Basic Retirement Factors

Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours. Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to longer (by illness or accident) or as a result of legislation concerning their position. In most countries, the idea of retirement is of recent origin. Nowadays most developed countries have systems to provide pensions on retirement in old ages which may be sponsored by employers or the state.

Many factors affect people's retirement decisions. Social Security clearly plays an important role. Majority of  people retire at ages 62 and 65. Greater wealth tends to lead to earlier retirement, since wealthier individuals can essentially "purchase" additional leisure. A great deal of attention has surrounded how the financial crisis is affecting retirement decisions, with the conventional wisdom saying that fewer people will retire since their savings have been depleted; however recent research suggests that the opposite may happen. More information tells of how many who retire will continue to work, but not in the career they have had for the majority of their life. Job openings will increase in the next 5 years due to retirements of the baby boomer generation. The over 50 population is actually the fastest growing labor groups in the US. This might have something to do with the economy, or the fact that this generation is outliving any previous generation and needs a job to entertain them!

Saving For Retirement

Retired workers then support themselves through pensions and savings. In most cases the money is provided by the government from accumulated your FICA Taxes plus from your mutual funds. The financial weight of provision of pensions on a government's budget is often heavy and is the reason for political debates about the retirement age. The state might be interested in a later retirement age for economic reasons. On a personal level, the rising cost of living during retirement is a serious concern to many older adults.

Calculations Using Actual Numbers
Although the 4% initial portfolio withdrawal rate can be used as a rough gauge, it is often desirable to use a retirement planning tool that accepts detailed input and can render a result that has more precision. Some of these tools model only the retirement phase of the plan while others can model both the savings or accumulation phase as well as the retirement phase of the plan.
The effects of making inflation-adjusted withdrawals from a given starting portfolio can be modeled with a downloadable spreadsheet that uses historical stock market data to estimate likely portfolio returns. Another approach is to employ a retirement calculator that also uses historical stock market modeling, but adds provisions for incorporating pension, other retirement income, and changes in spending that may occur during the course of the retirement.

Life After Retirement
Retirement might coincide with important life changes; a retired worker might move to a new location thereby having less frequent contact with their previous social context and adopting a new lifestyle. Often retirees volunteer for charities and other community organizations. Tourism is a common marker of retirement and for some becomes a way of life.

Often retirees are called upon to care for grandchildren and occasionally aged parents. For many it gives them more time to devote to a hobby or sport (golf, sailing etc.). On the other hand, many retirees feel restless and suffer from depression as a result of their new situation. Although it is not scientifically possible to directly show that retirement either causes or contributes to depression, the newly retired are one of the most vulnerable societal groups when it comes to depression most likely due to confluence of increasing age and deteriorating health status. Retirement coincides with deterioration of one's health that correlates with increasing age and this likely plays a major role in increased rates of depression in retirees. Longitudinal and cross-sectional studies have shown that healthy elderly and retired people are as happy or happier and have an equal quality of life as they age as compared to younger employed adults, therefore retirement in and of itself is not likely to contribute to development of depression. Many people in the later years of their lives, due to failing health, require assistance, sometimes in extremely expensive treatments. Those who need care, but are not in need of constant assistance, may choose to live in a retirement home.