The decision to fully retire from the workforce should be made consciously and what that looks like may vary greatly, from person to person. There are any number of factors that play into the decision and that can greatly impact one’s quality of life, relationships, as well as sense of purpose.
My colleague, retired Navy Captain Jim Carman, who currently serves as director of the Military Officers Association of America’s Transition Center, recently provided some food for thought on this question in MOAA’s Career Networking group on LinkedIn; his advice is reprinted here with his permission.
The Decision to Go Bye-bye
One of the most frequently asked questions is when to hang up your neck tie for the last time and say bye-bye to your day job? There are no easy answers to this multi-faceted question.
My father-in-law stopped working at 52, and he enjoyed a full life until almost 89. He never had an ounce of regret over his decision to quit early. By contrast, I have a good friend who is a very youthful 76 and enjoys the structure, identity and contribution he makes through his day job. He is also helping to incubate a start-up business and shuttles between homes in Florida and New England in his off time. He is very good at his job and makes a difference for his clients every day. Moreover, he tells me that his friends who retired in their 60s and used to roll their eyes over his decision to continue in full-time employment now view him with a degree of admiration for his meaningful role in the active workforce.
The decision to retire should not be made on impulse and must acknowledge that your retired years may outnumber your working years.
Based on discussions with a number of clients over the years, I think the decision to retire has four main elements: health, wealth, plans and job.
- Retiring early will capture for your personal use some of the best years you have left. Further, there’s a large body of evidence that suggests if you make it to 60 without any major medical issues and no family history of premature death, then you are very likely to live well into your 90s. Certainly health conditions can change in an instant, but I’m comforted by the good longevity genes on both sides of my family. Also, experts agree that psychological health can impact your physical health. Retiring in your 50s or 60s may lead to a lack of intellectual engagement, which is critical for good health.
- The slow-growing economy and low interest rates of the 2010s are straining many investment portfolios. Accordingly, an annual withdrawal rate of more than four or five percent will probably deplete your principle before you reach your life expectancy. Additionally, it’s difficult for many people to live comfortably in retirement on less than 80 percent of their current income. If you think this number sounds high, consider the things you might like to do for your children and grandchildren. These numbers get even more challenging if you shift your assets to a more conservative portfolio allocation of 40 percent stock and 60 percent fixed income investments. Just 50 percent of working adults say they expect to have enough money to live comfortably in retirement based on recent polling and 71 percent of non-retired adults with postgraduate education in the same polling say they expect to work in retirement.
- What do you expect to do with your time in retirement? My father-in-law could play golf four or five times a week and enjoy every minute on the course. Conversely, I have difficulty imagining life without the intellectual stimulation, cross-generational exposure and opportunity for continued growth provided by a day job. My military career afforded the opportunity for my wife and me to see much of the world, and our only frustration with our present situation is fewer opportunities to share experiences with our far-flung children and grandchildren. If you have plans that require long time commitments and the disposable income to support frequent travel, then you may be a good candidate for early retirement.
- Do you have unfulfilled ambition or a strong desire to continue having impact? If so, recognize that many employers will be concerned about investing in a candidate in his or her 60s, and your best option may be to continue growing where you’re currently planted. If you elect to consider new opportunities, you will be competing with candidates young enough to be your children. Demonstrating a high level of energy, a familiarity with technology and an openness to new ideas will be crucial skills in the interview process or to continue growing in your current organization. If you plan to continue working, expect to crank up your game a notch to avoid the deadwood designation.
The decision to retire should not be made on impulse and must acknowledge that your retired years may outnumber your working years. As you ponder retirement possibilities, seek the advice people you trust, your mentors and people who are living every day with their retirement decisions. Continued participation in the workforce or through a range of volunteer pursuits may help you stay mentally sharp, socially engaged and more secure financially.
Jim Carman is a graduate of the MIT Sloan School of Management and the Director of MOAA’s Transition Center.