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Retirement May Be Bad For You

Happiness in retirement may come not from working less so much as working differently.

For many, retirement is the light at the end of the long, arduous tunnel. We work for upwards of four decades – from our 20s until our 60s – with the goal of saving, investing, and accumulating enough that we can afford to stop working and retire. There’s just one problem: it turns out that what we do for a living is often intimately tied to our own well-being and happiness, and giving it up for retirement can actually make us less happy, not more!

As Tom Rath and Jim Harter have shown in their book “Well Being, the Five Essential Elements,” our happiness and well being are tied to five areas: career, social, financial, physical, and community well-being. Most of us vary in how much well being we have among these various areas, but the Rath and Harter research shows that severe deficits in any of these areas (or especially, several of them at once) can adversely impact our overall contentment.

And unfortunately, our employment does in fact tie to several of these areas. Not only is our job a central piece of our career well-being, but the relationships we have through work often also affect our social well-being, and sometimes impact our community well-being too. As a result, there’s a surprisingly high risk of a phenomenon we see all too often when working with financial planning clients: a significant decline in happiness and well-being after 6-12 months of retirement.

Sure, the first few weeks are great: lots of time for golf, knitting, and other hobbies; more opportunity to travel and relax; a chance to just enjoy a lackadaisical day for no other reason than the fact that it’s possible to do so. But over the months, this often leads to discontentment. After a while, the TV shows are all reruns; the front nine and the back nine of the golf course are feeling stale; and, well, there just isn’t much of a real reason to get up in the morning!

For most of our retired clients, this shift comes as a surprising challenge. Fortunately, it’s not an insurmountable one. There are ways to re-engage the world and find fulfillment. Some actually go “back” to work – not at a job they need for income, but at a job that gives personal fulfillment. That may be an “easier” job with fewer hours in an old industry, or a completely new (albeit usually part-time) career. For some clients, the “work” is on a purely volunteer basis, whether with an arts, religious, or other charitable institution, but it can become as engaging, engrossing, and fulfilling as a prior job – sometimes even more so.

But the bottom line is that retirement itself – or the financial capacity to choose it – is not the endpoint of happiness after the long career journey. Instead, it is a waypoint on the journey; the transition point where employment in many cases gets better, because it can be done purely for personal fulfillment, and no longer requires a financial component. Perhaps it’s even time to stop calling it “retirement” in the traditional sense, and instead just think of it as “financial independence” – the point at which your job and your income no longer have to be connected. Think about it for yourself: what would you do to engage the world every day, if the work you chose had no requirement to support you financially? Would “work” in such a world even be work, really? Would it make retirement worse, or all the better for your own well being?

Michael Kitces, CFP, is the director of research for Pinnacle Advisory Group, a private wealth management firm located in Columbia, Maryland that oversees approximately $850 million of client assets.  He is the publisher of the e-newsletter The Kitces Report and the blog Nerd’s Eye View through his website  Kitces is also one of the 2010 recipients of the Financial Planning Association’s “Heart of Financial Planning” awards for his dedication to advancing the financial planning profession.  Follow Kitces on Twitter at@MichaelKitces.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.