3 When Should I Retire?
Fred came to a stark realization not long after he finally quit, finally gave up the ghost and packed it in at work: he had waited far longer to retire than he should have waited. Fred could tell that he should have retired years earlier, from the broken-down way that he felt when he quit working, the broken-down way that his wife looked, and the run-down way that things at home looked, due to his neglect while at work. Fred could also tell that he had waited too long to retire, from the long list of things that he and his wife had wanted to do that they were now too weak and frail to do. And Fred could tell that he had waited too long to retire, from the way that his adult children and teenage grandchildren were off doing their own things, without any interest in spending time with them. All Fred could do was to wonder why he had waited so long.
Timing
Timing, they say, is everything. And that can certainly be true for retirement. Hang on at work too long, and you may miss some good years at home with family, doing things together that you and they want to do before it’s too late. In those extra work years, you may also make a lame ending to a good run at work. Yet conversely, quit work too soon, and you may miss accomplishing some good things at work for which you worked long and hard. You may also miss the opportunity to finish funding your retirement, and you may begin spending retirement savings too soon. You may also annoy and disappoint family members at home, whose routines you’ve disturbed before they were ready. So you can see how timing your retirement can mean a lot. You’ve probably got a year or two either way that you could go, and it wouldn’t make a great deal of difference in the big picture. But retire three, four, or five years too early or too late, and you may have some ‘splainin’ to do.
Choice
Of course, the prior paragraph assumes that you have some choice in the matter as to when to retire. Many of us do get to choose when to retire. Your employer may be happy to continue to employ you as long as you wish to work but may also have someone ready to replace you if you wish to leave. If you’re self-employed, your business may be doing just fine, in the sense that you could either continue it as you’ve been doing or sell it or close up shop. Your spouse or others at home may be fine with you working and fine if you don’t work. The choice may be largely up to you. If so, then recognize, appreciate, value, and wisely exercise your choice. Don’t miss the opportunity to make a good choice. If you have the option, don’t assume to the contrary that you don’t. Don’t fool yourself into believing that you must continue to work or must retire, when you instead have the option. Recognize and accept your responsibility to make a good retirement decision, rather than hiding behind a false claim of compulsion.
Necessity
Others have little or no choice regarding retirement. We either must stop working or must continue to work, for reasons beyond our control. Sometimes, the employer terminates the employment, and the older worker can’t find another job, having instead to accept firing as if it were retirement. Workers who own their own business likewise sometimes find that the business just runs out, and they’re not in a position to go work somewhere or to find another business to start and run. Other times, an older worker must quit working because of disability, having worn out on the job or suffered disabling injury and needing recovery and rest. Still other times, an older worker finds retirement necessary to care for a spouse, elderly parent, or other dependent at home. Forced retirements aren’t generally the best arrangement. Those who for some reason must stop working otherwise wouldn’t have stopped because they still need or want the income, activity, structure, society, or other benefits of work. But if some necessity is truly forcing you into retirement, and you’re not just making it up, then your role is to make the best of it. Go find the silver lining. It’s there. Indeed, it may be far better than being forced to work.
Regret
As the story at the beginning of this chapter illustrated, some workers regret not having retired sooner. Staying on at work for too long can be a bitter pill on both ends, at home and in the workplace. Employers, supervisors, and colleagues may not always appreciate the older worker’s extra dedication and longevity, especially if the older worker is no longer carrying the freight or no longer has the personality, collegiality, or skills. Employers and colleagues can have a subtle way of letting you know when they think that it’s time that you go. The same can be true at home, where a spouse or other household members may want or need your presence and need you to let go. Other workers, though, regret having retired too soon. Regret with respect to retiring too soon may be something that you can address by going back to work, maybe not at the same job from which you retired but then at a similar job or even a new job that you’ve always wanted to do. Make the question whether you may return to your job after retiring or can get another job a part of your decision, if you sense that you may be thinking about retirement too early. Indeed, when considering retirement, think intuitively about how you’ll feel once retired or if instead you keep working, to see if you sense the prospect for regret. Avoiding regret is a fair consideration in your decision.
Incentives
Employers sometimes try to sway the retirement decision with incentives for early retirement. The old saying is not to look a gift horse in the mouth but instead to take the gift and run. Yet early retirement isn’t necessarily a gift. It is instead a transaction. You’re giving up your job and all its income and benefits in order to get whatever your employer’s early retirement incentive offers you. You should thus look very closely at any such offer. Employers generally offer retirement incentives not because they love their employees but because their incentive is economically advantageous to the employer. Older workers can drive up labor costs. An older workforce generally has higher compensation and higher benefits costs. In some fields, an older workforce may also have lower productivity and fewer current skills. An older workforce may also have greater legal protections from termination, whether contract protections or protection against age discrimination. So, don’t jump at your employer’s early retirement offer, especially if you don’t have another job where you can earn equivalent income and benefits. Instead, carefully evaluate the offer.
Decision
While you consider whether now or soon is your best time to retire, recognize that retirement generally takes a decision. Some things, indeed a lot of things, you don’t have to decide. You don’t have to decide to get old, for instance. You don’t have to decide to have your hair turn gray or your tired feet wear out. But retirement is instead something that takes both your decision and your communication of that decision. You can’t just stop showing up for work, at least not responsibly, without telling your employer that you’re retiring. You can’t just walk away from your own business, at least not responsibly, without telling your customers and suppliers that you’re closing up shop and retiring. Get used to the idea that you’ve got a decision to make about retirement. Begin to evaluate when is the best time, how to decide, and how to communicate your decision.
Advisors
The decision to retire may not be entirely your own decision. If you are married when you approach retirement, your spouse should likely have a say in your decision. Your spouse might be happy, even delighted, if you came home from work one day and announced unexpectedly that you’d just retired. But then again, your spouse might not. A surprised spouse might worry about finances, health insurance, schedules, structures, activities, and any number of other things. Involve your spouse in the decision. You may have other dependent family members whom you should likewise involve. You may also have mentors and friends who would appreciate hearing your thoughts before hearing your decision. Your employer or business partner might also want to have a word with you before you announce your retirement. Your employer or partner might even make you an offer to stay on that you’d rightly hesitate to refuse. Consider carefully with whom you should consult before deciding to retire and announcing your retirement.
Process
As the prior paragraph just suggested, you should generally have a sound process for deciding whether to retire. Decisions made on the spur of the moment can be good decisions. More often, they’re not. A sound process begins with research and investigation. Reading this guide is research. You should also investigate the important considerations and conditions. Those considerations include the state of your health, your spouse’s health, your relationship with your employer or business, your health insurance, your retirement savings, your retirement budget and expenses, your age relative to Social Security and Medicare, your anticipated Social Security benefit and other unearned income, and several other significant factors that the following chapters on preparing for retirement address. Investigate the above subjects, with professional advice as necessary, until you are confident that you have a reliable view on each. Then, deliberate with your spouse and others whom you owe the courtesy or from whom you would expect wisdom and sound advice. The time to retire is when you’ve completed a sound process of deliberation and consultation, and you’ve firmly decided on a date.
Factors
As the prior paragraph just mentioned, ultimately, when to retire should generally come down to your evaluation of several factors. The thing to remember about factors is that evaluating them isn’t as simple as going down the list and marking yes or no next to each factor. Factors instead have different weights and may reflect different degrees. One factor may, for instance, scream at you to retire, but that factor may have little weight in your overall decision. Your mother-in-law, for instance, may strongly desire that you retire, when you might not afford her opinion significant weight. Another factor, though, may moderately suggest that you continue to work, but that factor may have great weight in your overall decision. Your retirement savings, for instance, may suggest that you’re still a good bit short of where you need to be to retire, when you’d give that judgment great weight. Also, factors that look independent of one another may instead influence one another. If, for instance, you’re a little short on retirement savings where things now stand, but you know that you need to downsize your housing or outright move when you retire, that change in your housing and location may significantly reduce your financial needs. The following chapters on how to prepare for retirement address these factors in much greater detail.
Intuition
The above two paragraphs describe a rational process for deciding when to retire. Reasoned, deliberative processes are generally good. You don’t want to have overlooked something important that surprises you later, once you’ve retired. You don’t want regrets and trying to go back and do things over again. Yet as already mentioned once above, regrets are themselves more intuitive than reasoned or rational. Your mind can only think of one thing at a time. While listing and weighing factors can ensure that you consciously and deliberately address the big points, your subconscious may be noticing patterns that your conscious deliberations don’t notice. Definitely, deliberate thoughtfully. But also put aside your conscious deliberations to listen to how your deeper subconscious may be signaling you toward the better decision. Indeed, don’t just look inside yourself but also look for patterns, fortuities, and providences outside of yourself that may be signaling you toward the better decision. The answer as to when to retire is already out there. It may just be up to you to notice it.
Rejection
Most of us retire at some point. A very few of us don’t. You may be among those few. Those who don’t ever really retire can have different reasons for not doing so. In one case, a worker’s spouse may have suddenly passed away before the worker’s planned retirement, leaving the working spouse with a lonely home and no reason to quit work. In another case, a worker may have a special ministry for which the worker is unusually gifted and to which the worker is unusually devoted, making retirement a poor choice. In another case, the work itself may be something of such unusual character that the worker can continue it indefinitely at a high degree of skill but with a low degree of stress. In another case, the work may be so creative and unique that the worker naturally continues it as an expression of the worker’s gift. You’ll likely know if you’re not one to retire. But if that’s your sense, be sure to listen to others, too. Don’t get so wrapped up in your work as your identity that you miss the chance in retirement for the first time to become your truer and whole self.
Reflection
If you’ve already decided when to retire, how confident are you of your decision? Did you follow a sound deliberative process to reach that decision? Have you consulted your spouse and others who might wish to be involved in some way in your decision? If you decide to retire but regret your decision, what are your prospects for resuming your former employment? What are your prospects for gaining other employment with similar income and benefits? Is an early retirement offer from your employer influencing your decision? If so, how carefully have you examined that offer, against the financial and other interests you have in continuing your employment? Is something forcing your consideration of retirement? If so, would anything other than retirement relieve you of that pressure? If, for instance, your spouse or another dependent at home needs care or assistance, is that something a service could provide? If instead, for another example, you need to recover from a disability, illness, or injury, would a work leave, instead of outright retirement, enable you to do so, so that you could return to work?
Key Points
The timing of your retirement can be very significant for its outcome.
In the best case, you’ll have a choice of when to retire at the best time.
In other cases, necessity may dictate that you retire when not ready.
If you have the choice of when to retire, be sure you don’t regret it.
Examine employer early retirement incentives carefully for worth.
Retirement generally takes making a decision and announcing it.
Consult your spouse and other significant advisors before deciding.
Follow a sound deliberative process for deciding when to retire.
Consider all relevant factors, giving each factor its appropriate weight.
Your intuition as to retirement may be more important than anything.
Not everyone retires, and so be sure when deciding that you should.