial stress in retirement

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By Capital Partners Ambitious Retirees

Throughout your working life, you’ve probably looked ahead to retirement as a stress-free time, where you don’t have to worry about all the challenges and conflicts related to your working life. However, financial stress in retirement is common, and your ability to handle the various stresses can have a direct impact on your overall health.

Positive and negative stress

Positive stress is also known as eustress and refers to any stressful situation that stimulates you to take action and respond in a positive way. Eustress stimulates the production of two hormones: serotonin, which is produced when you have a sense of peace or achievement; and dopamine, which helps you maintain clarity and motivation, so you can make productive decisions.

Negative stress is called distress and refers to a stressful situation that causes physical and emotional pain. This state of stress releases two hormones: cortisol, which fights stress by reducing the immune system; and norepinephrine, which activates the fight or flight reflex by increasing blood pressure and heart rate, and diverting blood flow from internal organs to the skeletal muscles.  The positive stress hormone, dopamine can override the negative hormone, cortisol, by helping you take decisive action to deal with the issue causing distress.

Looking at how these two different types of stress affect your body, you can see that aiming for a positive state of eustress is not only beneficial in the short term, it also helps you deal with the unexpected impact of distress.

Signs of unhealthy response to stress

If you or a loved one are uncharacteristically irritable, withdrawn or unmotivated, this could be a sign of overwhelming stress. High chronic levels of stress are contributing factors to the three major causes of death in Australia, Britain, the US and Canada: cardiovascular disease, lung cancer and stroke. Your ability to handle stress has a direct link to your health and longevity. This is why tackling your financial stress in retirement is so important to ensuring a quality way of life.

Replacing distress with eustress

During the early stages of retirement, you are particularly vulnerable to reacting to stress in a more negative way than usual. Your daily structure has changed, you have lost the enforced motivation of work, you may feel insecure about your financial future, and there might be a sense of disillusion that retirement isn’t the exciting fulfilling experience you imagined. All these factors can contribute to a lack of control over your daily life.

Barry LaValley, author of So You Think You Are Ready To Retire says that your method of handling stress will have a direct impact on your ability to adapt to retirement.

“If your ability to manage or reframe stress is key to retirement health, it makes sense to look at how you respond to both positive and negative stress and what you can do about it,” LaValley says.

“You can then consider changes in your outlook and the way that you frame your life in order to create a more hardy retirement personality.”

You can counteract negative stress by taking control of your routine and staying motivated. Create a regular structure for your day and set out to achieve specific tasks each day. With a sense of achievement and productivity, you can reduce the risk of falling into an ongoing distressed state.

Handling distressing situations

Some situations are unavoidably distressing – bereavement, divorce, financial strain – particularly as you may struggle to find a way to take control of these situations. If you are overwhelmed by a huge crisis in your life, you can talk to a counselor or even a friend to find a way to take control of the situation. As excessive distress can undermine your physical wellbeing, always make your health a priority during difficult times and see your doctor regularly.

Financial stress in retirement

Many people list finances as one of their top stress factors leading up to, and during retirement. The reasons for this are varied – people worry they do not have enough money to maintain their lifestyle, help out children and deal with unexpected health concerns.

At Capital Partners we aim to take the worry out of your finances. By understanding what your values and goals are during your retirement years, we can help plan an investment strategy that not only suits you but can be adjusted and changed as life changes.

Capital Partners is the FPA Professional Practice of the Year, and is committed to helping people live richer, happier lives.


The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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