What Does It Mean To Truly Retire?

Retirement is transitioning away from a one-size-fits-all milestone. As life expectancy increases, pensions dwindle, and an increasing number of Americans worry about outliving their savings, the concept of retirement is evolving away from traditional models into something far more flexible and individualized.

So, what does it mean to truly retire? For some, it’s walking away from work entirely. For others, it’s about creating passion projects, taking career breaks, transitioning to more fulfilling careers, or gradually reducing working hours to lessen the retirement shock. Ultimately, workers are discovering there is no “right” way to retire, and they’re designing retirements that more accurately reflect their goals, values, and lifestyles, regardless of antiquated retirement timelines. 

The Traditional View of Retirement

The Social Security Act of 1935 established 65 as the full retirement age, providing workers, employers, and government planners with a benchmark for pension planning purposes. Sixty-five marked when workers left the workforce entirely and began collecting their pensions, using savings to supplement their income streams until they passed away. Further cementing 65 as the “traditional retirement age,” President Lyndon Johnson signed Medicare into law in 1965 with, you guessed it, an eligibility age of 65.

For many, the traditional retirement model of 65 is still a goal. However, fewer Americans are leaving the workforce altogether at 65.

While Gen Xers, millennials, and Gen Zers do have concerns about their savings, Social Security, and employer-sponsored retirement savings, working in retirement is not always about the money. 

More than half of baby boomers (54%) cite working in retirement as a way to keep their minds active, and nearly half (47%) want to continue working after 65 because they enjoy their work. And 25% of workers across all generations report their desire to keep working in some capacity to maintain relationships and connections.  

The Many New Forms of Retirement

Retirement is no longer a final chapter, but rather a choose-your-own-adventure story. The evolving workforce, dwindling pension availability, and rising Social Security full retirement age drive many workers to newer, more flexible retirement models, proving that there is no one “right” way to retire. 

Early Retirement (FIRE)

Financial Independence, Retire Early (FIRE), inspired by the book “Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence,” emphasizes extreme savings and investing as a method for retiring much earlier than the traditional retirement age. FIRE gained popularity with young millennials and Gen Z, who have time and working years on their side to enable early retirement.

Phased Retirement

Almost half of American workers (48%) anticipate a phased retirement, where they gradually reduce their hours and responsibilities without completely leaving their income and benefits behind. Phased retirement also includes workers moving into part-time, seasonal, or temporary positions. This retirement model is particularly popular among baby boomers and older Gen Xers who want to increase their leisure time without leaving their primary career altogether.

Pre-Retirement

Pre-retirement, also known as semi-retirement, is when workers leave their primary careers but continue working in a different capacity. Some pre-retirees seek related jobs to their primary career, such as consulting or teaching. Others look for unrelated jobs that can supplement their income and provide a sense of societal connection until they’re ready to retire fully.

Micro-Retirements

Micro-retirements involve taking planned breaks from work, serving as a self-funded sabbatical to rest, travel, focus on family, or pursue personal goals. At the end of the scheduled break, workers may return to their same career field or explore a new one, using the time away to reevaluate their work-life balance. Micro-retirements, a growing trend among millennials and Gen Z workers, signify a broader shift in the concept of retirement, indicating that workers seek more flexible circumstances to prevent burnout and that provide autonomy and purpose.

How Do You Know if You’re “Really” Retired?

As new models of retirement involve working in some capacity or stepping away briefly and returning, how do you know if you’re “really” retired or just in another phase of your working life? Answering a few questions about your status can help you self-assess whether you’re truly retired. 

Are you financially independent?

If you can cover all of your expenses using pension payments or savings and without depending on a paycheck, you’re probably retired. 

Are you working by choice or necessity?

As pensions become less common, more people worry about their retirement savings, and the minimum age for Social Security benefits continues to rise, fewer individuals may be able to retire fully. In instances where you must continue working out of necessity, it’s crucial to find a job that enriches your life and does not introduce undue stress. 

Conversely, just because you continue to work does not mean you are not retired. More and more workers are continuing to work past the traditional retirement age to stay connected and keep their skills. The distinction between working for fulfillment and working to pay the bills matters when defining your retirement status.

Does your lifestyle align with your long-term goals?

In today’s world, retirement is increasingly about living the life you want, whether that includes working full-time, part-time, or not at all. If you’re already spending your time, finances, and energy in a way that reflects your long-term goals, you may already be living your version of retirement. 

Redefining Retirement on Your Own Terms

Traditional retirement models may work for some, but an increasing number of workers are deviating from this outdated societal definition to create their version of retirement. You don’t have to clock out for the final time to signify a happy and fulfilling retirement. Consider using some strategies to guide what you want your retirement to look like:

Vision Planning

The modern proverb “a GPS is useless if you don’t enter an address” is exceptionally relevant when it comes to retirement planning. Using vision planning to visualize your ideal day, week, month, and even your year in retirement can help you get closer to making that dream a reality. 

Sure, your perfect day may look like a slow morning scrolling through social media to see what your friend’s grandkids are up to, followed by a piddle around the garden and an early afternoon nap. Still, maybe that’s not sustainable day in and day out, and you might want to head into an office a day or two a week. 

Once you have a clear picture of your desired outcome, you can strategize to achieve your actual goals and not the assumed goals that traditional retirement age suggests. 

Lifestyle Audit

A lifestyle audit involves thoroughly examining where your money is going by reviewing bank and credit card statements, assessing property and ownership assets, estimating monthly living expenses, and analyzing the results in relation to your total income. You may have financial priorities to tackle before leaving your primary career, such as increasing savings or paying down debt. 

Financial Modeling

Once you have a clear idea of where you’re now and where you’re going, you can use financial modeling to create your roadmap and account for any detours or hazards along the way to your personal retirement destination. 

A financial advisor or retirement calculator can help you model different income sources and spending levels, enabling you to predict when you can achieve your financial vision of retirement. Confirmation from an advisor or modeling that your dream is achievable can help you cement your definition of retirement. Your current savings levels and projected outcomes may necessitate reevaluation of some retirement decisions, so starting early gives you more time to close the gaps. 

The Bottom Line

Whether you aspire to clock out for the final time at 65, retire at 35, and travel the world, or plan to work well into your 70s, retirement is not a fixed destination, and 65 is not the magic number for everyone. Personal preference supersedes traditional retirement norms, and truly retiring means having the freedom to live the life you want and choose how you spend your time, money, and energy.