How Do You Know It’s Time to Retire?

I really like the answer that Jan Cullinane, my recent podcast guest (RJ 018) and author (The Single Woman’s Guide to Retirement) gave to “How Do You Know It’s Time to Retire”.

  1. Do I have enough?
  2. Have I had enough?
  3. Do I have enough to do?

Question 1 is not just about how much money you have saved but whether it will last throughout all of your retirement years. Running out of money is retirees’ number one concern. When my wife and I entered our 5 year pre-retirement countdown, we developed a detailed financial retirement plan. The plan calculated our annual cash flow (income less expenses) over 30 years into the future and highlighted areas of concern. Since we planned ahead, we had time to fix issues and get our plan on track. (FYI, I’ve written a post called “Can You Afford to Retire?” in which I cover the importance of using a robust retirement calculator to create a retirement plan.)

Does anyone remember Johnny Paycheck’s and David Allen Coe’s (the mysterious rhinestone cowboy) “Take This Job and Shove It”? If you do, you probably already have an answer for question 2. For others, the answer is not so clear. In our case, once we had a retirement plan that we had confidence in, our perspective on work shifted from “needing” to work to “wanting” to work. Our decision to leave work wasn’t because we hated our jobs. We decided to leave when we saw how unexpected health issues derailed our friend’s plans. We thought why not give our remaining good health years to ourselves instead of our employers? Honestly, it was difficult to walk away from our income, work routine and health insurance. And it might disturb me if I calculated how much we walked away from. But I have to say that the years since we retired have been priceless and I do not regret our decision. By the way, I would love to know your answer to question 2 whether you are already retired or working on it (use the “Leave a Reply” section below).

Question 3, Do I have enough to do, refers to what is going to replace work in your life? What is going to motivate you to get out of bed every morning? Not having an answer can turn the anticipation and excitement of retirement into disenchantment. After my honeymoon stage wore off, I found myself missing work especially the sense of identity, structure and purpose it provided (see My Identity Crisis). Retirement was not what I expected it to be. However, I eventually I worked my way out of disenchantment by finding new things to replace work. Later on I learned of Robert Atchley’s 1975 model The 6 Stages of Retirement. They are: 1) Pre-retirement; 2) Retirement paths – honeymoon, immediate retirement routine and rest and relaxation; 3) Disenchantment; 4) Reorientation; 5) Retirement Routine; and 6) End of Retirement. The model reassures us that feeling disenchanted is common and normal. And most importantly it is followed by reorientation or as I call it Retirement 2.0. Perhaps if I had been aware of the stages before I retired, I might have been able to adjust faster. By the way, you can watch my presentation on the 6 stages of retirement.

Enjoying a successful retirement is everyone’s goal. However, retirement is a new experience and a stressful one (it ranks as the tenth most stressful event on the Life Change Index). Eventually most people find that they love retirement. However, the adjustment to retirement is challenging but it can be smoother if you have enough and have a realistic idea of what to expect.

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