From Breadwinner to Retiree: How to Manage the Transition

Many people arrive at retirement with mixed emotions, including anxiety. Making the transition involves a profound shift in your mindset.

An older woman and a young boy happily hug each other on a sofa.
(Image credit: Getty Images)

While some people leap into retirement with joy, delighting in the freedom to pursue their passions or spend time with the people they love, others struggle to get their footing. They're not sure what they'll do, how they'll spend their time or even who they'll be when work no longer gives shape to their lives.

The journey from being a breadwinner to embracing retirement can bring mixed emotions. Astonishingly, retirement ranks 10th on a list of life's most stressful events (higher than pregnancy and foreclosure). This shift signifies more than a financial change, although retirement happiness depends on getting that right, too. More important, this transition requires a profound shift in mindset.

Your new identity as a retiree

For better or worse, our identities are often tied up with our professions. “I'm a teacher" or “I'm an engineer" is how people introduce themselves. We've all heard the advice that we shouldn't let our jobs define us. But when you spend 40 hours a week for 40-plus years doing something, it's hard for that not to become a core part of your identity.

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Being a breadwinner isn't just about bringing home a paycheck. It's also about what you do all day, the difference you make to others, and the social connections you enjoy. Letting that all go is hard, even though you might be ready to give up the grinding commute, demanding boss, and workplace politics.

The long-term University of Michigan Health and Retirement Study of retirees found that retirees are 40% more likely to have a heart attack or stroke. The risk is especially acute in the first year of retirement and then starts to level off.

That's why I always advise my clients to retire to something, not from something. At least five years before retirement, start thinking about what your days will look like when you're no longer a worker. In your imagination, a retirement filled with golf and relaxation might sound appealing. But give that idea a test drive, and you might discover it's not really something you want to do all day, every day.

What can you do instead? My clients who love retirement are those who haven't used it as an opportunity to withdraw, but instead see it as a chance at a second (or third or fourth) act. They use the precious time retirement grants them to strengthen connections with the people they love and forge new relationships. Or they launch a business or volunteer or become more involved in their communities. There are so many things you could do. It's a matter of finding what will appeal to you and keep you engaged.

A new dynamic at home

If you look at ads depicting retirement, you'd think it was a golden time for couples, what with all the walks on beaches and carefree bike rides. In reality, retirement can stress relationships. You and your spouse may have become used to a certain rhythm in your relationship, perhaps with one spouse working exclusively outside the home and the other taking care of domestic tasks. Now you're thrust together 24/7. You've probably never spent that much time together before. Will you get on each other's nerves when this happens?

These shifting relationships are partly to blame for the rising rates of divorce among older couples, known as gray divorce. According to the U.S. Census Bureau, while the overall rate of divorce has been stable for years, the rate of divorce for people between ages 55 and 64 is highest among all age groups, at about 43%.

Again, planning is key. Well before you call it quits on your career, take time to think through how you'll navigate this newfound togetherness. Some couples might welcome a chance to reconnect. But others might want to maintain their own activities and pursuits. Open communication about your needs can go a long way toward smoothing the transition from breadwinner to retiree.

My own grandparents experienced this. During the bulk of their marriage, they adhered to traditional roles at home — my grandmother worked and kept house and my grandfather was the main breadwinner. But when they retired, they had to reinvent their dynamic. They began doing household chores together. I remember my grandfather learning to iron and doing the dishes. I credit their willingness to adapt to the longevity of their relationship.

Re-creating a paycheck

Another transition that comes when you're no longer the breadwinner is the loss of a steady paycheck. Now that's up to you, and many people find it's more challenging than they originally anticipated.

The problem is that you've spent years — make that decades — accumulating a retirement nest egg. When you retire, you will need an entirely new skill set to make that nest egg last for the rest of your life. When looking at the sizable account balance at the start of their retirement, some of my clients feel flush and think they've got a license to spend like never before. I remind them that $1 million isn't that much money when you parcel it out over 20 years or more.

With my clients who are nearing retirement, we discuss how they will create their own paycheck in retirement. There are several ways to do it. The right approach depends on your preferences and risk tolerance. For some clients, I recommend the bucket method, where we deposit a few years of expenses into cash accounts, while letting the remainder of the portfolio continue to grow. Other clients prefer more guarantees about their money, and we might buy an annuity to cover their fixed expense and round out their discretionary spending with their investments.

No matter how you choose to re-create your paycheck, the important thing is to pick one approach and stick with it. Jumping from one method to another to generate retirement income can result in investment losses if you don't get the timing right.

Bottom line

Anticipating retirement may have you eagerly counting down the days until you can bid farewell to the daily grind. But remember, retirement signifies much more than merely escaping the hassles of your career. It represents a profound transformation in how you perceive yourself and how others perceive you.

Retirement isn't just an endpoint. It's also a great opportunity to nurture your passions, fortify your connections with loved ones and even explore uncharted professional territories. By embracing the possibilities, you can make it a truly enriching and fulfilling phase of life.

Securities offered through Cetera Advisor Networks LLC, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera Advisor Networks LLC is under separate ownership from any other named entity. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors, address 14600 Branch St. Omaha, NE 68154. Erin is a non-registered associate of Cetera Advisor Networks LLC.   

The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Advisor Networks LLC cannot guarantee or represent that it is accurate or complete.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Erin Wood, CFP®, CRPC®, FBSⓇ
Senior Vice President, Financial Planning, Carson Group

Erin Wood is the Senior Vice President of Financial Planning at Carson Group, where she develops strategies to help families achieve their financial goals. She holds Certified Financial Planner, Chartered Retirement Planning Counselor and Certified Financial Behavior Specialist designations.