What Retirees Want, Retirement Segments and Stages of Retirement

Today we continue our coverage of the great retirement book What Retirees Want. It is PACKED full of great information and statistics about the state of retirement today.

Previously I posted an introduction and overview of the book. You may want to read that post first if you missed it.

Like with other books I’ve reviewed on ESI Money, I will share some key passages from this one and give my thoughts on their conclusions.

Let’s get started…

Segments of Retirees

The book introduces segments of retirees — distinct sub-groups that generally think and act in similar ways.

Here’s how they describe the groups:

We have fleshed out the segment characteristics with key demographic, financial, and other background information that aligns with the segment patterns. Roughly 20% of retirees fall into each of the first three segments, which we call Ageless Explorers, Comfortably Contents, and Live for Todays. That leaves about 35% of retirees in the fourth segment, Worried Strugglers.

Let’s go through these one at a time…

Ageless Explorers see retirement as a time of opportunity, adventure, exploration, and personal reinvention. They tend to be accomplished in their lives and careers, and retirement presents the chance to accomplish even more. Although they want to step back a bit from the burdens and stresses of their careers, they don’t intend to wind down. In fact, work has typically been a source of personal fulfillment in their lives, and they often work in retirement, but more for the activity and accomplishment than the money. They are the most likely to start businesses in retirement or take teaching positions. They tend to plan ahead and have given considerable thought to their activities and ambitions in retirement.

Ageless Explorers have rejected the life-of-leisure definition of retirement in favor of exercising their freedom to choose new paths. They are in the vanguard when it comes to actively making the most of their retirement experience.

Hahaha. They nailed me from the get-go!!!

As with any segmentation, it’s likely that most people don’t belong to one group exclusively, so you have to look for which of the four segments you most closely identify with.

This is the one that fits me best.

I’m not looking to climb Mt. Everest any time soon, but I do want my retirement to be more about an active lifestyle.

So while I’m not really an “explorer” (at least in my mind) most of what they describe above describes me including:

• “See retirement as a time of opportunity, adventure, exploration, and personal reinvention.” Yep. I’m getting better at blogging and becoming a pickleball pro. Hahahaha. Not to mention, my health is very good now as I’m focusing on it.
• “Accomplished in their lives and careers.” I haven’t done as much as some, but my career and life have generally been accomplished — especially for a smalltown hick from nowhere Iowa. 🙂
• “Retirement presents the chance to accomplish even more.” I’m not looking to accomplish more in the traditional sense. For me it’s more about living a life I enjoy and feel good about.
• “They want to step back a bit from the burdens and stresses of their careers.” My career was fulfilling in many ways, provided very well financially for our family, and was something I generally liked, but it was not who I am as a person. And there was a lot of burden and stress that went along with it — two things I have been more than happy to give up.
• “They don’t intend to wind down.” I am certainly working less in retirement, but I have replaced that with things I enjoy and want to do, so I don’t think I’ve downshifted much.
• “They often work in retirement, but more for the activity and accomplishment than the money.” I would say I do work “more” for the nonmonetary benefits. But with that said, if I didn’t make what I felt was a good wage for my time, I’d probably close my sites and volunteer instead (or start a different business). Making money is part of the “game” that I enjoy with business, so there has to be some of that to keep it fun and challenging for me.
• “They are the most likely to start businesses in retirement or take teaching positions.” I started ESI Money before I retired, but I knew retirement was coming up soon. I bought Rockstar Finance and started the Millionaire Money Mentors after I retired. I have considered teaching but the more I think of it, there are too many headaches associated with it. I would like to share some thoughts/experiences with classrooms of kids now and then so maybe I’ll check into that.
• “They tend to plan ahead.” Haha. The tag line of my life is “plan ahead”. LOL.
• “Making the most of their retirement experience.” I’m trying to!!!!!

Now let’s move on to the next group…

Comfortably Contents have much in common with Ageless Explorers in terms of what they’ve accomplished in their careers and how financially prepared they are for retirement. However, they approach retirement with a more traditional, less driven view that retirement is a reward for a life of conscientious work. They tend to be well-educated and their work provided a good income. They are less likely to work in retirement, and when they do, it’s to stay active as well as earn some supplemental money. In retirement, their focus is on recreation, fun, and relaxation. They’re not necessarily winding down, but rather shifting gears and priorities to enjoy the fruits of their labor.

This would be the other group that most describes me.

When you put them together, I’m probably something like 70% Ageless Explorer and 30% Comfortably Content.

I do want to accomplish things in retirement, but most of those things are personal goals around enjoying life. If I was 100% Ageless Explorer I’d probably start an adoption agency for stray cats or become an executive for a homeless shelter charity.

In reality I balance the go-go effort to accomplish something with the fact that guys just wanna have fun too (not just girls — hahaha, Cyndi Lauper.)

But I’m not laying around by any stretch of the imagination either. My “contentment” parts of retirement generally revolve around active pursuits like exercise and pickleball.

Next we move into a group that doesn’t fit me much…

Live for Todays have had active and varied lives and hope to continue with new experiences and adventure in retirement. Even more than Ageless Explorers, they seek continued personal growth and want to keep reinventing themselves. They have the biggest list of things they’d like to do and would ideally like their retirement to be an extension of their free-spirited lives. Live for todays are versatile, idealistic, experimental, hopeful, and ambitious to do and learn new things. They are the most likely to say they never feel old inside. They live challenges and changes, and they’ve changed more than most — relationships, jobs, and locations. They see life as fascinating and often find it unpredictable. They’re not planners. If they could, they would rather be doing it all: having fun with children and grandchildren, volunteering in the community, making new friends, taking classes, traveling, and engaging in new activities, hobbies, and intellectual pursuits.

They many have done okay financially, but it was more a matter of pay-as-you-go than save-for-retirement. Many will need to work a few extra years in retirement to get by, and they’re working primarily to supplement their income or build more of a nest egg.

Words/phrases that do not describe me:

• Free-spirited
• Idealistic
• Change
• Not planners
• Doing it all
• Pay-as-you-go
• Need to work a few extra years
• Working primarily to supplement their income or build more of a nest egg

Haha. This group is not really me.

So far, the first three groups, which according to the book, make up “roughly 20%” of retirees each, have been generally positive descriptions of people in retirement.

Now we enter the 35% of people who are finding retirement a bit more challenging…

Worried Strugglers are, compared with the other segments, the least ready and able to enjoy retirement. They have fewer financial resources and fewer hopes and dreams for what they’d like to do. They report being more worried, less active, less healthy, and less happy.

Financially, they have done relatively little planning and preparation. If they’ve been saving, it’s been at a lower rate and for fewer years.

Many worried strugglers feel they’ve been dealt a bad hand late in life and they are frustrated that others seem to have it better. For this segment, retirement is not the “golden years,” but instead a largely unpleasant experience. Yet they report that they’re not giving up and most think of themselves as pragmatic, as survivors.

Several thoughts here:

• I think it’s higher than 35% of the population. I’d say it’s closer to 50% based on other books I’ve read and research I’ve seen. But that’s just my guess/estimate, so I could be wrong too. If it is only 35%, then that’s not bad IMO.
• “Many worried strugglers feel they’ve been dealt a bad hand late in life.” Certainly some people in this group have been dealt a bad hand late in life. But the majority (over 50%) are just as sure to be suffering from self-inflicted wounds, also known as poor planning. For some reason they didn’t think they needed to plan, save, invest, etc. for a 30-year, multi-million dollar retirement, so they didn’t. And now they’re sad about that. Not sure what to say to them…
• “Retirement is not the ‘golden years,’ but instead a largely unpleasant experience.” I am sad for them on this front because retirement, if done correctly, is awesome. But they spent their lives like the Little Red Hen’s “friends” and now those decisions are coming back to haunt them.

Do you see yourself in any of these groups?

If so, which one(s) and why?

Retirement is a Journey, Not a Destination

Next the book moves on to talk about what it has determined are the five stages of retirement.

They begin with this introduction:

Not only are there different types of retirees, but the retirement lifescape is a moving target. People begin their retirement at different ages under different circumstances. Then they proceed through retirement in different ways at different paces. You can no longer tell where a retiree is in the journey simply based on age. We have seen far too many marketers treat 64-years-olds and 93-year-olds the same, just because they’re both “retired.” It turns out, though, that there are some common patterns.

Inspired by the insightful analysis of the idea that there were distinct stages of grief and bereavement by Dr. Elizabeth Kubler Ross (with whom Ken collaborated occasionally in the 1970s), we have been examining the stages of retirement for years. We’ve learned that retirees’ attitudes, needs, and priorities do evolve in five stages along the typical retirement journey.

Ok, let’s get into these…

Stage 1: Imagination. Starting 15 or more years before their planned retirement, many people start to imagine how they might spend their retirement years. With other responsibilities and concerns front-and-center, starting with family and job, they don’t dwell on retirement, but it appears that they do think about it quite positively. As their vision becomes clearer, especially about what they’d like to do and achieve in retirement, enthusiasm grows. In the imagination period, many realize that they should already be saving for retirement, including taking full advantage of employer and private retirement savings programs. Unfortunately, as we’ll discuss later, most are not actually doing this.

My retirement journey started over 30 years ago now…about 25 years before I actually retired…when I began saving in my first 401k.

I knew I’d be retiring someday and the fact that my employer matched part of what I put in seemed like a good deal. That’s about the extent of thought I gave it at the time which is all my knowledge and experience allowed.

Over time, I read and studied more about personal finance and started applying money principles to my life.

Then I began writing about finances and people started to ask me questions, so I really had to learn my stuff.

And the more I learned, the more I applied to my own life.

Back in the day, retiring “early” was simply before 65. This was way before the concept of FIRE became more well known. At that point, only a few crazies like those who wrote Your Money or Your Life were talking about retiring anywhere younger. Ha!

So I arbitrarily set 60 as my retirement age. It’s funny to think that if I had stuck with that number I’d still have a few years left to work — and I would have been working the past five years to boot!

Over time I saved more, invested well (like in real estate), grew my career and earnings without spending much more (growing my gap), and so on.

Then a series of work events made me consider retiring NOW rather than at 60. This was basically being fired from one job, finding another job in paradise, hating that job because of a bad boss, then realizing I had more than enough to retire, so why not?

And soon thereafter, I was in retirement.

So I went from knowing nothing to doing the bare minimum to learning and doing more to BAM, let’s retire. Not sure how much imagination there was, though I did always have a good impression of retirement and what it would be like.

Stage 2: Anticipation. Starting about 5 years before retirement, anticipation and preparation begin to percolate. Excitement builds as plan for recreation, hobbies, family, travel, and post retirement careers begin to coalesce. Most people feel that their retirement ambitions may be in reach. At the same time, reality sets in, especially around financial preparation, and many people get financial advice and try to ramp up their savings. And as retirement draws closer, other anxieties increase around any health issues, and how they will adapt to the absence of a regular paycheck, and how things will work out.

Because the series of events that caused me to eventually retire came upon me quickly (within a year or so) and challenged my thinking so much (I had “set” my ideal on retiring at 60 with $4 million, not considering the $3 million+ I had was invested in enough income producers that I would be fine), there wasn’t much anticipation.

It literally went like this (all within about 16 months):

• Fired from job — “Should we consider retiring? I don’t think so, we live in Oklahoma and I can’t imagine retiring here.”
• Taking new job — “I think I’ll work one last job. It seems like a good position and it’s in Colorado, so there’s that.”
• Finding out I had a micro-managing boss — “This guy is driving me crazy! I’m not sure how long I can take it!”
• On to retirement — “I’ve had enough and I have enough. Time to retire!”

So yeah, not much time for anticipation and certainly not five years worth.

Stage 3: Liberation. “Retirement Day” arrives and retirees feel an immediate mix of freedom, empowerment, and relief that it’s finally here. Most get busy with a planned backlog of activities and priorities — travel, hobbies, time to reconnect with spouses and families. They report that they are having fun and they enthusiastically enjoy their newfound free time, though they may have trouble structuring it. During the initial adjustment to retirement, they are most likely to be working with financial advisors and life coaches. How long does this honeymoon period of liberation last? Not long. Our research showered that on average, it’s less than two years.

Many thoughts on this:

• I certainly felt the freedom, but it was also very surreal. The first week to 10 days was simply so strange. I had done one thing (go to work) for 28 years (longer if you count school years) and now I was no longer doing that. I had the sense that the world might implode but also felt that I was getting away with murder (staying home while all those schmucks went to work).
• But that didn’t last long. Once I realized I was FREE, it was pure joy! It was Christmas morning every day! I was up at 5 am EVERY DAY! I was that excited about life.
• I could also feel the stress melting away from me. It took some time to disappear completely but I could literally feel it leaving me. I slept better, much better, as a result. And I’ve probably yawned in retirement (5 years) as much as I did in a week of work at my last job. I was so bored there and am so excited about retirement!
• I certainly had a backlog of activities starting with working out more. I began a workout routine that I still keep today, though I have increased it a bit over time. I also started blogging/writing more, taking ESI Money from a side hobby to something I did more frequently.
• I have never had trouble structuring anything. Hahaha. That’s just how I am. I’m a planner. As I’ll often say to may wife when something comes up, “You know I have a plan for it” to which she’ll respond, “Oh, I know you have a plan!”
• Uh, no on both the financial advisor and life coaches. Why do I need someone who knows less about a topic than I do to give me advice? On the other hand, I did hire a personal trainer and have had one for over half the time I’ve been retired (and have one now).
• So far, my honeymoon is still on! I still LOVE retirement, though you could say it’s less like Christmas morning and more like the last day of school these days (still very cool, but toned down a bit). And I do slack a bit — I now sleep in until 6 am. Hahahaha.

Stage 4: Reorientation. Starting about two years into retirement, people have largely transitioned out of their work identities and have begun to figure out what retirement means for them. After the initial burst of excitement, many find they need to adjust their expectations and plans. For most, retirement offers even more new choices and opportunities than they had anticipated — and that’s exciting. Those who relocate tend to do so a few years into retirement. As life’s clock continues to tick, retirees in this phase may have growing worries about health and finances. However, most reinvent themselves, overcome obstacles, make adjustments in both lifestyles and expectations, and reorient themselves around what will make their retirement personally fulfilling. Our research shows that many enjoy a prolonged “sweet spot” of retirement where happiness, contentment, and fun are at all-time highs. This stage of reorientation and enjoyment typically lasts a dozen years or more.

Some thoughts here:

• So I could be in this phase. Not sure but after reading that description, it does describe a lot of what retirement is like for me. It’s similar to the Liberation phase, just a bit more toned down on the enthusiasm.
• It took me about 15 seconds to transition out of my work identity. I was so out of there and done with my last job that I almost tripped on my work identity as I threw it off while leaving on my last day.
• I have had different activities that have come (and some gone) during retirement. I discovered pickleball of course, plus bought and then sold Rockstar Finance. We’ve traveled a good amount — Grand Cayman twice, Hawaii, Ft. Myers Beach, and a few driving trips here and there. Traveling has been limited by Covid plus the fact that we live in Colorado — it’s so nice here, why go elsewhere? And, of course, I started the Millionaire Money Mentors. What new things will I find in the coming years of retirement? Time will tell!
• I have changed my daily routine a bit over time to add in more “quiet time”. This entailed me eating breakfast at my gym’s cafe after my morning workout. I’d bring along a book and simply sit, eat, drink coffee, and read. It was only 30 minutes or so, but the combination of quiet time, knowing my workout was behind me (ha!), and realizing I had a great day ahead of me was simply heaven.
• We have not relocated yet. Time will tell if we ever move and if so, where that might be. A lot depends on what my dad and our kids want to do.
• I am not worried about finances at all and am not worried about health much, though I am doing all I can to maintain our finances and keep myself healthy.
• Glad to hear this stage lasts so long! I’m looking forward to many more great years to come!

Stage 5: Reconciliation. Starting around 15 years or more into retirement, as health problems and limitations increase, most people tend to slow down their pace of activities and enjoy more rest and relaxation. Our research has shown that while many retirees in this phase are still enjoying themselves and trying to remain hopeful and content, that’s mixed with sadness due to their own illness or that of a loved one, loss of friends and loved ones, and worries about further loss. Many are widowed, often after a period of caregiving for the spouse. Family connections and activities become more central to their lives. In this later stage of retirement, people engage in more personal reflection and are coming to terms with their lives and the legacies they wish to leave.

This is in my future. If I’m still writing at that point, I’ll share my thoughts and feelings with you.

The book now ends chapter 1 with the following summary:

What do retirees want. Interestingly, our research has taught us that the American dream of “life, liberty, and the pursuit of happiness” is morphing slightly for today’s retirees. What they want is health for life, freedom to be one’s authentic self, and a chance to pursue one’s purpose and personal version of happiness.

So true.

I too have found that retirement is different for different people — a time where they can write the story of their lives that they want to write, without the limitations and responsibilities that work tends to place on people.

For the next post in this series, see What Retirees Want, Retirement Fun and Working in Retirement.