The first age of retirement: preparing to retire.
If you’ve been driving at 75 mph and suddenly stop, it’s scary. What just happened? What do you do now? And is this whiplash?
It’s the same with retirement: for most people, it isn’t just a matter of walking away from work. Chances are the last years of your full-time working life were the busiest – and possibly the most stressed – you’ve ever been.
People typically reach their earning peak between ages 45 and 55, and those years can feel like a whirlwind of excitement and stress. Sometimes the idea of retirement in another 10 years can be the biggest thing keeping you going.
But in the first age of retirement – preparation – and going into the second age – transition – the anticipation of more free time can end up as a curse… of too much free time.
According to a 2023 study by Paychex, 1-in-6 retirees were considering going back to work, with 52% of those individuals citing “getting bored” as a factor, and 43% checking “feeling lonely.” Interestingly, 34% named “Retirement not what I expected” as a factor.
Those days of 50-hour weeks can seem more pleasant in hindsight.
Considering Options
While “un-retiring” has been used to describe these re-entries to the workforce, taking the off ramp to retirement can be a better approach. But just what does this mean?
Broadly, it means moving in stages away from your old life while moving toward what once were just side interests. As you gradually transition to retirement, you can get a feel for your options after those fast-paced working years. You may even decide you’d rather stay a few more years. Or you may decide the off-ramp is also an on-ramp to a rewarding new journey.
An example to this approach is a C-level executive from a large company who had always been interested in improving the lives of the most vulnerable in her community. As her retirement approached, she spent more time with a local foundation. Not long after retirement, she increased her involvement, eventually becoming the foundation’s CEO.
While not everyone wants to move from one C-suite to another in retirement, if there’s a cause near and dear to you, there will be organizations who will appreciate your time and energy. If you’ve spent the last decade setting and reaching goals, why not give yourself a timeline that takes you, step by step, toward the hours you’d like to dedicate to that cause?
A Little Bit of Work
As you plan for a future with time spent on a cause or hobby or project you’ve wanted to pursue, you’ll probably want to make a similar plan to leave your current career.
For some, that might be – as Johnny Paycheck sang – “Take This Job and Shove It;” but for many, taking the off-ramp means working less without immediately quitting. Stretching our metaphor to its limits, by moving from that fast lane over to the slower traffic, you have time to adjust and decide which exit is best: full retirement, getting involved in civic life, doing a bit of consulting, or your own mix.
Whether you’re working for yourself, for a small business, or for a big organization, the knowledge you’ve acquired is valuable. In your last year or two before retirement, you may find that your employer is happy to shift your responsibilities toward training and education, either full-time or with reduced hours. It’s also possible that a consulting arrangement with your employer could give you more flexibility and autonomy as you help them prepare the next generation of leadership. And, if you enjoy it, you can find organizations such as Service Corps of Retired Executives needing volunteers to mentor younger entrepreneurs.
The Greatest Benefit
The greatest advantage of taking the off-ramp instead of an abrupt change is the potential for a happier and more fulfilling transition.
Remember that study above, citing boredom and loneliness? There’s been a lot of research into retirement’s effects on mental health; while many people thrive, a 2022 study stated that, “Retirement often involves major changes in social roles and social networks, as well as changes to tangible assets like income and health insurance, which all impact risk and management of depression.”
The paper goes on to recommend that, “Employers should consider bridge employment or phased retirement programs (i.e. options to work part time before transitioning out of work altogether), which are associated with better mental health of retirees.”
You’re the Driver
However you choose to leave the fast lane, remember that you have options. Moving too quickly or too slowly can end up sending you in the wrong direction, so make a plan, be open to new ideas, and get ready to enjoy retirement, on your terms.
© 2024 Advisory services offered by Moneta Group Investment Advisors, LLC, (“MGIA”) an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified.
Trademarks and copyrights of materials referenced herein are the property of their respective owners. Index returns reflect total return, assuming reinvestment of dividends and interest. The returns do not reflect the effect of taxes and/or fees that an investor would incur. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. An index is an unmanaged portfolio of specified securities and does not reflect any initial or ongoing expenses nor can it be invested in directly. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise.
