Retirement

Retirement is the fact of ceasing to work, due to employment terms, disability or choice. The practice of retiring on reaching a certain age, has been around since the 18th century & started being adopted as a government policy during the late 19th century & the 20th century.

Economic prosperity has allowed more people to move away from manual labour & also live longer & healthier lives. This structural shift has enabled a move away from compulsion of lifelong work & allowed retirement to become a life-cycle choice. Disability could be the exceptional cause that pushes a willing person out of work force.

Retirement could take one of the following forms –

• Traditional Retirement – Quitting work for good in favor of leisure &/or passionate interests on reaching certain age of seniority.
• Early Retirement – Taking a break well before average retirement age, to pursue passions & enhance life experiences.
• Semi-Retirement – Taking leave of working life but using expertise in consultative or entrepreneurial capacity with scaled back engagement & flexible hours.
• Temporary Retirement – One may feel the need to take a temporary break from work, particularly jobs with long hours, stressful environment & technological redundancy. Retirement could be of uncertain duration with option to going back to work in previous or new area.

Retirement Decision

The decision to retire – type & timing – is driven by following parameters:

• Well-Being – Life of comfort with a suitable social & entertainment eco-system.
• Finances – Ability to maintain lifestyle, preserve savings & leave a legacy.
• Health – Access to quality health services.
• Employment & Infrastructure – Access to civic amenities & employment hubs.
• Quality of life – Clean, safe environment in which to live

Ecosystem to Retire Well

A holistic approach is needed to make success of post-retirement life because demands of happiness do not change with this cessation of full-time work.

Psychological Factors – The switch from a fully engaged working life to partial or full retirement has its psychological toll irrespective of the reason behind this transition. Adjusting to retirement is difficult because feelings of boredom, anxiety & restlessness permeate the various stages of retirement, that everyone goes through –

• Pre-Retirement
• Retirement
• Disenchantment
• Reorientation &
• Reconciliation & Stability.

Societal & personal expectations present a mental challenge during the tectonic shift that retirement brings about in one’s life.  It is important to prepare for all the major & minor likely changes, so that one is not overwhelmed & can gently ease into this new stage of life. Importance of support group of family & friends, cannot be overemphasized.

Financial Factors – Retirement implies an end to stream of earned income & complete/increased dependence on accumulated savings for living out the post-retirement years. The fundamental problem is that this is akin to forecasting the future & involves putting real numbers to it. There are just too many moving parts to this puzzle. The estimate of corpus that could finance the retired life & savings required over working life to reach such a figure, can only be as good as the assumptions on which it is based.

Projecting long into the future with unknowable assumptions & basing one’s financial future on such conclusions is a risky bet. Life could pan out anywhere between highest estimate (with pessimistic assumptions of high inflation, low investment return, long life expectancy) & low-ball estimate (optimistic assumptions of low inflation, high investment return, early death) of money needed to retire. The process of estimating retirement needs has to be regularly improved, based on what did occur since the last calculation. One can safely conclude that fountainhead for successful retirement is healthy finance.