When to retire is one of those sticky questions. It’s financial. It’s psychological. And sometimes it’s out of our control.
The idea of stepping out of the workforce in your mid-60s with possibly three decades of living in retirement ahead is unnerving, especially when it comes to your future financial security.
“Money is part of it, but there are many dilemmas that people grapple with as they're trying to make this decision,” Teresa Amabile, a psychologist at Harvard Business School and co-author of the new book “Retiring: Creating a Life That Works for You,” told Yahoo Finance.
They may want to retire because there are other things they want to spend more time on, or work has become more of a grind, or they don’t like the direction the corporate culture is going, she said.
A growing number of workers, in fact, are facing this decision. This year, a record number of Americans are turning 65 — about 4.1 million — and the rush will continue through 2027.
Sixty-five is commonly considered retirement age, most likely because that’s when Americans are eligible for Medicare. For someone who has been clinging to a job for the health insurance coverage, it’s the green light to hit the exit.
Everyone’s situation is different, but there are factors beyond the big ones — how much money you have saved for retirement and whether you have health insurance — that can make the decision less of a hand-wringer and help you avoid feeling pressured to step down, Amabile said.
“For most people, from the president of the United States on down, the ideal scenario is to exit when you want, how you want,” she added.
Read more: Retirement planning: A step-by-step guide
Here's what Amabile had to say about all that and more in a conversation with Yahoo Finance’s Kerry Hannon. Edited excerpts:
Kerry Hannon: Why is it so hard for many people to make the decision to retire?
Teresa Amabile: For people who have identified closely with their work, to leave it behind isn’t easy without losing a sense of purpose. Even people who didn't believe they identified really closely with their work worry about finding something meaningful to do with themselves after they retire.
Another reason it can be hard for people to step out is people respect you while you're working. It's a sense of pride. If you don’t find real meaning in just the ordinary thing you’re doing in your life, it can make getting over that hurdle really tough.
One key factor to getting retirement right is “alignment” you write. Can you pull that apart a bit?
People who have a smoother transition into retirement, and who end up more satisfied in their retirement life, tend to have alignment — achieving a good fit between who they are and their life structure.
It’s knowing what is important to you now, not who you used to be. We all have multiple identities. I am not only a psychologist, researcher, and writer. I'm also a grandmother. So those are some of my multiple identities.
You need to recognize your identities, your values, priorities, your needs, your personality, even your health. And then look at your activities, relationships, places you spend your time, groups you belong to, organizations you belong to and the dynamics that go on between them. Are they in alignment? You might have to proactively figure out what you can do to make a change or changes in your life structure, maybe a minor tweak in one context.
For Americans confronting the push to retire, self-awareness makes all the difference, you told me after President Biden decided to not run for re-election. How does that allow you to exit when you want, how you want?
Self-awareness can require partnering with someone you trust to talk about who you are now and what's most important to you, what your needs really are. That could be a life partner or an adult child. It can be a trusted friend, it could be a counselor, a therapist, a life coach. We often get stuck in a view of ourselves that's no longer current.
It is hard to develop self-awareness if you occupy a really high-status position because people tell you what they think you want to hear about yourself, and if other people aren't being honest with you, even those who are closest to you, it can be hard for you to be honest with yourself.
The people who have an easier time stepping away are keenly aware objectively of who they are at this point in their life and their driving motivations, their passions, and their health and stamina. It’s not that they are less identified with their work and their organizations.
Can you break it down into the stages someone might go through to toss in the towel?
The first task in deciding to retire is deciding when to retire. That’s a doozy for some people.
Then you have to decide how to retire. First, you tangibly wind down your job, maybe transferring some projects to other people, transferring the knowledge that you have, doing the HR paperwork.
The next part is more difficult — psychologically detaching from your work — especially for people who identified closely with their work. Detaching from that daily structure alone can be difficult even for people who aren’t so caught up in the identity piece. Detaching from work relationships, too, can be particularly difficult for some people.
Building a provisional retirement life for yourself is another stage. And that often involves quite a bit of experimentation and exploration of new activities, relationships, groups, organizations, places to spend your time.
Pre-retirees tend to use fearful language when they think about retirement. What’s that all about?
I was so surprised at how negative the attitudes toward retirement were by people who were still working. In our research, we asked people to say the first word that pops into their head when we said the word “retirement.”
We were not terribly surprised that young people in the early years of their careers gave word associations like “money worries,” “uncertainty,” and “old.” Those are some stereotypes of retirement and many young people are worried about Social Security not being around for them.
What really surprised me was the number of negative word associations we got from people 55-plus who are approaching retirement. These were people still working. They hadn't yet decided when to retire. The most prominent words were “scary” and “never.”
Not surprising was that many financially secure professionals we interviewed after they retired from corporate careers gave positive word associations, almost all of them words like “relaxation” and “fun” and “wonderful.”
That brings me to the question of the role our finances and health play into all of this?
Health and wealth play important roles in people's retirement decisions. Often, people will make the decision once they feel they've got enough saved, whether that's age 58, 62, or 65. When they look at their Social Security and their savings, they say, "Okay, I've done the math. It works. I can do it now."
Poor health, however, can force people through that gate before they feel ready.
How is retirement different for this generation than previous generations?
Baby boomers, in general, are in better health than their parents were at retirement. The improvements in general physical health have made a big difference in people feeling they can be more active in retirement compared to our parents' generation.
We can expect to have longer lives after retirement and healthier lives for a longer period of time. So that's the biggest change.
The other trend that I've noticed is that attitudes toward retirement are changing. We used to have a stereotype that retirees are sedentary, focused only on leisure and going downhill. Baby boomer retirees are changing that image. They are active, participating as volunteers, wanting to continue living their lives in a large way.
If you were to give advice to a Gen Xer in their 50s, how should they start to think about self- awareness and retirement?
I would recommend that people who are very career-focused in their 40s and in their 50s start thinking about what else in life they might begin to develop an interest, even a passion for, that they might want to invest in more significantly after they retire. That will give them a sense that they're not leaping off a cliff into a void, but that they're going to something really positive and really exciting.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.
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