The Psychology of Retirement



Editor’s note: This article is an adaptation of the live webinar delivered by Robert Laura in 2021. His comments have been edited for clarity and length.

You can read the summary article here as part of the 3rd Qtr 2021 Retirement InSight and Trends Newsletter, worth 1.0 CE when read in its entirety (after passing the online quiz.)

You may also choose to take the full length course The Psychology of Retirement for 1.0 hour continuing education (CE) credit.

By Robert Laura, CKA, AAMS, CPRC, CMFC, CRPC

Many people perceive retirement as nothing but addition, as gains, as positive things that they will get. People don’t realize that problems can be multiplied simply because you have more time and fewer distractions.

The challenge with traditional retirement planning is that we don’t drill down and look at the person. We spend all our time on the calculations. To help people live meaningful lives and make a successful transition to retirement, we must look at how they’re thinking and behaving.

We need to help people avoid wasting the first few years of retirement, trying to figure it out on their own. This is all too often what happens as people are in this transition; they kind of fumble around and what I call “suffer in silence.” The reason that happens is that there’s a stigma associated with retirement. You have enough money not to work and all the time to do whatever you want. And so, you can’t tell anybody that retirement’s not going well. If it’s not going well, what’s the matter with you, right? Ninety percent of what goes on in retirement is like an iceberg; it’s below the surface. We want to help people avoid that and gain basic strategies to fight the dark side every time.

There’s a perception that there’s a hard side and a soft side of retirement and that the hard side of the dollars and cents is what matters. However, over 80 percent of our retirement decisions and success in retirement have nothing to do with money.

Brainwashed About Retirement

Traditional retirement planning is fatally flawed. People have been brainwashed for the last 20, 30, or 40 years. It’s portrayed as not running out of money, not taking Social Security at the wrong time, and not being a burden on other people. This makes the process complex. Many people work with a financial professional because it’s complex, overwhelming, and stressful.

People also assume that the personal side will fall into place, that it will magically work out like, “Hey, we go on vacation, we do some things, we miss some things, but it all works out okay.” That’s not always the case. People also assume that work is bad and leisure is good. They assume that with more time and fewer obligations, it’s just going to be the best thing ever; that’s what they’ve always wanted. That’s not the case. We don’t want to talk about what people are going to lose compared to what they think they’re going to gain.

Another flawed assumption is that couples like and know each other. Often couples aren’t even on the same page, let alone in the same book. Both individuals in that couple think the other assumes the same for retirement. Guess when they most of the time figure it out? After they’re already spending 24 hours a day, seven days a week. It’s fertile ground for arguments and is a big reason we continue to see increases in silver divorce.

Another fatal flaw or assumption is that having more time means less stress. When people understand this, they will be able to make a better transition because we can establish their mindset; we can look at their behaviors and help them see them from a fresh perspective. Often, they head into the retirement decision without the whole picture. We need to break it down and share the psychology or be sure the mental, physical, and spiritual aspects are included.

How to Win at Retirement

One of my favorite questions to ask people is, “How do you win that retirement?” Think about someone you know who’s a successful retiree. What makes them successful? It’s a powerful question.

There are six components to making a successful transition to retirement. It requires planning ways to:

  1. Replace your work ability
  2. Fill your time with meaningful tasks
  3. Stay connected and relevant
  4. Keep mentally and physically fit,
  5. Have a way to express your spiritual beliefs, whatever they may be, and
  6. Help you feel financially secure.

A person can likely check off four or five or six of these boxes. But often, when people make the transition to retirement, they’ve only got one or two boxes checked, and they can’t figure out where the voids are.

New retirees can waste two to three years trying to figure it out. Just like we tell people that you need to have a written financial plan for your retirement income, how long it’s going to last, and how much they can take out, we need a written plan for the non-financial aspects as well. People need to understand how to win at retirement. They don’t have that context. They don’t know. They just kind of float around and, again, do mundane tasks. We think that being busy is better, and that’s not always the best way to live and make that transition to retirement. Psychology is the study of the mind and behavior. If we’re going to change people’s mindsets, perceptions and even influence their behavior in the future, we have to get rid of some old and outdated stuff.

Out-of-Date Language

There is out-of-date language that we must get rid of in retirement today. Ten thousand people retire every day, right? Wrong. Ten thousand people don’t retire every day. Ten thousand people turn age 65. The new approach should state that between 4,000 to 5,000 people out of 10,000 who reach age 65 will fail at retirement. It’s a very different conversation.

Why are they failing at retirement? Because they don’t have a plan for the non-financial aspects, they’re not prepared for what takes place beyond the dollars and cents. So, they struggle. Guess what? They can’t tell anyone. We’ve got to change the conversation from things people already know to things they don’t know that add value and stimulate conversation.

Another one that shows up often is that people prefer to plan a two-week vacation over planning their retirement. Sixty percent of people who escaped from prison are caught within the first 24 hours, and 80 percent of people who escaped are caught within the first week. If you think about it, people who escaped from prison spent most of their time figuring out how to get out, and once they got out, they didn’t know what to do. They didn’t have the tools, resources, or support. That’s the same thing with retirement. People are so focused on getting out of the workplace that they don’t know what to do when they’re in this transition. This is a much more valuable conversation than just saying, “Hey, did you know people prefer to plan a two-week vacation versus their retirement.” This concept doesn’t help them.

There’s something called the Holmes Rahe Stress Inventory. Two psychologists looked at 43 of life’s most stressful events – events that can make people physically sick. Guess what Number 10 is on the list? Retirement. If you look at the complete list of 43 events, 20 of them intersect with a person’s life at, near, or in retirement. That’s overwhelming. And so, we’ve got to look at retirement from a different perspective because there’s a lot more to it than, “Hey, and you’re 65 and got a million bucks; you’re good to go.”

The following out-of-date phrase we really must get rid of is, “You need to retire to something.” Do you? You’re essentially saying, “Hey, you should put off doing the stuff that’s important to you and wait till you’re retired to try to figure it out.” Human behavior doesn’t work like that. I can’t tell you how many times in my workshops people say, “Oh, once I retire, I will work out every day, eat healthily, hang out with the grandkids, and play golf,” and I want to say, no you are not.

First, we make our habits, and our habits make us. Taking your habits with you is ten times easier. So, it will be best if you retire with something. Don’t put off your best life, don’t put off getting healthy, and don’t put off spending time with your family until you retire. Because when you get there, you may find that you can’t. We’ve got to start changing that behavior now.

Another out-of-date belief is that retirement will make you happy. We got to quit being Pollyanna about retirement. It doesn’t make you happy. Yes, it feels good at first, but it doesn’t work like that. There’s a dark side to retirement, depression, addiction, suicide. There are scary things that lie below the surface. Add now there’s the pandemic and the isolation. These are massive factors that people aren’t prepared for, and they’re easy to fall into. If you think a stock market crash or inflation’s a problem, try dealing with addiction or depression or even the loss of a loved one due to suicide because they lost purpose. It’s scary stuff to which we must pay attention.

Another big mistake people make with retirement is they assume retirement means they don’t have to work. That’s not correct. It just reorients work. Yes, you don’t have to go to work and deal with your boss, deadlines, or other work-related things. You do have to work on yourself, your connections, relationships, your mental and social wellbeing. It still takes work. Many times, these skills are rusty because you’ve been doing other things in the workplace. Retirement doesn’t eliminate work; it just reorients it. People don’t know that they need that context and awareness. It’s like, “Oh gosh, I guess I never thought about it like that.” And I think that’s where the differentiation comes in. No matter what profession you’re in, if you’re adding value to people’s lives and they experience these “aha” moments, you’re getting results, and that’s what gives you value.

And finally, a successful retirement isn’t one without problems, but one in which you learned to overcome them. It’s not going to be perfect. I think everyone assumes that when they’ve retired, they’ll move to the beach, walk on the beach every day, work on their memoirs, i.e., what we see in commercials. That’s technically not true. We send people out to retirement with these vague ideas and assumptions and instead should be asking, “Do you have role models, examples of a successful retirement?” This is the kind of information you can put into newsletters, articles, workshops, and general conversations.

The Tie-In with Positive Psychology

Martin Seligman, the president of the American Psychological Association late last century, challenged the group to start focusing on human flourishing rather than disease and deficiency. Walking backward, a lot of psychology work has focused on how we help someone who’s at a negative four get to a negative two. There wasn’t much research focused on, “How do we take someone who’s operating at a level two or three and get to a level four or five?”

Seligman started identifying these principles of human flourishing and came up with the acronym PERMA to describe the principles of positive psychology.

  • P is for positive emotions
  • E is engagement
  • R is for relationships
  • M is for meaning, and
  • A is for achievement.

We need to create environments where people can use and allow this method to foster, and that’s not what’s happening. Remember, how do you know you’re winning at retirement? It’s not only just replacing your work identity, but you stay relevant, connected mentally, physically active, express your spiritual beliefs and feel financially secure. These are underlying components of the PERMA model. This is where advisors have a huge opportunity.

We get some positive emotions from the workplace. When the workplace is removed, we need to know how to replace positive emotions. The same is with engagement. I love professional conversations and the people with whom I’m involved. It’s engaging. If I don’t have this, how am I going to replace it?

For example, one client really struggled with the transition, and he had just retired from a job where he had turned around an organization that had been in the red for ten years. Everything was going well, and he left. Well, he didn’t have any other projects. He was moping around the house all day. He needed to set some goals for himself and to get motivated.

One thing that helps people successfully transition to retirement is to write down what a perfect day and a perfect week are for them. Most people can do the perfect day, right? Wake up, have coffee, read the newspaper, go for a walk, read a book, take a nap. It’s simple, but when we apply this to seven days a week, Monday starts Tuesday, Wednesday, and Thursday.

Key Takeaways

  • Traditional retirement planning is fatally flawed and needs to be revamped to include a focus on non-financial aspects. People really do need a written non-financial plan. It’s the same reason why they do a financial plan. When you break stuff down, it does something different. It transitions, and it transfers people that give some things to think about, but also, to look back on. People need a written retirement plan to address the mental, social, physical, spiritual aspects of retirement. It’s a huge thing.
  • There are five things to do for a successful retirement transition. The plan should address the mental, social, physical, spiritual, and financial aspects of retirement. Most people have just the financial piece. It’s essential to have all five pieces to be providing genuinely holistic or comprehensive retirement planning.
  • Making a successful transition takes work, knowledge, skills, and a fresh mindset for clients to work through the challenges. It’s about setting people up for when they get knocked down because it’s going to happen. So instead of saying, “Retirement is going to be perfect, you’re going to love this,” say, “There are going to be some challenges, and when you have them, here are some resources.”
  • The other opportunity for all professionals is to expand your centers of influence. You should probably have a personal trainer, a nutritionist, a therapist, and just some other people in your Rolodex; that when people have a question or an issue or something comes up, you can refer them out to your professional. That’s a big part of that holistic or comprehensive approach.

The Psychology of Retirement - Robert Laura, CKA, AAMS, CPRC, CMFC, CRPC

The Psychology of Retirement – Robert Laura, CKA, AAMS, CPRC, CMFC, CRPC

About Robert Laura, CKA, AAMS, CPRC, CMFC, CRPC, Retirement Activist,  founder of and the Retirement Coaches Association

Robert Laura, CKA, AAMS, CPRC, CMFC, CRPC, is the Retirement Activist who is committed to changing the way people think about and prepare for every aspect of retirement. His nationally syndicated columns at and Financial Advisor magazine reflect his ground-breaking efforts to challenge the status quo of traditional retirement planning.

As a former social worker and certified personal trainer turned money manager and author, he has found that retirement is among the most fascinating, yet least understood, phases of life. Through interviews with celebrities, professional athletes, entertainers, leading experts, and his own clients, he’s developed a powerful message to tackle the mental, social, spiritual, and financial aspects of retirement. His objective is simple: to help people create a no-regrets retirement plan.

As the RETIREMENT ACTIVIST, Robert runs the Certified Professional Retirement Coach Designation, founded and Retirement Coaches Association. He has authored Naked Retirement, Retirement Rx, and a number of guides to help individuals succeed in this next chapter of life. In addition to his own writings, he frequently appears in major business media such as Wall Street Journal, CNBC, and Investor’s Business Daily, Yahoo Finance, The Street, and more.

Robert conducts training for other financial professionals, as well as workshops and webinars for individuals and couples, designed to help people prepare for every aspect of retirement. He has been speaking and teaching economic, investment, and retirement programs for nearly 20 years.

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©2021, Robert Laura, CKA, AAMS, CPRC, CMFC, CRPC. All rights reserved. Used with permission.

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