The New Retirement. Jan Cullinane
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“New” Retirement
Is the word retirement outdated? Most say yes, because the word conjures up images of withdrawing, being sedentary, old (in attitude if not age), and non-contributing members of society. Terms like Zoomers, Arrivement, Life 2.0, Next Act, Encore, Third Act, and so forth have been suggested as alternatives (my favorite is the Spanish word to describe retirement, jubilación). But, for the sake of name recognition, I'll continue to use the word retirement.
For some, a long and (hopefully) rewarding job/career followed by nonworking years is the retirement goal. For others, retirement is more of a process, perhaps involving several forays into and out of alternative projects, pastimes, and careers/jobs. Many people hope to do a “phased transition” to retirement and combine more leisure time with work, and some insist they will never retire. Some want to retire by age 55. Others want to be part of the FIRE movement – financial independence, retire early – in which the goal is to live on your own terms by the time you're in your 30s or 40s. With FIRE, you can work full-time, work part-time, or not work – it's your choice. Needless to say, unless you hit it rich when you're young or get a big inheritance, FIRE involves very aggressive saving and investing, and perhaps living a radically different kind of lifestyle. So there are lots of choices. But whichever flavor of retirement you think you might want to pursue, this book will help guide you.
Expectations versus Reality
“Work 'til you drop” – that is the professed retirement plan for a number of people, whether it's because they love what they do, they need the money, it's something with which they are familiar, it's easier to avoid change, or some combination of these. But retirement can happen whether you're ready or not. Some professions have mandatory retirement ages, including airline pilots, firefighters, FBI agents, and certain judgeships. In other cases, people are unexpectedly downsized, “right-sized,” need to retire to care for an aging parent, they or their spouse or child have an illness, the business changes, or a calamity (such as Covid-19) hits.
There is a disconnect between what many people think will happen and what does happen regarding retirement timing. I refer to it as expectations versus reality. Each year, the Employee Benefit Research Institute (EBRI) publishes a “Retirement Confidence Survey.” The 2020 version, which surveyed more than 2,000 workers and retirees in January 2020 (prepandemic), offers important insights. For example, looking at recent retirees' experiences:
They expected to retire at a median age of 65; they actually retired at a median age of 62.
31% expected to retire at 70; only 6% actually worked until the age of 70.
Only 11% planned to retire before age 60; 33% retired before age 60.
18% planned to retire between 60 and 64; 37% actually did retire during that age range.
48% left the workforce earlier than planned.
The results have been consistent over the years – many of us think we will work longer than we actually do (the EBRI has been doing this annual survey for 30 years). We may get another job or start another career, but it's important to know the reality versus the expectation. Speaking of which … the EBRI looked at this statistic, too, and found that 74% of retirees planned to work for pay in retirement; but only 24% did work for pay in retirement. As Antoine de Saint-Exupéry said, “A goal without a plan is just a wish.”
What did the 2021 EBRI survey of more than 3,000 Americans during the pandemic show? The median expected age for retirement was still 65, and the actual age was still 62; 23% of retirees said the pandemic made them “somewhat or significantly less confident they will have enough to live comfortably throughout retirement.”
Working and Sense of Self
Set aside financial considerations for the moment (they'll be addressed in detail in Chapters 7, 8, and 9). What is your relationship between work and your identity? There are two competing theories. The first, called continuity theory, is the perspective that our levels of self-esteem and life satisfaction stay the same, independent of work. Under this theory, it wouldn't matter if a person worked or not; he or she would maintain the same feelings of well-being. The second perspective, role theory, has two sides. Although role theory considers working to be vital to a person's identity, retirement can improve feelings of well-being if the career/job being left was considered very difficult or stressful; or retirement can cause distress if people feel they have lost a valuable role by not being employed. The effect of leaving your career/job (again, disregarding money) is more a function of how you perceive your employment – does working play a crucial role in your life, is it something to give up with relief, or is it immaterial to how you think about yourself?
Now, think about your “elevator speech” – the blurb you'd give to someone you meet for the first time (called an elevator speech because it takes about the same time as a short elevator ride – 30 to 60 seconds). How would you describe yourself if you had left your job and just met some new neighbors in a new community – would your elevator speech be about your previous career? If so, working may be integral to your self-worth. And that's okay. It may have defined you for many decades. But you will need to find a substitute for it if you do not find/create another job or career. More about that in Chapter 2.
My tip/confession: I've moved seven times, and my husband and I have lived in our present home for more than 14 years. The majority of people in our community are retired and some have started new businesses. Most do not talk about their previous careers, and many had quite illustrious ones. They are present and future-oriented, not reliving their past glory days. I do feel work is integral to me as a person, which is why I still like working, although now it's on my terms and my office is in my house. My husband, on the other hand, had a long career as a tax partner in a major accounting firm, and, although he enjoyed and excelled at his job, he claims he doesn't miss a day of working, and wonders where the day goes.
Why People Decide to Retire
A friend of mine named Jim said you should ask yourself these three questions to decide if you are ready to retire: Do I have enough? Have I had enough? Do I have enough to do? This is simple, clever, and to a large part it reflects what studies have shown as the major reasons why men and women decide to retire:
To do other things
Financial incentives/have enough money to retire
Spouse retired
Poor health
Didn't like working
Didn't get along with boss
Family health issues
Not appreciated
Job terminated
There's no one correct answer to the question “When should I retire?” A 2018 Fidelity survey found that half of Boomer couples disagree about when they should retire, and for Millennials, more than half disagreed what time was/will be the right time. If you are reading this book because you're considering retiring, take the fun and informative “Are You Ready to Launch Your Retirement” quiz at the end of this chapter. And, if you have a spouse or significant other, she/he should also take the quiz … and be sure to have an in-depth discussion about your results.
As you can see from the preceding list, some people retired not because they wanted to, but because they had to. It's important to recognize that it's not always a choice. As the popular idiom succinctly states, “Forewarned is forearmed.”