Knowing when to ring the closing bell on your career is complicated.
No one wants to feel pressured to step down. For most people, from the president of the United States on down, the ideal scenario is to exit when you want, how you want.
It might be a gradual phasing out from your working days or a hard stop. In either case, facing the difficult decision is often more personal than professional, and it’s generally entangled with your financial outlook.
“There are many dilemmas that people grapple with as they’re trying to make this decision,” Teresa Amabile, a psychologist at Harvard Business School who has extensively researched workers’ retirement paths and co-author of the forthcoming book “Retiring: Creating a Life That Works for You,” told Yahoo Finance.
One-size-fits-all prescriptions are likely to fall short, but there are some things that can make the decision less fraught.
“The people who have an easier time stepping away don’t necessarily identify less with their work, or their profession, or their organization,” she said. “It comes down to self-awareness. They are more keenly aware objectively of who they are at this point in their life than people who struggle with the decision.”
Those who have less angst over pulling the switch are not focused on who they were “when they were starting their career, or at the peak of their activity in their career, possibly 10 or 15 years earlier,” she said, “but who they are right now and their driving motivations, their passions, and their health and stamina at this point.”
The coming wave of 65-year-olds
A growing number of you will be facing these big questions not long from now. This year, a record number of Americans are turning 65 — about 4.1 million — according to an analysis from the Retirement Income Institute, and the surge will continue through 2027.
Roughly 1 in 5 Americans age 65 and older were employed in 2023, four times the number in the mid-1980s. That tallies up to around 11 million workers, according to the Pew Research Center.
“For many of us, retiring is difficult because we are ashamed about not working,” Teresa Ghilarducci, a labor economist and author of “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy,” told Yahoo Finance. “And that contributes to the American style of retirement, which is a continual busyness and a declaration of being busy.”
Another reason people have trouble stepping aside from a position or retiring is that they don’t have a life or identity outside of work, Robert Laura, a retirement coach, told Yahoo Finance.
“Many people confuse who they are with what they do. Frankly, they fall in love with work but don’t realize work can’t love them back, so they cling onto it,” he said. “It’s a concept called enmeshment, where people get too many of their personal and psychological needs intertwined with the workplace. This actually happens a lot with high-profile people.”
Read more: Retirement planning: A step-by-step guide
‘Get up on the balcony’
So, how do you start to disentangle your identity and wean from the need to be busy? Try taking an outside-looking-in view of yourself.
”Remove yourself a little bit psychologically from the action of your day-to-day life and take a more objective view of yourself, which sometimes requires that you do this with a psychotherapist, a trusted friend or relative, or a life coach,” Amabile said.
“Get up on the balcony with someone to talk you through what your life is now: What are all the different pieces, what parts are complementary, what parts are in conflict, what parts energize you, what parts drain you?”
You might discover that it’s not how productive or powerful you are in your job that matters.
Be honest with yourself about whether you’re struggling with your work in ways you didn’t used to or if you just plain have less energy during the day.
The culture of your organization may have changed in a way that you find less appealing, or colleague relationships that you’ve treasured have been broken by people retiring or leaving for a different job, she added.
Then again, you might be motivated to stay because you are hot on a new assignment that “you’re incredibly jazzed about, and you feel revitalized in your work life, and you’re looking for a project that will be a capstone on your career,” Amabile said.
That may be a sign that your off-ramp is still a few exits away.
What if you can’t afford to retire?
For millions of people, money is a significant factor in not stepping away from work even when they physically and mentally should.
“Very few people are working in their late 60s and 70s for sheer pleasure; more are working because their retirement income is low and unstable,” Ghilarducci said. “If you can’t afford to retire, it also creates shame, and that shame creates depression and inaction, and that makes the problem even worse.”
Most people between the ages of 62 and 70 who are still employed are working because of financial necessity, according to her analysis. Meanwhile, 2 in 5 of today’s working households could fall short of maintaining their standard of living in retirement, according to the Center for Retirement Research at Boston College.
There are ways to plan ahead so that making your decision to retire isn’t dictated by your fear of outliving your money.
Have a question about about retirement? Personal finances? Anything career-related? Drop Kerry Hannon a note.
Knowing what you have to work with is key.
“The most important thing I see folks overlook when they are thinking about retirement is getting a handle on their expenses,” Tricia Rosen, a financial planner and founder of Access Financial Planning, told Yahoo Finance. “The summary of someone’s expenses doesn’t have to be very detailed to be useful, but a realistic understanding of what they need to maintain their desired lifestyle is needed.”
It’s helpful to break it down into two parts: the basic, non-negotiable expenses, and the ones that can be more flexible from year to year, she said.
Consider using some of the standard planning guidelines for retirement transition such as having 25 times your anticipated annual retirement expenses, said Brian Preston, a certified financial planner and author of the new book “Millionaire Mission: A 9-Step System to Level-Up Your Finances and Build Wealth. Traditional guidance says not to spend more than 4% of your retirement savings in the first year to protect yourself from running out of money in your golden years.
The folks who are good savers and not comfortable spending are usually in the best shape financially to retire, but they have a hard time with making the transition to retirement, according to Rosen.
“The shift from seeing their portfolio grow to taking withdrawals from their portfolio to cover their living expenses can be very difficult and scary,” she said. “It’s an emotional transition that I don’t think is given enough weight.”
Learn more about high-yield savings accounts, money market accounts, and CD accounts.
Look at beginnings, not endings
It’s what you are retiring to, not what you are retiring from that should be your mindset. Often, older workers feel like they can’t quite retire because they don’t know what life will be like for them on the other side.
“Facing a structural void, which is how many people think of retirement, can be really daunting and even terrifying,” Amabile said.
Her advice: Ask what interests you had in the past that you never pursued. Might there still be a spark you can rekindle?
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on X @kerryhannon.
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