The Retirement Problem: What Will You Do With All That Time?


You’re excited about retirement, right? You’ve worked hard for, what, four or five decades now? You’re due. No more early alarm. No more meetings. No more deadlines. No more office politics. Can you believe it? It’s just you — out on the links; puttering in the garden; taking care of your grand kids. It’s going to be great.

Except, what if it’s not as you pictured? What if those things you’ve looked forward to all these years — more time for your hobbies, more time to travel and more time to relax — aren’t enough to sustain you? What then?

Even soon-to-be retirees with big plans for the next chapter of their lives often harbor big doubts about what comes next, according Stewart Friedman, practice professor of management at Wharton and founding director of the Wharton Work/Life Integration Project. “The questions people ask at earlier stages of life become more profound at these later stages,” he says. “Am I living the life I want to live? What is most important to me? Who is most important to me? You see the end, and so you think about what you want to do with the time that you have remaining. There is the question of: now what?”

Research indicates that those who are happiest in retirement tend to answer that question by “giving back” and discovering a sense of purpose. While giving back can mean boosting charitable contributions, for a growing number of retirees it often comes in the form of a significant volunteer position or encore career, notes Friedman. “The most successful people in retirement look to use their talents and passions to make a contribution,” he says.

Figuring out how exactly you’ll make this contribution and how you define your sense of purpose is the tricky part. Some introspection is in order. “It’s critical to reflect on what matters to you,” says Friedman. “People at this stage are focused on their legacy. You need to actively inquire of yourself: What do I want to leave behind?”

‘Money Is Not the Panacea’

The great paradox of the golden years is that there is so much time, and yet so very little of it. Retirement, after all, signals the final stage of life. It typically happens after 40-plus years of work, after your children are grown and after your house is paid off. As a result, retirement is often a time when a person contemplates his or her mortality, says Jack Guttentag, emeritus professor of finance at Wharton, who is 92. “When people reach the later stages of life, the realization that their lifespan is coming to an end may generate some anxiety,” he says.

“The questions people ask at earlier stages of life become more profound at these later stages.” –Stewart Friedman

“You always knew intellectually that life was short, but during the years when you were building a career and a family, the emotional recognition of that fact was kept at bay,” he continues. “When the realization that you will soon cease to exist finally comes to call, the response can range from disabling to total equanimity.”

The end may feel near, but in fact, for most people just starting to collect Social Security, there is still plenty of life to be lived. As people lead longer and healthier lives, a person retiring from full-time work at the age of 65 today will likely live another 20 to 30 years. That time horizon is daunting for many people, says Kevin Reardon, owner and president of Shakespeare Wealth Management in Pewaukee, Wisconsin. “There’s often a combination of excitement and anxiety as people approach retirement,” he says. “The excitement comes from having more free time, but the anxiety comes from figuring out how much can I afford to spend? And what will I do with all that time?”

The two are related, but money is the most practical concern. Many prospective retirees have deep-seated worries about having enough money to maintain their lifestyle in retirement — and for good reason: The latest household survey conducted by the Board of Governors of the Federal Reserve System found that as of 2014, about 31% of Americans have no retirement savings or pension at all.

According to the latest Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI), Americans’ faith in their ability to retire comfortably, which languished at record lows between 2009 and 2013 — the crisis years — has rebounded, but is still quite low: Nearly a quarter of American workers say they are not at all confident they will have enough to be comfortable.

“Retirees are less sure of what their retirement income is going to be,” says Chris Geczy, an adjunct professor of finance at Wharton and the academic director of the Wharton Wealth Management Initiative and the Jacobs Levy Equity Management Center for Quantitative Financial Research.

And yet, he says, “money is not the panacea” for a successful retirement. “Having enough of it so that you are buffeted against antagonistic states of nature — an economic shock, say, or a health scare — is important, but there’s more to it than just money.”

In other words, people approaching retirement need to have a financial plan, but they also must have a plan to stay engaged and productive. “Your psychic value and your economic value are correlated in our society, so find ways to protect both leading up to retirement,” says Geczy. “Aging well and aging gracefully are part of the goal.”

‘It’s Useful to Know Yourself’

Aging well and gracefully in retirement may be the goal, but getting there is often a challenge. After all, it can be traumatic to leave the working world — particularly if your self-concept is wrapped up in your job. You might feel a loss of importance and a loss of vitality; you may grieve the loss of friendships. “A lot of people get their identity from work and they get their social interaction from work, so the idea of stopping means they’re going to lose both,” says Peter Cappelli, professor of management at Wharton and the director of the school’s Center for Human Resources. “[You need to] respect that it’s going to be a huge loss.

“If you’re getting close to that part of your life and you don’t know what you’re going to do, treat it as a worrying sign,” he adds. “Don’t assume it’s going to be OK and that it’s all going to work out. Figure this out now. Get busy.”

“There’s often a combination of excitement and anxiety as people approach retirement. The excitement comes from having more free time, but the anxiety comes from figuring out how much can I afford to spend? And what will I do with all that time?” –Kevin Reardon

The first step is self-reflection. Start by doing a realistic assessment of what you enjoy about your job and what you stand to lose by retiring. On the one hand, you may feel ready to leave the working world, but on the other hand, as the reality of retirement takes hold, you may feel restless and uncertain.

Consider, too, how you will spend the 40 or 50 odd hours a week you previously spent at your job. Do a mental exercise, suggests Cappelli. “Let’s say the office is closed for a week. Ask yourself: What are you going to do with all that extra time? If your answer is, ‘Gee, I have no idea,’ think about your interests. Think about your hobbies. Think about what you like about the work you do and what kinds of volunteer opportunities appeal to you. It’s useful to know yourself.”

Dig deep, says Amy Jo Lauber, a financial planner in West Seneca, New York. “Think about organizations you feel strongly about. Ask yourself: Is there a part of the world I want to make better?”

As you’re making a list of potential opportunities, seek out courses and programs that might be useful to you in this new undertaking. In the years leading up to retirement, it’s wise to invest in activities, relationships and expertise, according to San Asato, the president of a financial advisory group in Minnesota. “The thing is, no one really knows how he or she will feel once retired. Before retirement, it’s all hypothetical,” he says.

“But one of the biggest challenges is when there’s a gap between expectation and reality,” Asato adds. “You take a busy executive who has had a successful career. He is looking forward to retirement because he wants to pursue a hobby or some kind of pet project. But when he retires, he finds that he is not very good at it. It’s difficult. I encourage my clients to take classes, take lessons and brush up on their skills [while they’re still working].”

If you still need time to figure out how you want to spend your retirement – or, indeed, you still need the paycheck — consider a phased retirement, which involves working a part-time schedule while beginning to draw benefits. Many companies, including Intel and Cigna, have programs that allow older employees to scale back on a contract or freelance basis, notes Wharton’s Cappelli. “The [workers] have the same status and they pretty much work in the same groups they did before, but they do not supervise other employees and they have no administrative responsibilities,” he says.

The benefits of these gigs are myriad: You stay socially engaged, your mind stays more acute and alert, and you have ample free time to explore other opportunities. The additional income doesn’t hurt either. “You’re not getting out; you’re tapering down,” Cappelli says.

New Challenges, New Domains

Then again, you may already have your sights set on your next endeavor. Perhaps it’s a cause you’re passionate about — be it disaster relief, autism awareness and treatment, food insecurity or your local school. Perhaps it’s a continuation of a professional pursuit that involves tackling a problem in a new light. Perhaps it’s a venture that uses your hard-earned skills in a new domain.

Your idea already has a name: encore career — a job that blends personal meaning, continued income, and often involves some element of social impact. Research conducted by the consultancy Penn Schoen Berland, on behalf of and the MetLife Foundation, suggests that as many as nine million Americans aged 44-70 are engaged in post-retirement careers, and another 31 million Americans want to pursue an encore career.

“The least successful [people in retirement] are those who hated what they did to earn a living, and looked forward to a retirement when they could begin to do what they enjoyed.” –Jack Guttentag

According to the research, encore careers — also known as “post careers” or “second acts” — tend to provide more satisfaction than previous careers. People in encore careers express very high job satisfaction, and overwhelming majorities say they feel good about the work they are doing, see the positive results of their work, know that they are making a difference, feel appreciated and like that they are able to use their skills and experience, note the study’s authors. (While encore careers are not solely in the realm of the nonprofit world, the findings align with similar research on the benefits of volunteering. According to a study by Merrill Lynch published earlier this year, retirees who volunteer have a stronger sense of purpose, higher self-esteem, and are both happier and healthier than those who do not.)

It’s not surprising that people engaged in encore careers feel energized by them, says Friedman. “They’re using their human capital — the knowledge and experience they’ve developed over the course of their lives and their careers — combined with their social capital — who they know and the connections they’ve made — to make the world a little bit better.”

Jack Guttentag, the retired Wharton professor who still works full-time, is one of the ultimate examples. What he’s doing now in his so-called retirement years is not all that different from what he did as an academic and a researcher. He is working on an Internet-based calculator that makes it easier for retired homeowners to assess whether or not they would profit from taking out a reverse mortgage. “This was one of my earliest academic interests going back to the 1970s, but today we have computer-based tools and the Internet, which permit entirely new approaches to the topic,” he says.

Guttentag is philosophical when it comes to describing how he arrived at his current career. “The least successful [people in retirement] are those who hated what they did to earn a living, and looked forward to a retirement when they could begin to do what they enjoyed. The most successful are those who loved what they did during their most productive years, and continued their involvement with the same or closely related activities, possibly at a reduced scale, as they became older.

“A third group had rewarding and productive careers, which they were forced to terminate on retirement, at which point they switch to a new activity,” he continues. “How well they do depends heavily on how early they had begun to engage in what was to become their major post-retirement activity.”

But in the end, says Lauber, the financial planner, there is no one-size-fits-all solution. “There is no one formula. Retirement can take a lot of shapes. There’s a lot of different ways you can be successful in retirement.”

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