Research has proven what experienced financial planners know from experience: Retiring too early is not good for your mental health.
Financial companies often advertise a form of retirement that emphasizes a life of recreation and pleasure. Americans gladly accept this relatively new idea of retirement and look forward to this lifestyle. Millennials have taken the retirement dream to the extreme with the Financial Independence, Retire Early (FIRE) movement that inspires some to retire as early as their 30s.
This latest research shows that early retirement may not be the best for your cognitive health. I would go so far as to argue that it’s not good for the soul. Humans thrive when they feel driven by a sense of purpose and service, and I have found that our formula for thriving doesn’t change when we retire. However, delaying retirement isn’t the solution. I suggest we rethink how we live IN retirement.
I’ve witnessed three general categories of retirement lifestyle. Each has its own appeal and tradeoffs.
- Retire to a life of leisure and pleasure. Some of our clients have retired without another purpose beyond the pursuit of comforts, entertainment and relaxation. While these are not harmful pursuits, they lack a sense of purpose. Boredom is a common result. Some retirees spend too much time watching the news and becoming anxious about the state of the world. Others fill their time with budget-breaking vacations. Those who were very active during their working years often cope by finding unfulfilling tasks to keep themselves occupied.
- Leave your primary career for a job you love. Some of our younger retirees happily transition to another job that may or may not be related to their primary career. They might accept a paid position at a local non-profit, provide part-time mentoring to the next generation of leaders, or take a low-stress role related to a hobby, such as working the front desk at the gym or as a starter at the golf course. Retirees who choose this path enjoy the combination of purpose, professional relationships and income.
- Leaving work for a life of unpaid service. I love meeting this group of retirees. They have the best response to our question, “What have you been up to lately?” They often share stories about making a difference through their volunteerism. Some operate a family daycare as they watch over young grandchildren. Others spend their day watching over ageing parents, or disabled siblings. You won’t see these folks in a commercial about retirement. However, the retirees in this camp often live with the greatest joy, purpose and contentment.
I believe that the most spiritually successful retirement is one that combines elements of all three of these categories. Retirement is about balance: You must strive to incorporate the parts of your working life that you found fulfilling, while also making time for the lifestyle that you’ve been working toward your whole career. This can be a challenge, but it is our joy as financial advisors to help the clients we serve find that balance, and live lives of purpose.