Retirement doesn’t just affect your wallet; it also has a big impact on your well-being. Still, only about 1 in 10 Americans are equipped for this transition. In a recent survey of financial planners, only 11% said their clients were prepared for the mental ramifications of retirement.
Although building a nest egg by saving and investing is an important part of preparing for retirement, experts say it’s not the only thing you need to do before you clock out for the final time.
The way we tend to think about retirement isn’t wrong, but it is often incomplete, says Ashley Agnew, senior wealth advisor and director of financial wellness at Centerpoint Advisors in Needham, Mass. “We envision more relaxed days, but often fail to imagine how we will describe ourselves,” she says. As a result, many people feel like they have lost a sense of identity and purpose after retirement.
Richard Kahler, founder of Rapid City, S.D.-based Kahler Financial Group and a certified financial therapist, says many people look ahead to retirement with only positive anticipation. The discovery of more complex feelings surrounding the ending of a career can throw people for a loop.
“The curveball is they get into retirement and go, ‘Oh wow, this is not what I was expecting,’” he says.
Most people’s identities are wrapped up in their careers, particularly those with high-powered jobs and those who have achieved professional success and recognition. According to Kahler, retirement can trigger anxiety and feelings of low self-worth, along with a sense of loss, similar to the grief people feel after the death of a loved one.
These emotions can be especially acute in cases where an illness or injury requires someone to stop working. “It’s an especially hard transition if you’re forced to retire. We don’t factor in that transition might not be of our choosing,” Kahler says, adding that forced retirement can exacerbate the loss of purpose that retirement can bring.
A 2023 study by the Transamerica Center for Retirement Studies found that 56% of retirees were forced to retire before they expected to; fewer than 40% retired on their preferred timeline.
Forced retirement due to illness or injury can be detrimental to a person’s finances, Kahler notes. But even if you’re able to retire on your own timeline, feelings of loss and uncertainty can become a threat to the economic stability you spent your working years preparing for. Without a clear sense of purpose or identity, people can try to fill that void by spending recklessly and endangering the income-producing potential of their nest egg.
How to prepare emotionally for retirement
Since one major reason people feel unmoored after retiring is the lack of a daily routine like the one that defined their working years. Kahler suggests imagining — or even planning out — daily or weekly schedules. When will you get up? What will you do in the mornings, at midday and in the afternoons? Thinking through what your day-to-day life will look like can help you visualize your new reality.
Agnew recommends what she characterizes as “guided brainstorming.” Write down your strongest feeling, then identify two more specific emotions within that feeling. (For instance, if you start with the observation that you’re feeling sad, you might from there identify uncertainty and fear within that sad feeling.) Then think back to other times in your life or experiences when you felt those emotions. Write down those experiences, along with your recollections of how you met those challenges and overcame those negative feelings.
This exercise does two things, Agnew says. It forces you to confront your feelings rather than avoiding them by engaging in bad habits like overspending. In addition, “[It] is a good reminder that you can indeed get through hard things, even if they do not go exactly as planned,” she says.
Some people may fall into poor money management habits in retirement because of an unconscious correlation between our worth as people and our ability to generate income, according to Susan Zimmerman, co-founder and program director of Mindful Asset Planning in Apple Valley, Minn. For many of us, “Earnings equal recognition,” she says. People should make a conscious effort to develop an identity and a sense of self-worth that isn’t tied to their earnings potential.
Your career path can be a good place to start. “Increase your self knowledge. Ask some questions,” Zimmerman says. For instance: What are the enjoyable parts of your job? What are your strengths and weaknesses? The answers you come up with can help guide you toward hobbies or volunteer opportunities that can make your retired years more fulfilling.
Another valuable resource to help you manage the transition is people in your network who have already retired. Zimmerman points out that these friends and colleagues can offer a perspective shaped by experience and advice for navigating a post-career reality.
“The all-consuming element of most adults’ work lives leaves very little space to think through what might be viewed as the heavier topic of, ‘What am I going to do with the new me?'”
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