February 27, 2020

Retirement is Liberating – and Hard Work

Most baby boomers find the first weeks of retirement liberating. But it takes some work to ensure the feeling lasts.

“Almost everyone is just thrilled with the first days of retirement, and the big thing is: ‘I do not have to set my alarm,’ ” said Harvard Business School professor Teresa Amabile. Eventually, another thought dawns on a new retiree: “I don’t want to turn into one of those people who sits around in their jammies half the day. I need more of a routine.”

That’s when they start investigating what they’ll do with their time, said Amabile, who, with a team of researchers, interviewed 83 older professionals during their pre- or post-retirement years (or both) to understand the transformation from worker to retiree.

For a smooth transition, the planning should start well before leaving your job, as you process the question of how and when to retire. A critical part of the retirement decision is making sure you can afford it. But the psychological preparation is just as important.

This work, which boils down to four essential tasks, can take several years before and after the retirement date to complete. The first task – the decision to retire – was covered in last Thursday’s blog. Here are the remaining three:

Detach from work. Some people already have one foot in retirement while they’re still working. This can happen organically as an older worker starts to feel marginalized, or it can be a self-directed detachment as he or she becomes psychologically more distant in preparation for leaving. Amabile said completing the process of detaching from work can take weeks or years after retirement day. …Learn More

February 20, 2020

Mapping Out a Fulfilling Retirement

One might say that baby boomers on the cusp of retiring come in two varieties. Some cannot wait to retire and already have a plan. For others, the unknowns fill them with dread.

How will I occupy my days? Should I do something meaningful, or is the goal just to have fun? And how do I figure this out? At 62, this writer really has no idea.

For the other boomers who are feeling this way, take some comfort in knowing you are in good company.

“I can’t say this strongly enough. There are some people who seem to literally not think about what their retirement might look like before they retire,” says Harvard Business School professor Teresa Amabile, whose research team interviewed 83 professionals in their pre- or post-retirement years (or both) to study how they navigate the transition years.

A big part of retiring is letting go of what can be a strong identification with work, and people are reluctant to give that up, she said. This identity might be attached to one’s profession – doctor, professor, carpenter – or to an employer, a specific experiment, or the team on your current project. For others, identity is tied to being the family breadwinner. For many people entering retirement, the basis of that identity is “profoundly shaken,” Amabile said.

Of course, not everyone confronts an identity crisis. Older people who are eager to start a new chapter of their life or are simply burned out by work may find that it’s liberating to shed that old identity and move on.

But, according to Amabile, a more arduous process is common. Many older workers begin to realize, “My identity as a person and my work are really bound up together, so I need to work through that.” A crucial part of planning for retirement is determining “what life is going to be like without work, because work structures your life,” she said.

Amabile described the problems one couple in the study encountered because they didn’t have a solid plan. After retiring, they moved out of the community they’d lived in for 25 years and relocated near some family members. But two years later, they still hadn’t settled comfortably into their new life and “felt at loose ends all the time,” she said.

To prevent this from happening to you, consider that boomers typically must go through four tasks as they transition to a satisfying retirement; Amabile and her team members – Lotte Bailyn, Douglas Hall, Kathy Kram, Marcy Crary, and Jeff Steiner – saw these four tasks in many of their interviews with baby boomers.

The tasks – described below and in a follow-up blog – don’t have to happen in any particular order, though the most common sequence is: Decide to retire. Detach from work. Explore a new life structure. Consolidate a new life structure. …Learn More

December 31, 2019

Boomers Want to Make Retirement Work

The articles that our readers gravitated to over the course of this year provide a window into baby boomers’ biggest concerns about retirement.

Judging by the most popular blogs of 2019, they were very interested in the critical decision of when to claim Social Security and whether the money they have saved will be enough to last into old age.

Nearly half of U.S. workers in their 50s could potentially fall short of the income they’ll need to live comfortably in retirement. So people are also reading articles about whether to extend their careers and about other ways they might fill the financial gap.

Here is a list of 10 of our most popular blogs in 2019. Please take a look!

Half of Retirees Afraid to Use Savings

How Long Will Retirement Savings Last?

The Art of Persuasion and Social Security

Social Security: the ‘Break-even’ Debate

Books: Where the Elderly Find Happiness

Second Careers Late in Life Extend Work …Learn More

October 3, 2019

The Secret to Feeling Younger

You’re as young as you feel!

This cliché is meant to be uplifting to older people. But it really just begs the question: what, exactly, is it that makes a person feel young?

Having a sense of control over the events in one’s life is the answer that emerged from a 2019 study of 60- to 90-year-olds in the Journal of Gerontology. “[B]elieving that your daily efforts can result in desired outcomes” lines up nicely with what the researchers call “a younger subjective age.”

This makes a lot of sense. Feeling in control becomes important as we age, because it counteracts our growing vulnerabilities – we can’t move as fast, hear as well, or remember as much. Wresting back some control can rejuvenate older people, instill optimism, and improve memory and even longevity, various studies have found. …Learn More

September 26, 2019

Half of Retirees Afraid to Use Savings

For most retirees, figuring out how much money to withdraw from savings every year is a difficult-to-impossible math problem. But the issue goes much deeper: fears about what the future might bring make this decision overwhelming.

Extreme caution is a popular solution. A 2009 study estimated that by the time middle-income retirees are in their 80s, they still had not touched about three-fourths of their savings, and 2016 research found that retirees with substantial assets are the most reluctant spenders. Vanguard recently reported that retirees with very modest savings turn around and reinvest a third of the money they’re required to withdraw under IRS rules after age 70½.

People saved all of their lives to make sure they will enjoy retirement. So why are they so reluctant to spend the money for the purpose it was intended?

A 2018 study in the Journal of Personal Finance surveyed retirees to get a sense of the psychology behind their caution.

Half of the survey respondents agreed with this statement:  “The thought of my retirement portfolio balance going down over time brings me discomfort, even if the decline in value is a result of me spending money on my retirement goals.”

And the people who agreed with this statement said they feel like they are not well prepared financially to retire – and this had nothing to do with how prepared they actually are. …Learn More

September 24, 2019

What Personality Says about Your Wealth

A person’s finances are not determined simply by obvious factors like how much they earn – personality can also make a difference.

A new study has identified three personality traits that play a role in how individuals handle their nest eggs. For example, conscientious people – self-disciplined planners – are more careful and have more wealth at the end of their lives.

The University of Illinois researchers looked at two types of wealth: within employer retirement plans and outside of these plans. They did not find a connection between the wealth levels in employer plans and various personality traits, a result they anticipated because retirement wealth has more to do with a retiree’s work history and earnings.

But they did find a connection between personality and the wealth individuals hold outside of their retirement plans. Even though the majority of retirees have very little of this wealth, it’s still interesting to see the connections.

For example, retirees who are open to new experiences – they are imaginative, proactive, and broad-minded – behave like conscientious people and preserve their wealth, especially after their mid-60s, according to the study, which was conducted for NBER’s Retirement and Disability Research Center.

Agreeableness works in the opposite direction. Agreeable people are known for being soft-hearted, friendly and helpful – they also tend to care less about money or about managing it. Not surprisingly, they have less wealth. …Learn More

March 5, 2019

Books: Where the Elderly Find Happiness

Aging is not, as the cliché goes, for the faint of heart. If a woman makes it to 65, she can expect to live at least 20 more years. Three new books written by or about the elderly provide a wonderful roadmap to aging with grace, introspection, gratitude, and humor.

“Coming of Age: My Journey to the Eighties” by Madeleine May Kunin

The former Vermont governor and ambassador to Switzerland has authored books about politics, feminism, and women as leaders. In her new memoir, she has blossomed into an essayist and poet. Kunin, who is 85, muses about defying “death’s black raven” on her shoulder. The color red is one way to achieve this. She bought a Barcelona Red Prius (easier to find in the parking lot), and then she and her late husband, John, purchased two oversized red armchairs. “I wanted to bring life inside – not leave it outdoors. And the red chairs did exactly that,” she says.

In her poem, “I Loved You When You Did the Dishes,” she writes tenderly of John – first as a robust partner, then as a dependent, and always as “the man of my dreams.” Old age has given her permission to let down her guard, which she did not do as a public figure. Now she discloses private matters like thinning skin and her pain when, as a young legislator in the 1970s, male colleagues didn’t take her seriously. But she invariably looks back on her life with humor. Kunin tells one anecdote about ducking into a men’s bathroom to avoid the long line for the women’s room. A man who recognized her immediately said, “I never thought I’d meet the governor here.”

“Women Rowing North: Navigating Life’s Currents and Flourishing as We Age” by Mary Pipher

Early in her book, Pipher borrows a novelist’s words: “Old age transfigures or fossilizes.” Pipher, who is a psychologist, urges women to aim for transformation or “willing ourselves into a good new place.” The most important thing, she says, is to keep moving along, upriver – memory loss, muscle loss, and stereotypes be damned! Each chapter is a roadmap to that good place: Understanding Ourselves. Making Intentional Choices. Building a Good Day. Creating Community. Anchoring in Gratitude. In the chapter Crafting Resplendent Narratives, she advises readers dealing with difficult situations to “honor our pain and move toward something joyful.” …Learn More