Defining retirement: What does it mean to be retired?

Defining retirement: What does it mean to be retired?

Welcome to “retirement month” at Get Rich Slowly. During the month of March, we'll explore all sorts of topics related to retirement and financial independence. To start, let's look at the defintion of retirement.

What does it mean to be retired?

This question probably seems silly to some of you. After all, isn't there a dictionary definition of retirement? There is: “The action or fact of leaving one's job and ceasing to work.” As is sometimes the case, however, the dictionary definition is less than satisfactory when you take a closer look.

In my ongoing quest to learn everything I can about the history of retirement, I recently picked up The Experience of Retirement by sociologist Robert S. Weiss. This book covers the real-life experiences of 100 traditional retirees from the Boston area. What's it like to leave work? What are the financial implications of retirement? The social implications? What makes a good retirement?

Weiss, who has spent a long time thinking about retirement, has trouble with the dictionary definition of the word. He writes:

Defining retirement can be surprisingly difficult. There are, in general, three approaches. I call them the economic, the psychological, and the sociological.”

To make matters even more complicated, I'd argue that there are (at least) five different types of retirement: traditional retirement, early retirement, temporary retirement, semi-retirement, and mini retirements. There might even be other variations that I havne't considered! (We'll explore those types of retirement in greater depth tomorrow, by the way.)

For now, though, let's take a closer look at Weiss' three definitions of retirement.

Economic Retirement

“The economic approach [to retirement] assumes that a person older than his or her mid-fifties is retired if he or she does not work, or at least does not work for money,” Weiss writes.

The problem with this definition, however, is that it completely ignores the concept of early retirement. With the possible exception of retired athletes, younger folks who have left the workplace are not considered retired.

Weiss notes that the economic approach to defining retirement also fails when looking at people who have retired from their careers but maintain “substantial part-time employment”, perhaps as a contractor with their former firm. It also ignores older people who might want paid work but are unable to get it.

Psychological Retirement

The economic definition of retirement is an objective definition — it's a way for economists and social scientists to decide whether you are retired. Contrast that with the psychological approach to defining retirement, which is subjective. It's an internal judgment each person makes for herself.

“According to this approach,” Weiss writes, “you are retired if you think you are.” This, he says, is the approach to retirement used by most surveys; people self-select whether or not they're retired.

When asked, I often say that I am retired. (Or, at the very least, semi-retired.) Yes, it's true that I'm currently spending 40+ hours per week running this website. It's also true that I hope to make money from it. Despite this, I consider myself retired. That's because I've (unknowingly) been using the psychological approach to defining retirement.

Weiss notes, “The only problem of classification that the psychological approach is likely to encounter occurs when people themselves are not sure whether they are retired, as when they have retired from what had been their careers but now work at something new.” Plus, self-definitions are malleable. They can change quickly.

Sociological Retirement

The final approach to defining retirement, Weiss says, is the sociological. “According to this approach,” he says, “you are retired if you have left your career and occupy a social niche in which it is socially acceptable to be without work.”

With the sociological definition, you are retired if others see you as retired.

There can be conflicts, however, between the way others view your status and how you view it yourself. Weiss writes:

“This is the definition of retirement that I think we use in everyday life. And yet it may be the least clear-cut of the definitions: it requires others' ratification, and there is no specific point at which this can be assuredly obtained.”

Weiss shares the example of a once-successful lawyer who had been without steady employment for years. “He said he was delighted to reach his mid-sixties…Not until then could he be sure his claim to retirement status would be accepted.”

Defining Retirement

Even with these three approaches to defining retirement, it can sometimes be tough to determine if any one person is retired or not. Yes, the definitions often overlap, but they can also come into conflict with each other.

Weiss offers himself as an example. At the time he wrote The Experience of Retirement, he was nearly eighty years old. It had been many years since he regularly taught classes or conducted research. Yet he continued to work — just on a lesser level than he once had.

“The economic definition of retirement would unhesitatingly classify me as retired,” Weiss writes. Psychologically, however, Weiss is “resistive”: “I do not want to think of myself as retired.” And sociologically, his position is ambiguous. He continues to work, but his social niche is much quieter than it once was.

If an eighty-year-old sociologist has trouble deciding whether he's retired, it's no wonder some people chafe at calling me — a 48-year-old writer — retired. Yet I consider myself retired.

Defining Financial Independence

Ultimately, “retirement” is a loaded word, and I try not to use it except in casual conversation. I prefer to talk about “financial independence,” which is essentially the same idea but without the baggage. (This is precisely why I use the term “global climate change” instead of “global warming.” The latter is more common, but it carries so much baggage that it tends to cloud conversations about an important subject.)

Re-framing the conversation in terms of Financial Independence has another advantage. There are clearly different degrees of financial freedom, so it's possible to talk about progress along a sort of FI continuum.

To me, there's little or no difference between retirement and Financial Independence. But I usually prefer to use the latter terminology in order to avoid fights with the Internet Retirement Police.

What does the word “retirement” mean to you? What's the difference between retirement and financial independence? How will you know when you've achieved financial independence? And what will you do once you get there?

More about...Retirement

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mark
mark
2 years ago

I have zero interest in ever retiring. I’m 46 now. While I will sometimes go through periods of time where I find my job/workplace annoying, I never think, “Can’t wait til I’m retired and don’t have to work anymore!” If I felt that way I’d just look for another job now. What does “retired” mean on a day-to-day, practical level? The retirees I know seem fairly bored. The active ones will go to the gym and exercise most days but, go to the theater occasionally, etc. But many just wither away. I see no benefit to ever being “retired” and… Read more »

CalLadyQED
CalLadyQED
2 years ago
Reply to  mark

I’m 33 and I have been longing for retirement for years. I never wanted to work and I still don’t. So I’m (very imperfectly) pursuing FI so I can stop “working”

Jason@WinningPersonalFinance
2 years ago

Great post J.D. I 100% agree with your approach of talking about financial independence and not focusing on retirement. I even wrote a guest post about why I’m trying to FI and not FIRE on Abandoned Cubicle (link in my name). I struggle sometimes with people that are still “working” 20+ hours a week consider themselves “retired.” I think somebody can be retired from their primary career but still work in a new one. I guess the best definition of retirement would have to be “you are retired if you think you are.” Nobody can really argue if the criteria… Read more »

Smile If You Dare
Smile If You Dare
2 years ago

Yes, “retiring” is a loaded word, and can be an uncomfortable thought for sure.
While some pople (mostly those working I would guess) think that retirement is some kind of lottery-winning experience, it isn’t. The idea of retiring brings up ideas of shuffleboard and golf. Not for me…

I have solved this problem by realizing that I have “stopped working”!

JoeHx
JoeHx
2 years ago

I really like the psychological retirement and sociological retirement deifnitions – you are retired if you think you are and you are retired if others see you as retired. It seems to make sense since retirement is more of a status, maybe a social standing, then an objective thing. Financial independence, on the other hand, simply means you have enough money that you don’t need to work. I think it might be hard to actually determine when someone crosses the threshold from financial dependence to financial independence, despite the fact that’s there’s been tons of research and that the “4%… Read more »

Dave @ Married with Money
Dave @ Married with Money
2 years ago

I’m a big fan of the psychological retirement definition. The others are too subject to the opinions of others. If I want to be a broke retired person, then why should I not be able to do that?

That being said, FI is much more important to all of my planning, as I continue to do some sort of work/projects/etc after I’m done working for ‘the man’

Big-D
Big-D
2 years ago

I have always considered retired, in terms of how others perceive it, as “the ability to not be required to work for money as dictated by another entity for a prolonged period of time”. What I mean by this is someone else (or if you own your own company, business requirements) does not say “show up for the 9:00am meeting or else”. By this definition, JD, you are not retired because you perform actions for GRS (and write articles) and have deadlines. You cannot leave for a 5 months around the world cruise and not have negative repercussions on your… Read more »

Marc
Marc
2 years ago

To me, retirement is not working at all (by choice, which would exclude people who want work but are unable to find it). I consider retirement and financial independence to be different, but I know not everyone shares my opinions.

Marc
Marc
2 years ago

Most people “retire from” something. I consider it “retiring to” your life purpose. You stop doing what you have to do and have the money and time to do what you are called to do.

Steveark
Steveark
2 years ago

That was fascinating. I am always at a loss when people ask me what I do. It seems disingenuous to say I’m retired when I’m earning twice the median US salary with my consulting but it feels wrong to say I’m working when I have a two day work week and five day weekends. When I’m talking to my super rich friends they always seem puzzled that I work at all, like maybe I invested all my money in crypto’s and now I’m having to be a Walmart greeter. And when I talk to guys still working at my old… Read more »

JC Webber III
JC Webber III
2 years ago

I ‘retired’ early (57) and reached financial independence about the same time (maybe a few months sooner). Now at 67 (and collecting SS) I don’t feel any difference in status. I’m still retired (and still FI). 8^)

Jan
Jan
2 years ago

At least saying “retired” is acceptable (not understood, but acceptable). Saying that I am FI to most of my friends, who still struggle with day to day bills? No way! That would be looked on as bragging for sure.

S.G.
S.G.
2 years ago
Reply to  Jan

Sure, but just because you dont want to use a specific term doesnt make it less accurate.

Though im curious, “retired” isnt just as loaded for the same reasons? I would think youd fudge it a little and just say “unemployed, but not looking for work” which is technically accurate.

S.G.
S.G.
2 years ago

As a card carrying member of the “retirement police” I’m going to have to issue you a citation. You aren’t retired. You are self employed. You run a business as do most of the larger FI bloggers I’ve seen. If I had to set objective criteria on it I would say you’re retired if you don’t work more than 20 hours per week and don’t work for money to support yourself. Semi-retired would be if you work part time/sporadically and/or have a need to work for money to support yourself. Self employed if you work more than half time on… Read more »

S.G.
S.G.
2 years ago
Reply to  S.G.

Oh, I thought it went without saying, but for clarity: financially independent but still working more than half time for someone else is “employed”.

timemoveson
timemoveson
2 years ago
Reply to  S.G.

I think these definitions are very thoughtful and would describe my objective view of what the real meanings are. There are no value judgements implied by any of these; they just provide context and differentiation I think. Well said.

Accidental FIRE
Accidental FIRE
2 years ago

I think if you’re working for money in any capacity, you’re not retired. However, if you left a traditional w2 job and now work on things on your own time (not dictated by someone else) I have no problem with folks saying ‘retired’ in that case. But let’s face it, they’re self employed as S.G. said. But those ‘police’ who get all butt-hurt about folks using that word need to get a life. The best status of all is being self employed, and not needing the money at all. You’re just doing it for the fun of it and because… Read more »

S.G.
S.G.
2 years ago

I get you and agree for a lot of things people get wound up about on the internet. With that being said: Words mean things. Arguing over their meaning clarifies our communication so we aren’t talking past each other. I get annoyed when I’m reading the blog of a “retired” person who has monetized their site and, in at least one case, was talking about the paid work their doing. Part of the point of the sites is to understand how not making money anymore is okay. I don’t read MMM because i don’t care for his style, but i… Read more »

Cindi
Cindi
2 years ago

I despise the word ‘retirement’. I also despise the word ‘working’. In their place, I like and prefer the word ‘living’. I’m LIVING! My entire life has been set against the money that flows my way. It’s a very simple formula and doesn’t take any brain cells to figure out. Right now, my income flows between $1,500 and $2,500 a month. It didn’t take a genius to figure out that if I was debt free, the above income would work for me just fine. Paid off home, cars, yada, yada, yada. If I do need something expensive, I take out… Read more »

Lady Dividend
Lady Dividend
2 years ago

Very thoughtful article. Your discussion of the different words for and meanings of retirement make me want to ask a question to the readers. Is anyone NOT forthcoming about their plans to retire early? I haven’t told anyone, and one day I would just like it to appear that I decided to become a stay at home mom (no kids yet).

freebird
freebird
2 years ago

To me retirement is about control over how I spend my time. Not doing something when I’d rather be doing something else, that sort of thing. I’d say that financial independence is the difference between retirement and unemployment. My idea of financial independence is when my investment portfolio net value exceeds 30x my annual expenses. For me that was over a decade ago, and what I did was keep working full time. That’s when I learned about the value of financial independence– whether or not one decides to retire early. Sure many (most?) who hit their target check out of… Read more »

James Chan
James Chan
1 year ago

How about if we replace the word retirement to re-enactment to suggest that you leave the “world-of-work” to start a new “world-of-self.” That way, people don’t know what you’re talking about; and you should not care if they “get it.” Everyone is happy, allegedly. You quietly return to the Tao and no one bothers you, including yourself.

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