Should You Take That Early Retirement Package?

My former employer (a large household name corporation) recently announced their intention to reduce their workforce by 15%. To accomplish that, they are offering eligible employees a generous early retirement package.

So far, four of my friends who still work there are taking it. Another friend who is 56 and was planning to work at least into his 60s, is thinking about it.

I was in the same situation over 11 years ago. I was 56 at the time (almost 57) and planned to work another 3½ years. But the company offered a generous package and after running the numbers and contemplating at great length, I decided to do it.

I’ve never regretted my choice.

Admittedly, I would have benefitted from another 3½ years of salary. I became a wedding officiant for five years to earn supplemental income until I started taking Social Security at 62.

But I was ready to end my career. Fortunately, I already had a clear picture of what I wanted to do with my life after I retired. If you’ve read some of the articles on this website or my books, you know that I firmly believe this is one of the keys to a happy, fulfilling retirement.

If you are now facing the prospect of early retirement or find yourself in this position in the future, you are not alone. The Employee Benefits Research Institute released a Retirement Confidence Survey in 2023 that found that 70% of people retire earlier than planned, and they retire, on average, three years earlier.

I am not a financial planner. Retire Fabulously! covers the non-financial aspects of retirement. Whether you can afford to retire early is a separate matter. But it’s important to be mentally prepared for retirement and have a realistic idea of how your life will change and what you’ll do with your newfound freedom. Here are some pointers to help you transition more effectively into early retirement.

There are so many other interesting ways to spend your time. I feel like early retirement is a gift, but it’s such an incredible gift. It’s a gift I need to use. - Martha Felt-Barton

What will you do each day?

We all love vacations and weekends because they give us a nice break from our work days. I hate to be the bearer of bad news, but retirement is not a permanent vacation. I think it’s more accurate to view retirement as each week being a 7-day weekend.

When you wake up on your first non-work day (hopefully not to an alarm clock), what will you do?

You may wish to allow yourself a few days or weeks to decompress and do whatever you feel like doing – or nothing. And you probably have a list of chores or projects to do “someday.” But sooner or later, that will get old.

To me, retirement (early or not) is a fantastic opportunity to design the life you truly want to live. You are being given 40+ hours of your week back. Your challenge is to fill those hours with pursuits that bring you happiness and fulfillment. That looks different for each of us, but the mix of activities you curate for your new life should include something from these broad categories.

Physical Activity

It’s easy to become more sedentary after you retire, especially if you spend hours in front of a TV or a computer screen. If you’re into recreational sports such as pickleball, tennis, golf, bowling, hiking, or biking, great! Walking for half an hour a day is a healthy activity. Even minor choices you make throughout the day, like parking farther away in a parking lot or taking the stairs instead of an elevator, can make a difference.

Mental Stimulation

One of the best ways to keep your life interesting is to keep learning. Read thought-provoking books, go to museums, or take classes. Many community colleges welcome people of all ages and you don’t have to be enrolled in a degree program. You can take whatever classes interest you. Some universities allow seniors to attend classes that aren’t full for no cost and no credit. Your local library or community center may offer interesting programs.

Socialization

While you worked, socialization came easily. You were surrounded by people all day long. Even if those people were acquaintances more than friends, you benefitted from human contact. It was easy to find someone to eat lunch with. Except for those friends with whom you socialize outside of work, you’ll find that most work acquaintances fall away quickly.

After you retire, you’ll need to take a more proactive approach to socialization. You’ll need to initiate contact with others and plan get-togethers. Activities such as taking classes or joining a band or chorus will put you in contact with others. Be sure to cultivate several friendships with people who care about you and can offer support if needed.

Fulfillment

Fulfillment is difficult to define and it’s different for each of us. At a high level, fulfillment means anything that makes you feel happy, alive, and complete. It’s whatever makes your heart sing. It’s how you feel when you’re “in your zone” and you lose track of how much time is passing.

Fulfillment comes from many sources, internal and external. It may come from expressing yourself creatively through art, music, or writing. It may come from volunteering. It may come from exploring new places and learning new things. It may come from spending time in nature or with family or friends.

Activities that bring you fulfillment don’t have to be productive (although they can be), they only have to bring you joy.

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After you are retired, you don’t have work assignments to complete, deadlines to meet, quotas to satisfy, or accomplishments to collect for your annual review. Your “job” now is to be happy living the life you want to live. That may require a significant mindset shift from how you have lived for most of your life.

It’s also an opportunity to create a new identity for yourself. Depending on how career-focused you are, your job title gives you identity and purpose. It reflects your knowledge and skill and the value you contribute to the world. It may convey prestige, status, and empowerment.

When you retire, you lose this identity, at least in the present tense. You’ll always be a “former” or “retired” something, but that probably won’t provide the same fulfillment or validation.

Before I retired, I was a software engineer and, for the last ten years, a manager. Now I can say that I’m a musician and an author.

Who will you become? The title isn’t as important as the fact that you still have a purpose for your life. You’ll be happier if you have a reason to get up each day and something to look forward to.

This topic is explored in greater depth in my book Smooth Sailing Into Retirement. This book will guide you from your last few months of work through your first year of retirement. It identifies the many ways your life will change and prepares you for the emotions you may experience along the way. You will learn how to design your new day-to-day life in a way that will reflect your passions and interests. You will be inspired to create a new identity for yourself that embodies the way you plan to live in retirement and frees you from the limitations of your former job title.

Click here to learn more | BUY IT NOW!

Related articles you might find useful:

4 Questions You Need to Answer to Enjoy a Rewarding Retirement

Will You Be Happy After You Retire?

8 Conversations Every Couple Needs to Have

“I’m Afraid to Retire.”

 8 Surprising Ways that Retiring Can Stress You Out – And How to Conquer Them

 

© 2024 Dave Hughes. All rights reserved.

Photo credits:
Thinking man: Sarah Blocksidge
Man jumping on sand: Chris Wilpert. Some rights reserved.

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