Personal Finance

What Does "Retirement" Really Mean?

Source: Wikimedia Commons userMjuzikxhankej .

What comes to mind when you think of retirement ? The word has very different meanings to different people.

For some, "retirement" refers to life after we stop working altogether. But this isn't the only definition of "retirement" -- and it may not be the version that would make you the happiest.

Let's take a look at some alternative types of retirement to see which one you should be planning for.

The most well-known concept of retirement is the one that probably came to your mind first: You turn 62 or 65, quit your 9-to-5 job, and then while away the rest of your days playing golf, puttering around your garden, or finally taking those cruises you've always talked about.

The trouble with this scenario is that few people enjoy a life of complete leisure -- in fact, such a lifestyle makes some people downright miserable. Restlessness often sets in after a long stretch of relaxing and unstructured days.

When you leave the workforce, consider filling your days with meaningful "work" activities, like volunteering or writing that book you've always talked about. If you're a natural go-getter, you may even want to consider getting an enjoyable part-time job after you retire to keep yourself active and occupied.


If you're turned off by the idea of working for the vast majority of your adult life and waiting for an eventual payoff when you're older, you may want to consider retiring early -- or, as some personal finance gurus prefer to call it, "attaining financial freedom."

Early retirement operates on the same basic principles as traditional retirement: Work like crazy when you're younger, carefully save and invest your money to build a retirement fund, and then stop working altogether -- except the payoff comes much earlier, sometimes as early as your 30s or 40s.

How do you reach this lofty goal? Here are some starter ideas:

  • Live on one spouse's income and allocate the other's to saving and investments .
  • Take on a second job to build your savings.
  • Cut back on your standard of living so you require less income to live a happy, fulfilled life.
  • Invest in passive-income ventures (such as rental property or high-dividend index funds) to provide yourself with future revenue streams that require less hands-on daily work.
  • Start a side business for supplemental income. Save and invest the profits.

Still not too keen on working like mad for a future payoff? Then you may want to consider semi-retirement, in which you continue to work enough to give your days structure and purpose while leaving yourself plenty of time for other activities.

You may decide to leave a high-paying career you don't enjoy and switch to a line of work that's lower-paying but more fulfilling -- one that feels like a hobby as much as a career. A combination of reducing your lifestyle costs and building up enough savings to back you up could make this doable for you at any age.

If you have a hobby that requires some skill or expertise (or you want to learn one), you may be able to leverage that to make some money on the side and even land regular gigs, such as trade and craft shows, lectures, consultations, and musical performances. You could even develop a side business that will pad your income with only a few days of work per week.

There are lots of ways you can structure your work to get you closer to that golden state of work/life balance.

In the end, there's no right or wrong way to go about retirement. What works for one person may not work for another, so the key is deciding which arrangement will ultimately make you and your family the happiest -- both now and in the years to come. Only you know the answer to that question.

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