6 Types Of Retirement, Which Is For You?

Retirement seems to be something everyone is either thinking about, planning it, saving for it, working at it or living it. If you belong to the last group, congratulations for achieving this coveted milestone!

Despite a common topic, retirement means different things to different people. Its notion has expanded over recent past decades due to changes in life expectancy, living standard, lifestyle awareness, technological advancement, change in attitude towards work and generational aspiration.

The Baby Boomers think of retirement as life after work – handing in one’s office pass with a nice handshake or well-deserved farewell party and then stepping into a life of freedom and leisure to live happily ever after.

Millennials see retirement as the freedom and means to do whatever one desires, including continuing to stay engaged in some form of employment by choice. Because of YOLO, slogging away one’s prime years in a cubicle under high stress with little satisfaction does not appeal to this cohort at all. 

Born in the era of internet, Millennials grow up in a world where digital technology continuously forged new frontiers in the way we live, play, interact, socialise and work. The fusion between the virtual and physical worlds means Millennials see work as a sub-set of life, complementing instead of superseding it.

So here’s a rundown of 6 types of retirement, hopefully you can identify one that suits your preference, personality and circumstance.

Classic Retirement

This is how retirement was invented. Work for 30-40years, build up a pension and personal savings before making the grand exit to start a life of well-deserved pleasure and enjoyment. 

Retirement age in most developed and developing countries is stipulated as between 65 to 67 years and there is pressure to extend it to delay drawdown on pension funds that are increasingly hard pressed to meet longer lifespan. Assuming one started work in one’s 20s, that means 30-40years of preparation to build up and prepare for retirement. Typically, those who go for classic retirement will not return to work since retirement is, by definition, to stop work. Life is compartmentalised as study, work and retire.

Who: For people who maintain gainful employment with a pension scheme throughout one’s work life, supplemented by personal savings. Classic retirees overwhelmingly belong to the Baby Boomer and Generation X, especially the former as their work life coincided with post-war economic expansion where lifelong work was the norm rather than the exception. There is no other, or better, alternative and it is a shiny scheme that rewards dedication and loyalty with delayed gratification. 

Partial Retirement

Partial retirement is when one switches to part-time or assignment-based work with scaled-down hours to spend more time on one’s hobby (such as travel) or passion. Some may choose to start a small side business having amassed enough  experience, contacts and financial back-up. 

Who: This is ideal for those with a zest of life in the next chapter where they want/need to stay economically viable and socially involved, contributing their skills based on their own terms and schedule now that they have some breathing space. Some may belong to the Boomer generation but most tend to be Generation X’ers, in their late 40s-50s, professionals white collar workers with marketable skills.

Early Retirement

Undoubtedly the retirement buzzword  as the F.I.R.E movement gain mainstream awareness. Aspirants of early retirement look at work as an inconvenient intrusion but grudgingly admit that work provides for the means and financial security to build their dream life. For them, work is something to get over-and-done-with quickly, so they grit their teeth, go on a path of extreme frugality and intense work to earn as much as they can within as short a time as possible so that they can begin their dream life.

Who: The idea of early retirement was mooted by Generation X’ers such as Peter Adeney of Mr Money Moustache and Sam Dogen of Financial Samurai – both in their 40s – that got quickly adopted by many Millennials as their life motto. F.I.R.E followers tend to be professionals in IT, engineering or the financial industry with highly desirable skills that pay well. 

For early retirement, it is most important to figure out your purpose for retirement.  There is no shortage of information online and in mainstream media on how to achieve F.I.R.E as well as the pros and cons, so do your research before deciding if this is right for you.

Delayed Retirement

Delayed retirement comprises of 2 groups: those who intentionally postpone retirement in order to meet personal goals such as attaining better retirement lifestyle or to build more retirement funds and the 2nd group who unfortunately has to stay employed by circumstance.

By and large, the latter group has huge responsibilities that do not allow them to stop work, ranging from medical expenses, debt, daily living costs or having to provide for many dependents.

Who: Voluntary group is made up of mostly clear-minded folks who have a target in mind for their retirement. The 2nd group, mostly comprising the sandwich generation needs to take care of elderly parents as well as to support children who have yet to reach independence. As breadwinners for their dependents mean that retirement is not an option. To avoid falling into this group, it is important to start retirement planning as early as possible, practise financial minimalism and be committed to a plan to save and invest for retirement.

“Failing to plan is planning to fail.”  ~ Benjamin Franklin

Occasional Retirement

As more lifestyle choices are available due to internet and other  technological advancement, more people are opting to take temporary retirement through sabbaticals, allowing them to explore and experiment with the retirement lifestyle they want. This can be taking a year off work to travel or take a course for personal interest. 

Whatever the reasons, it is a good way to get acquainted with retirement without sacrificing the means. It eases one into retirement instead of the suddenness as in the case of Classic Retirement, which can be stressful to some.

Who: By far, Generation X and Millennials who are life enthusiasts, keen to explore and pursue other lifestyle and life goals during employable years.

Never-Retire

Last but not least, perhaps retirement is not for everyone. There are some who are happy and physically fit to continue working. They do not see work as a hindrance to life but as an essential part of life itself. This option suits professionals since their work is less menial and tend to be more valuable with accumulation of experience.

Who: Boomers, GenX, Millennials – everyone who loves their job or find retirement too boring an alternative. Suitable for those who are doing what they enjoy and see work as adding to their live, giving a clear reason to get out of bed every day and continuing to earn their own keeps or for the finer things in life.

So, now that you know the various types of retirement, which suits you best? Retirement is a choice. To pick the right choice, you need to know yourself and your circumstance well.

Choose wisely,

Savvy Maverick