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Retirement is a time of change.

Sometimes it is forced on someone, and other times there is a gradual entrance. In this lesson, we explore these two main ways as well as effective ways to plan for retirement and how minority and gender status influence this.

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Retirement

Do you know what I dislike? Rock stars and musicians who announce they are retiring. I don’t think anyone even believes them anymore.

In just a few months, they are typically doing some kind of comeback tour. And let’s not even point out the ridiculousness of the Rolling Stones, Cher, Madonna, and Kiss who are still touring!Retirement means to stop working and end one’s professional career. Typically, this means leaving the workforce permanently.

Once gone, the individual will likely engage in other activities, depending on their financial security and abilities. For instance, some people enjoy traveling, others enjoy spending time with their family, some are forced to spend time with their family, and some must move into care facilities due to poor health.Let’s look at how people retire and then how people prepare and adjust for it once it happens.

Gradual vs. Abrupt

Abrupt retirement is a sudden and all-at-once retirement. Sort of looked at as ‘jumping off the cliff’ or being forced out of the job, this is the type of retirement where you go to work on Friday and the following Monday you’re retired. A surprisingly large number, about 1/3 of all retirees, enter retirement in this way. Overall, the amount of control a person thinks they have is key to how they take this. If the individual feels that it is a good time to retire and capture some amount of control, they will likely fare better than an individual who is fighting the process and feels like their life is out of their control.

Many of these individuals are ecstatic at their newfound freedom from work. I would be too. Think about it: no more having to do what other people say. No more having to get up and go do stuff. But, that’s the thing – it starts to get old. People who are used to getting up every day, going to work and doing things, and being effective and productive soon find themselves without meaning.

Every day starts to drag on, because they don’t have anything to do. A depression creeps in, because they are no longer being effective and contributing to the world.A way to effectively combat this is by creating structure. Instead of spending every day in bed or trying to fill the endless hours of the day, the retiree should make a job out of something. Structure and doing something will increase the positive feelings and a sense of purpose as well as helping fill up the time of retirement.

These can be things like volunteering, consulting, or finding a series of hobbies and tasks to complete outside the home.Gradual retirement is a slowing down and progressive bowing out of responsibilities. With abrupt retirement, an individual goes into work Friday, and they’re free of all work on Monday.

In contrast, with gradual retirement, the individual goes to work on Monday, but now someone else has taken on the new projects. Or the retiree has given up some responsibilities, so that they can gradually bow out and let others take over their work. Like the abrupt retiree that feels like they have some control, gradual retirees often fare better, because they feel like they have some control. Thinking about it, is it better to have things happen slowly and manageably, or quickly?Another example of gradual retirement is the need to keep working. Recent issues with finances and a down economy have brought into question the traditional retirement idea. Now it is not uncommon for retirees to continue working in some part-time or consultant role. They may not be able to work where they were, but the need to keep working to support themselves is a reality.

These individuals would be labeled as gradual retirees.

Preparation

When someone is going to stop working, it’s kind of a good idea to know what is going to happen in order to prepare. If I told you you’d lose your arm next week, you’d want to start getting stuff ready for your new one-handed way of life. That’s a rather brutal example, but I think it makes the point that things will be drastically different when you retire.Here are some simple rules to follow:

  • Start saving early
  • Plan for your needs and the unexpected
  • Utilize employer’s retirement savings plans
  • Learn what is available to you
  • Diversify, but keep basic investment principles in mind
  • Avoid early withdrawal of savings
  • Use tax-free retirement accounts
  • Research Social Security benefits
  • Consult with planners

A special note should be made.

Some of these require a person to be involved with a career with a company that offers these incentives. Many women and minorities simply don’t ever get the opportunity to enter these kinds of places. Furthermore, these groups often make less than white males do, making things like ‘not using savings’ and ‘start saving early’ more difficult, if not impossible. These disparities are reflected in the current research, with minorities and women, particularly minority women, retiring on less and often entering poverty, due to a lack of resources.

Lesson Summary

Retirement means to stop working and end one’s professional career. This can occur by abrupt retirement, which is a sudden and all-at-once retirement, or gradual retirement, which is a slowing down and progressive bowing out of responsibilities.

Some general guidelines for retiring include saving early, leaving the nest egg alone, and doing research on how to increase your savings. This can be difficult for minorities and females who often earn less than their male and majority counterparts.

Learning Outcomes

Finishing this lesson successfully will enhance your chances of meeting the following objectives:

  • Discuss retirement
  • Compare and contrast abrupt and gradual retirement
  • Understand that a feeling of control over events can impact how a person deals with retirement
  • Enumerate the general guidelines for preparing for retirement

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