Carl was 62 when he decided it was time to retire. I asked why. He said all his friends were retiring and he figured he wasn’t getting any younger and thought he would, too.
The next time I saw Carl, I asked how he was enjoying retirement. “What retirement?” he said. “I was so bored, I called my old boss and got my job back.”
In my years as I financial planner, I’ve seen both good and bad reasons to retire. Here are some of the more common bad reasons:
• “I’m at retirement age.” In the US, you’re generally not required by law to retire at 65. I have clients who are over 80, still in good health, and still working because they enjoy it.
• “I’m bored with (or sick of) my work.” If work is boring, retirement could potentially be even more so. Like Carl, you may quickly grow sick of retirement. If you hate your work, consider engaging a career counselor and find a job or career that will excite you. Remember, Colonel Sanders was in his 60’s when he founded Kentucky Fried Chicken.
• “My parents retired when they were my age.” You are not your parents. Your life, circumstances, and reasons for retiring—or not—are different from theirs.
• “I don’t like my boss.” If this is the umpteenth boss you haven’t liked, now would be a great time to get some counseling and find out how you’ve managed to pick such poor bosses. Once you figure that out, go find a boss that’s a joy to work for. They do exist.
• “I got laid off.” It’s always hard to be laid off, especially at an advanced age when finding a new job can be more of a challenge. Again, this is not a good reason to retire. With an aging workforce, an increasing number of employers are willing, even eager, to hire older employees.
• “Between Social Security and my savings, I think I have enough money to retire.” “Thinking” you have enough isn’t good enough. You’d better “know” you have enough. A good rule of thumb is to only withdraw 3% to 4% of your retirement nest egg each year. Add that to your annual Social Security income to get the total amount you can spend every year for everything, including taxes, travel, new cars, and one-time expenses.
• “My spouse wants me to retire.” Cajoling a reluctant partner into retirement can backfire. Find out the reasons your partner wants you to retire and negotiate a win/win solution. For example, if your spouse wants to spend more time with you or travel, consider reducing your work hours or taking more vacation time.
So am I saying you should keep your job until you’re 90? Of course not. There are some excellent reasons to retire. The best one is having a good idea what you want to do instead of working for an income. I encourage my retiring clients to do a set of exercises that help them explore what the perfect day, week, and month look like in retirement. Make a list of the activities you want to do and establish a time line for accomplishing them.
Another good reason is being financially independent. You have a financial plan, a clear idea of how you and your spouse want to live in retirement, and ample income to support your chosen lifestyle.
The best reason to stop working for an income is that you have something else you actively want to do instead. Ideally, instead of merely retiring from something, you will retire to something you will enjoy.