In economics, “retirement” has no definition. Or rather, it has several definitions, none of which are any good.
First off, there’s self-defined retirement. When do people say they’re retired? Turns out it depends, and it depends on a lot of things. Women in certain cohorts, for example, will have their retirement status depend more on what their husbands are doing for work than what they’re doing. Their self-defined status will also depend on whether or not they have children still living at home, and so on. People can still be working and say they’re retired. People can be out of work and say they’re not retired. As people get older the lines between unemployment and retirement start to blur.
So then there’s working vs. not working, (sometimes not including those who self-identify as unemployed), but that doesn’t capture people who have ramped down considerably, now working a part-time job or a retirement job. And, of course, how unemployed folks are treated matters as those lines between unemployment and not in the labor force start to blur when you’re open to new employment opportunities but you’re a discouraged worker.
Earlier versions of retired might include whether or not you’re receiving a pension or drawing down social security money. Of course, with defined benefit pensions disappearing, that’s going to exclude a lot of people who aren’t taking social security just yet. And there are plenty of folks who retire from a law enforcement kind of job in their 50s and go on to an entirely full-time new career following that. And what about folks who never got to have a job that offers a pension? Or who didn’t work long enough to vest?
Finally there’s all sorts of hybrid definitions that researchers use. Working at a “career job” for at least 10 years, then stopping working at that job and now working fewer than 30 hours per week or less at a different job (or at no job) or moving from working for an employer to self-employment. And variations on that theme.
Anyhow, this is all to say that we at grumpy rumblings think it is lame when early retirement bloggers argue about what the definition of retirement is. There is no technical definition. They don’t own the term. Nobody really does. Except, of course, the self-defined version, and we social scientists know that the self-defined term means different things to different people.
And that’s ok.
(Seriously folks, the term “financially independent” was invented for a reason. It fills that void. It’s not a dirty word.)
When will you consider yourself retired?