Retirement

American Psychologist Psychological Perspectives on the Changing Nature of Retirement Kenneth S. Shultz, and Mo Wang Online First Publication, February 21, 2011. doi: 10.1037/a0022411

CITATION Shultz, K. S., & Wang, M. (2011, February 21). Psychological Perspectives on the Changing Nature of Retirement. American Psychologist. Advance online publication. doi: 10.1037/a0022411

Psychological Perspectives on the Changing Nature of Retirement Kenneth S. Shultz Mo Wang

The concept and the process of retirement are rapidly evolving. As a result, psychologists are in a unique position to understand and explain the dynamics behind the changing face of retirement. We begin this article with a brief overview of the history of retirement and then note the various definitions used when studying retirement. We then propose that taking a temporal view of studying retirement would be most advantageous for psychologists. Psychological conceptualizations of retirement are then discussed, and we link these conceptualizations to studying the changing nature of retirement. Finally, we conclude with some suggestions for future research in the area of retirement that would be particularly relevant for psychologists to consider. Keywords: retirement, older workers, work ability

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etirement is an interdisciplinary topic studied by researchers in psychology, sociology, social work, demography, economics, and organizational sciences, to name just a few fields. As a result, there is a growing body of literature on retirement, both within academic circles and in the popular press. In the 1970s there were 203 peer-reviewed articles containing the keyword retirement, according to PsycINFO. In the 1980s the number rose to 522, in the 1990s it rose to 680, and in the 2000s it ballooned to 1,804. Thus, retirement as a research topic is becoming more prominent in the psychology literature. A major factor influencing this increased stream of research and interest is the rapid aging of the populations in most developed countries because of lower birth rates, increased longevity, and the looming retirement of the large baby boom cohort (OECD, 2006). Although research on retirement takes many different forms, the consensus is that retirement is not a single event but rather a process that older individuals go through over a period of years. However, this process is by no means uniform in that no two individuals are likely to experience retirement in exactly the same way. In addition, this process is quickly evolving and shifting as the social, organizational, and societal contexts in which retirement takes place change. As a result, researchers who take a psychological perspective in studying retirement may be better able to capture the changing nature of retirement, because psychologists directly study the behavioral and psychological antecedents and outcomes of retirement, as well as the

April 2011 ● American Psychologist © 2011 American Psychological Association 0003-066X/11/$12.00 Vol. 66, No. 3, 000 – 000 DOI: 10.1037/a0022411

California State University, San Bernardino University of Maryland, College Park

psychological mechanisms that underlie the retirement process. We begin this article with a brief overview of the history of retirement and then note the various definitions used in studying retirement. Next, we discuss the need to examine retirement from a temporal viewpoint. Subsequently, we review psychology’s unique contribution to the study of retirement and introduce several theoretical conceptualizations researchers could use to capture the psychological aspects of retirement. Linking these conceptualizations to the changing nature of retirement, we further point out several future directions that may be fruitful for researchers to pursue.

History and a Temporal View of Retirement Historical Perspective on Retirement Historically, retirement is a relatively new phenomenon. Throughout most of history, individuals continued to work until they were simply no longer physically able to work. It was not until the industrial revolution, the creation of Social Security, and the wider availability of company pension benefits in the first half of the 20th century that individuals were able to cease paid employment while they were still otherwise able to work. The origins of the U.S. Social Security system can be traced to Germany, where in 1889 Chancellor Otto von Bismarck made Germany the first country to institute an old-age social insurance program. The German program initially set the retirement age at 70, but in 1916 it reduced the retirement age to 65. Similarly, both Social Security and traditional defined benefit pension plans encouraged workers to retire at a particular age (e.g., 65). In addition, until the 1980s, many employers also had mandatory retirement ages. However, the cultural milieu has shifted in recent years from a “pro-

Kenneth S. Shultz, Department of Psychology, California State University, San Bernardino; Mo Wang, Department of Psychology, University of Maryland, College Park. We thank Deborah Olson and Janet Kottke for their feedback on an earlier version of this article. Correspondence concerning this article should be addressed to Kenneth S. Shultz, Department of Psychology, California State University, San Bernardino, 5500 University Parkway, San Bernardino, CA 92407. E-mail: [email protected]

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The psychological aspects of retirement have become extremely important given the length of time people spend in their retirement. However, the psychological aspects have often been overshadowed by the focus on the physical and financial issues that have been shown to impact retirement in previous research. This overshadowing is related to the fact that the physical and financial issues appear to be more salient if people spend only a relatively short time in retirement. However, more and more research evidence suggests that the physical and financial issues people face in retirement are directly linked to the psychological aspects of retirement (e.g., Quick & Moen, 1998; van Solinge & Henkens, 2008; Wang, in press; Zhan, Wang, Liu, & Shultz, 2009). In this article, we aim to illustrate the utility of applying psychological perspectives to studying the changing nature of retirement. Conceptualizing Retirement With a Temporal View Kenneth S. Shultz

retirement” (i.e., mandatory or forced retirement) to a “prowork” (i.e., pro-choice on the part of the older worker to continue to work or retire) emphasis with regard to older workers (see Table 1). As a result, the vast majority of what we know about the psychological dynamics (e.g., the influence of attitudes and personality characteristics) surrounding retirement has been uncovered in the last few decades. Therefore, it is critical to better understand the ever expanding phenomenon of retirement, in terms of both its antecedents and its outcomes, as it is being reshaped and redefined over time by factors at the individual, group, organizational, and societal levels (Beehr & Bennett, 2007; Shultz & Henkens, 2010).

As Ekerdt (2010) recently noted, “The designation of retirement status is famously ambiguous because there are multiple overlapping criteria by which someone might be called retired, including career cessation, reduced work effort, pension receipt, or self-report” (p. 70). Not surprisingly, psychologists, who are more likely to study individual-level phenomena, are most likely to choose to measure retirement via self-report. Adding possible confusion to this self-report definition of retirement is the fact that individuals can “un-retire” or “re-retire” by rejoining the workforce and starting new careers after they retire, which is a relatively common phenomenon now (Alley & Crimmins, 2007; Wang, Adams, Beehr, & Shultz, 2009). Thus, there are individuals now who retire multiple times throughout their lives. Although starting a second career at midlife has always been common in some professions (e.g., professional sports, the military), it is now becoming the norm for many older workers (both professionals and nonprofessionals) as well. As a result, it is not only those in

Table 1 The Evolution of Retirement Historical period

View of retirement

Prior to 1900

● Retirement nonexistent for most workers as most workers simply worked until no longer able to work ● Retirement becomes a legitimate possibility with Social Security and employer pensions ● Male workers continue to strive to retire earlier and earlier, while women delay their retirement ● Economic and social conditions halt the precipitous decline in age of retirement for men ● The landscape of retirement is in flux and riddled with uncertainty

1900 to 1950 1950 to 1980 1980 to 2000 2000 to present

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Focus of researchers

● No systematic research on retirement ● What little research is available focuses on economic issues ● Multiple disciplines study both the antecedents and outcomes of retirement ● Longitudinal studies of retirement begin to emerge ● A more integrative framework for studying the process of retirement begins to evolve

April 2011 ● American Psychologist

Mo Wang

their 60s and 70s who are retiring for the first time but more and more often those in their 40s and 50s as well. To address this potential confusion, we believe that viewing retirement from a temporal perspective is particularly useful for psychologists who wish to study and better understand retirement as a process. Retirement typically begins with a somewhat distal preretirement preparation and planning phase in which individuals begin to envision what their retirement might entail and begin discussing those plans with friends, family members, and colleagues. Next, as retirement becomes more proximal, individuals begin the retirement decision-making process, taking into account a wide variety of factors, including the current economic and employment contexts as well as family and personal considerations. Finally, as individuals make the transition from full-time workers to retirees, they begin the retirement and life adjustment process. This process may include engaging in bridge employment (i.e., temporary or part-time work) to help smooth the transition to full retirement. However, it should be noted that this process does not go smoothly for all retirees. Some older individuals enter retirement experiencing ambivalence, anxiety, fear, depression, and a deep feeling of loss. We address these issues later in this article when we discuss clinical and counseling psychologists’ contribution to the study of retirement. Viewing retirement from this temporal perspective allows researchers to investigate retirement as it unfolds over time from one phase to another while realizing that this process is not homogeneous across individuals. Within these broad phases, of course, are smaller and shorter segments that individuals go through as they approach retirement, transition through the retirement decision-making process, and begin life as self-designated retirees. Thus, April 2011 ● American Psychologist

researchers often focus on a specific phase of the retirement process in a given study, cognizant that they are studying just one piece of the larger retirement puzzle. Figure 1 illustrates the dynamic nature of retirement, which Neugarten (1996), and more recently Wang and Shultz (2010), discussed. The right side of Figure 1 depicts the temporal nature of the retirement process. In addition, the four boxes on the left side of Figure 1 emphasize that retirement is not a formulaic process that all individuals experience in the same lockstep way. As research summarized by Brown, Fukunaga, Umemoto, and Wicker (1996), O’Rand and Henretta (1999), and Taylor and Geldhauser (2007) attests, disabled individuals, individuals from traditionally disadvantaged racial and ethnic groups, those from lower social classes, undocumented immigrants, the economically needy, individuals who have never worked, and the chronically unemployed will approach the retirement planning, decision-making, and transition and adjustment processes with vastly different experiences and perspectives. Thus, Figure 1 reinforces the need to examine the unique psychological dynamics that individuals face as they transition through their own retirement processes, possibly multiple times.

Psychology’s Contribution to the Study of Retirement It is evident from a survey of the literature that researchers from economic and sociological perspectives often pay the most attention to studying the roles that retirees’ demographic characteristics (e.g., age and gender) as well as their health and financial attributes play in shaping retirement phenomena (e.g., Barnes-Farrell, 2003). Psychological perspectives, on the other hand, offer different insights about retirement phenomena. Within psychology itself we see several subdisciplines, each with their unique perspectives, that have contributed to our understanding of the dynamics of retirement. For example, life span developmental psychologists have tended to focus on individual histories when examining both the antecedents and outcomes of retirement for a given individual. These individual history factors include how people have dealt with previous transitions (Settersten & Hagestad, 1996), their work and leisure habits (Morrow-Howell & Leon, 1988), and their previous workforce participation patterns and preferences (Appold, 2004). Further, the social and work contexts, such as older workers’ job-associated statuses and roles (e.g., job characteristics and career standings; Wang, Zhan, Liu, & Shultz, 2008), their social network and family structure (e.g., Szinovacz & Davey, 2004), and their experience in other life spheres (e.g., marital life; Rosenkoetter & Garris, 1998), have also been important factors for life span developmental psychologists studying retirement. Another research focus of life span developmental psychologists studying retirement has centered on how retirees adjust to postretirement life. Research has been conducted to evaluate whether postretirement psychological and behavioral development follows the normative life stage hypothesis (i.e., that in later life stages, individuals 3

Figure 1 Longitudinal Progression of the Retirement Process and Potential Impact Factors

Note. From “Employee Retirement: A Review and Recommendations for Future Investigation,” by M. Wang & K. S. Shultz, 2010, Journal of Management, 36, p. 182. Copyright 2010 by Southern Management Association.

move to activities and roles that involve less responsibility to others and less rigorous physical effort; Super, 1990). To date, however, empirical findings suggest that the psychological and physical demands associated with retirees’ reorganizing of their activities and time structures to achieve adjustment gradually decrease over time (e.g., van Solinge & Henkens, 2008), and their psychological well-being gradually increases over time (e.g., Wang, 2007). Industrial/organizational (I/O) psychologists have also studied retirement, focusing on how preretirement employment-related psychological factors shape the retirement process. For example, the extent to which retirees identify with their work roles has been shown to be related negatively to retirement transition and adjustment outcomes (e.g., Quick & Moen, 1998), whereas work stress, psychological and physical job demands, job challenges, and job dissatisfaction (e.g., Shultz, Morton, & Weckerle, 1998; van Solinge & Henkens, 2008; Wang, 2007) have been shown to be positively related to retirement transition and adjustment outcomes. I/O psychologists have also viewed employee retirement as analogous to organizational withdrawal behaviors such as turnover, showing that job burn4

out, work centrality, and commitment to various facets of work are unique predictors of retirement decisions (e.g., Bidewell, Griffin, & Hesketh, 2006). Another unique contribution of I/O psychology to retirement research is its incorporation of organizational factors into its understanding of retirement processes. For example, organizational climate and culture may influence employees’ expectations about retirement and their retirement decisions (Feldman, 1994). Specifically, whether the organization treats older workers with respect and dignity and values their experience and wisdom would largely influence the retirees’ motivation to stay on the job (Finkelstein & Farrell, 2007). More recently, I/O psychologists have turned their attention to studying antecedents and outcomes of retirees’ bridge employment decisions. Bridge employment represents a transition phase in which older workers are beginning to disengage psychologically from labor force participation but are not yet ready to begin life as retirees with no work responsibilities (Wang et al., 2009). I/O psychologists see bridge employment as offering opportunities for organizations to maintain critical talent and achieve successful knowledge transfer to younger employees; it may also lead April 2011 ● American Psychologist

to positive adjustment outcomes for retirees in their postretirement life. Research by I/O psychologists has shown that beyond demographics, health, and financial attributes, job-related psychological variables (e.g., job attitudes and work role stressors) are important predictors of bridge employment decisions (e.g., Pengcharoen & Shultz, 2010; Wang et al., 2008) and that engaging in bridge employment may be beneficial for retirees’ physical and mental health (e.g., Zhan et al., 2009). Vocational psychologists have also brought a unique perspective to the study of retirement. As might be expected, there is a strong focus in their research on retirees’ vocational skills and abilities, types of preretirement careers, career-specific norms, and postretirement career changes. For example, retirees who have adequate career knowledge and skills to function across different job roles, organizational hierarchies, and national boundaries may thrive in the current business environment, because they fill the exact need for substantial speed and flexibility in responding to intensely competitive market forces produced by the global economy (AARP, 2005). Consequently, these retirees are likely to enjoy better postretirement workrelated activities because they have more autonomy and control of these activities and thus are likely to experience less work-related stress (Zhan et al., 2009). Different types of preretirement careers and careerspecific norms have also been shown to be important factors influencing individuals’ retirement planning and decision making. For instance, if a person’s career is important to his or her self-identity and there is high commitment to the specific career role, it is less likely that the person will retire from his or her career job (Adams & Beehr, 1998). Settersten and Hagestad (1996) reported that career norms regarding appropriate retirement ages produce pressures on older workers with regard to their retirement preferences and plans. Specifically, those individuals who are behind schedule with regard to their career advancement or who have plateaued in their careers are more likely to feel pressure to retire. Finally, clinical and counseling psychology has tended to focus more on studying how to help retirees prepare before entering retirement and have a more successful adjustment to the changes created by the decision to retire. Many individuals are genuinely ready to retire, resolve the retirement process well, and retire in a positive way. However, some individuals feel ambivalent about retirement and may become depressed and experience feelings of loss, idleness, and uselessness. Thus, clinical and counseling psychologists can help these individuals make a more successful transition to retirement. For example, in studying financial planning for retirement, Hershey, Jacobs-Lawson, McArdle, and Hamagami (2007) found that improving older workers’ psychological goal clarity regarding retirement financial planning and their self-efficacy in handling investments could lead to desirable financial planning outcomes. Taylor-Carter, Cook, and Weinberg (1997) showed that both formal and informal preparation for retirement increased prospective retirees’ confidence in their abilities to make the retirement transition. April 2011 ● American Psychologist

In addition, research following a clinical and counseling psychology perspective has shown that an individual’s marital relationship has an important influence on retirement adjustment outcomes. Retirees with happier marriages are more likely to achieve better transition and adjustment outcomes (e.g., Rosenkoetter & Garris, 1998). In addition, losing a partner during the retirement transition was found to have a negative impact on retirement satisfaction (van Solinge & Henkens, 2008). One important conceptualization from the clinical and counseling psychology perspective regarding retirement adjustment (e.g., Goodman, Schlossberg, & Anderson, 2006; Schlossberg, 1981) is that adjustment is reached when individuals are not preoccupied with the retirement transition but are comfortable with the changed circumstances of their lives in retirement. In other words, retirement adjustment is reached when retirees are able to integrate retirement into their lives. This conceptualization has been very influential in guiding researchers in operationalizing retirement adjustment and investigating it in the dynamic adjustment process (e.g., van Solinge & Henkens, 2008; Wang, 2007).

Psychological Conceptualizations of Retirement Now that we have reviewed psychology’s unique contributions to retirement research, it is important to synthesize psychological conceptualizations of retirement that have guided the application of psychological perspectives to the study of retirement. Providing a conceptual taxonomy is critical, because theoretical conceptualizations have an impact on how researchers describe the concept in question and in turn ground their study in relevant knowledge frameworks that lay the foundation for tackling specific research questions (Wang & Shultz, 2010). Specifically, we discuss three types of conceptualizations (cf. Wang & Shultz, 2010) that best accommodate the psychological view of retirement: retirement as a decision-making process, retirement as an adjustment process, and retirement as a career development stage. Conceptualizing retirement as a decision-making process emphasizes the psychological underpinnings that impact retirement as a motivated choice behavior. This conceptualization contends that when workers decide to retire, they choose to decrease their psychological commitment to work and to behaviorally withdraw from work (e.g., Feldman, 1994). According to this conceptualization, after workers make the decision to retire, their work activities should begin to decline over time, and other life activities, such as family and community-related activities, should increase. However, not all individuals will follow this path, and not all retirees will be successful at accomplishing this transition. Although this hypothesis has received mixed empirical support (Wang & Shultz, 2010), it highlights the importance of the retirement decision as a major life event (Adams & Beehr, 1998). When conceptualizing retirement as a decision-making process, researchers have typically relied on the informed decision-making approach to conduct their inves5

tigations. This approach assumes that older workers make their retirement decisions on the basis of information they have regarding their own characteristics and their work and nonwork environments. They weigh these factors and evaluate the overall utility of retirement before they make the decision to retire. According to this approach, many psychological factors may be at play in shaping this decision. For example, older workers’ perceptions about the work environment, their need and value preferences, and their information-processing and social comparison styles may all play critical roles in reaching the decision to retire. Conceptualizing retirement as an adjustment process provides a broader and more dynamic psychological approach to understanding retirement (Wang et al., 2009). Specifically, this conceptualization views retirement as incorporating both the transition from employment to retirement and the trajectory of individual development in postretirement life. According to this view, first, it is not the decision to retire but the characteristics of the retirement transition process embedded in this decision that are important (van Solinge & Henkens, 2008). In other words, people may make the same decision to retire, yet the timing of the decision, the previous preparation for the decision, the resources associated with the decision, and the amount of the activity change caused by the decision may be very different or have different psychological meanings for different individuals. Therefore, conceptualizing retirement as an adjustment process emphasizes investigating the psychological nature of retirement rather than the simple decision content. Second, this conceptualization recognizes retirement as a longitudinal developmental process characterized by adjustment styles and tendencies, which provides a more realistic depiction of retirement and guides the selection and investigation of psychological outcomes of retirement (Wang, 2007). In particular, recognizing that this adjustment process could have different psychological implications for retirees at different time points opens new windows to understanding the dynamic nature of the retirement process. Retirement can also be conceptualized as a late career development stage, based on the protean career model that argues that careers are controlled by the workers themselves and reflect their own personal values and goals (Hall, 2004). Specifically, instead of viewing retirement as a career exit, this approach recognizes the continued potential for growth and renewal during retirement. As such, this conceptualization pays particular attention to how retirees align their career goals with their work and leisure activities in retirement life and emphasizes examining unique psychological factors that are associated with retirees’ career potential and career pursuit, which may inform retirees’ workforce participation activities and patterns after they retire (Shultz & Wang, 2008). Thus, the research question considered by those conceptualizing retirement as a career development stage centers on retirees’ agency and efficacy in keeping and pursuing their growth and renewal needs. Consequently, this conceptualization is mostly adopted by those retirement studies that aim to investigate 6

and understand bridge employment and work behaviors in retirement life. On the basis of psychology’s contributions to the study of retirement and the existing psychological conceptualizations of retirement we discussed above, we feel that the central approach for applying the psychological perspective to studying retirement is threefold. First, the psychological perspective emphasizes studying retirement as a coherent process that unfolds over time from one phase to another. This perspective has been reflected in the contributions made by life span developmental psychologists (e.g., van Solinge & Henkens, 2008; Wang, 2007), I/O psychologists (e.g., Bidewell et al., 2006; Feldman, 1994), vocational psychologists (e.g., Settersten & Hagestad, 1996; Zhan et al., 2009), and counseling and clinical psychologists (e.g., Goodman et al., 2006; Rosenkoetter & Garris, 1998) discussed earlier. It is also reflected in all three psychological conceptualizations of retirement discussed above. Second, the psychological perspective emphasizes studying the behavioral and psychological antecedents and outcomes of retirement as well as the psychological mechanisms that underlie the retirement process. This perspective positions psychologists to study both inter-individual and intra-individual differences during the retirement process. It complements and is distinguished from the approaches of other social science disciplines (e.g., economics and sociology) because those approaches largely view retirement phenomena as the result of economic or social dynamics and thus are not able to provide insights at the micro/individual level. Third, the psychological perspective emphasizes studying the interaction between retirees and their environment. Specifically, as reflected in all three psychological conceptualizations of retirement discussed above, the psychological perspective acknowledges the fact that retirees can actively shape their experiences in retirement. As active selves, retirees reflect on and evaluate their experiences in retirement. Moreover, they are able to modify their environment to shape their retirement experiences. Therefore, the psychological perspective emphasizes considerations about retirees’ willingness and confidence (e.g., agency and efficacy) and behavioral tendencies (e.g., proactive behaviors) in influencing their retirement environment. Further, the psychological perspective also accommodates the effect of dynamic changes in the retirement environment. It recognizes that changes in the retirement environment may facilitate or constrain certain retirement experiences. Retirees have to adapt themselves accordingly to the changing retirement environment in order to maintain physical, functional, and psychological well-being (Zhan et al., 2009). Linking Psychological Conceptualizations to Studying the Changing Nature of Retirement The changing nature of work, careers, families, and the organization of work has an impact on how retirement is enacted (Shultz & Olson, in press; Shultz & Wang, 2008). With regard to the changing nature of work, it is on the April 2011 ● American Psychologist

whole becoming less physical but more psychologically dynamic. Whereas the less physical nature of today’s jobs allow individuals to work longer, thus delaying retirement, tighter deadlines, higher expectations for longer work hours, and the need for near constant retraining and updating produce a dynamic workplace that can be stressful, particularly for older workers (Barnes-Farrell, 2005; Shultz, Wang, Crimmins, & Fisher, 2010). As a result, we see people today retiring at much earlier ages than just a half century ago (Alley & Crimmins, 2007). To study these earlier retirement phenomena associated with the changing demands of work, it may be particularly relevant to conceptualize retirement as a decision-making process. For example, it will be important to study how older workers perceive and evaluate their work demands and work environments in making their retirement decisions. In particular, it will be interesting to consider the decision-making trade-offs between the uncertainty associated with retiring early and the psychological burden associated with stressful work demands. In addition, work careers are changing in ways that may impact how retirement is enacted (Shultz & Wang, 2008). For example, in the past 20 years, there has been a continuous trend for workers to move away from the traditional linear career progression that was dictated primarily by the organization and focused on organization-based rewards such as promotions and pension qualifications. As such, workers are experiencing more disjointed career paths as well as changing jobs and career paths multiple times in the course of their work lives (Wang et al., 2009). Consequently, we are seeing untraditional career models (e.g., the protean career model) take prominence, models in which workers are responsible for the self-management of their careers, including deciding when to retire and what form their retirement will take (Hall, 2004). To study these retirement phenomena associated with various career paths, it may be fruitful to conceptualize retirement as a late career development stage. Accordingly, how retirees prepare for this career stage, adjust their career goals corresponding to their needs, and consider different career moves after entering retirement are important issues to examine. Changing family structures are also impacting retirement patterns and experiences. For example, more couples are working to time their retirements so as to retire at about the same time (Hutchens & Dentinger, 2005). In addition, many women are delaying child rearing and parents are living longer, so many older workers, particularly women, are sandwiched between the demands of both child care and elder care (Neal & Hammer, 2007). Several studies have shown that there are clear gender differences in how men and women are likely to cope with these competing demands toward the end of their careers. For example, Barrah, Shultz, Baltes, and Stolz (2004) found that women were more likely to seek new employment or retire when elder care demands became overwhelming, whereas men were more likely to adjust their schedules, thus allowing them to continue working in the same job while tending to increased elder care demands. Therefore, the changing April 2011 ● American Psychologist

family structure directly impacts people’s retirement decision making, and gender presents an important boundary condition of this impact. As such, it will be interesting to study how people weigh their family-related retirement pull (e.g., enjoying more time with family) and push (e.g., having less flexibility for elder and child care because of employment) factors in making retirement decisions. The organizational environment in which people’s jobs are embedded is also changing in ways that will influence the enactment and experience of retirement. For example, jobs are becoming less secure, with persistent downsizings by corporations. Also, employers have steadily shifted from defined benefit pension plans with guaranteed pension benefits to defined contribution (e.g., 401k) plans and are less likely to offer retiree medical benefits. As a result, workers have had to bear much more risk with regard to funding their retirement. These changes in organizational policies impose new challenges to understanding retirees’ adjustment process. For example, it is important to identify the resources different groups of retirees rely on to accomplish their psychological transition from employment to retirement smoothly and effectively (Wang, 2007). At a broader level, government and employer policies toward older workers were “pro-retirement” (i.e., provided disincentives to work at older ages) for most of the 20th century (see Table 1). However, over the last few decades, the tide has shifted in many respects to “pro-work” policies for older workers (McNamara, Sano, & Williamson, in press). That is, older workers in most developed countries are being encouraged to extend their work lives beyond the traditional retirement age by local and national governments (van Dalen, Henkens, Henderikse, & Schippers, 2010). For example, Social Security in the United States no longer has earning limits for those retirees between the ages of 65 and 70. In addition, the age to receive full Social Security benefits is slowly increasing from 65 to 67, while the incentive to delay receiving Social Security benefits until age 70 has become more financially lucrative. All these changes in public policies are likely to influence individuals’ retirement decision making and postretirement adjustment outcomes (Shultz, 2003; Wang & Shultz, 2010). However, the financial crisis that began around 2008 may well have even more weight in encouraging older workers to extend their careers and delay retirement because of reduced retirement savings and loss of pension benefits. It is unclear at the current time, however, what the long-term ramifications of the current financial crisis will be with regard to older workers delaying their retirement. Many of these policies have significant impact not only because of their financial incentives but also because of the social norm and climate that they are creating. Employers are offering an increasing number of olderworker–friendly options such as phased retirement, training to maintain and update older workers’ skills, bridge employment, and flexible work schedules to encourage older workers to transition out of career jobs slowly or to recruit older workers who may be changing careers. These macrolevel changes by employers and governments are dramat7

ically altering how we think about retirement and how retirement is carried out at both the individual and societal levels (van Dalen et al., 2010). In Europe, the concept of work ability has been studied for the last several decades (Ilmarinen, 2006). Work ability addresses the ability of older workers to maintain their employability as they age, thus allowing them more say in both the timing of and the form that their retirement will take. It is “a balance between a person’s resources and work demands” (Ilmarinen, 2009, p. 61). Given the recent shift in much of the developed world from a “pro-retirement” to a “pro-work” perspective with regard to older workers, the concept of work ability should become even more prominent in the study of work and retirement at older ages. As Ilmarinen (2009) noted, Work ability . . . is primarily a question of balance between work and personal resources, attitudes, values, and so forth. . . . Personal resources change with age, for example; and, with globalization and new technology, work demands also change. The factors affecting work ability are therefore continuously changing and must be balanced. (p. 62)

We expect that this dynamic nature of work ability may render it an important psychological construct to consider when studying the dramatic changes in how retirement is enacted and carried out for most individuals in the 21st century.

Future Research Directions The process of retirement has become more blurred over time, to the point that researchers are unable to agree on a single definition of what constitutes retirement (Denton & Spencer, 2009). As a result, it is clear that psychological conceptualizations of retirement are needed to better understand the changing nature of retirement. Below we provide suggestions in three areas particularly relevant for psychology: (a) examining retirement as a longitudinal progression over multiple phases, (b) taking the voluntary versus involuntary nature of retirement into account, and (c) viewing retirement as an additional career stage. For each of the major retirement phases depicted on the right side of Figure 1, Wang and Shultz (2010) outlined the key issues that past researchers have addressed to varying degrees. However, few studies have encompassed major portions of this longitudinal retirement process, instead focusing on a narrow cross-section or point in time. Further, few studies have examined the interdependence among these phases (e.g., how these stages influence one another and how they together influence the long-term outcomes of retirement). For example, although many studies have examined the antecedents of general retirement planning and different aspects of retirement planning (e.g., Hershey et al., 2007), there is a lack of research on the long-term influences of retirement planning on retirement adjustment. It is possible that retirement planning not only impacts the decision to retire and/or decisions with regard to bridge employment participation but may also influence 8

the trajectories of retirees’ retirement adjustment. In addition, different specific aspects of planning may influence different types of long-term outcomes, which deserve more research attention. Another important issue to consider is that not all retirement decisions are voluntary (e.g., Shultz et al., 1998; Szinovacz & Davey, 2004; van Solinge & Henkens, 2008). Thus, if we conceptualize retirement as a decision-making process, we have to recognize that the theoretical utility of this conceptualization depends on the extent to which the retirement decision is a result of personal choice. If the personal choice component is missing, then the informed decision-making approach would not apply. Therefore, the voluntariness of the retirement decision can be viewed as a boundary condition for applying the informed decisionmaking approach in testing predictors of retirement decision. Similarly, if we conceptualize retirement as an adjustment process, the extent to which the retirement is voluntary may also have an important influence on retirees’ adjustment outcomes. Previous research has shown that involuntary retirement usually leads to negative attitudes toward retirement (e.g., Shultz et al., 1998). However, whether involuntary retirement leads to long-term maladjustment issues is still unknown. Furthermore, Wang et al. (2009) and Shultz and Wang (2008) have discussed how retirement is becoming an additional stage in workers’ careers. That is, retirement is no longer seen as the end of one’s working life but rather is viewed as an opportunity to continue one’s work life in a different venue and/or form. There is thus a shift from looking at the retirement transition process broadly to examining the postretirement trajectory (i.e., individual development in postretirement life; Wang & Shultz, 2010). For example, several individuals may make the same decision to retire from their career jobs; however, if their life circumstances, psychological planning, financial resources, and other contextual characteristics are different, then how their retirement from career employment plays out may be very different. For example, one person may decide to slowly phase out of her career job by reducing work hours and/or responsibilities. Meanwhile, another person may engage in an encore career that may or may not be similar to the previous career employment that person held, whereas another older worker may decide to stop paid employment altogether to focus on family caregiving needs. Finally, the concept of work ability, discussed earlier, is also particularly relevant to the issue of continued employment options for older workers who may retire from their career jobs. Although the framework of work ability has been applied mostly in Europe, it is clearly relevant to the United States as well. Unless older workers possess the functional capacities, competence, and values needed to meet the increasing demands of today’s jobs, they will have little say in their postretirement activities, particularly with regard to continued employment in some form. However, work ability is a function of the correspondence between the older workers’ resources and the work demands present in the workplace. As a result, poor work ability can also be April 2011 ● American Psychologist

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