How to retire well according to psychology
Written and accurate as at: May 14, 2025 Current Stats & Facts
Retirement is meant to be a time of freedom, rest and recreation. But despite all the planning and anticipation leading up to it, there’s always a chance it won’t live up to our expectations.
Fortunately, little shifts in behaviour can go a long way. Here’s what psychology tells us about staying happy and healthy, maintaining a sense of purpose, and making the most of your retirement years.
Keep your mind active
Retirement is known to speed up cognitive decline (with verbal memory in particular worsening 38% faster post-retirement), but the good news is there are things you can do that can help slow or even prevent this.
Think of your brain as a muscle — something that gets stronger with use and weaker with neglect. It might have been getting regular workouts during your pre-retirement years but now you have to look outside the box for ways to keep it active.
While the jury is still out on brain training apps, there are plenty of activities whose benefits are grounded in empirical evidence.
For example, one study of 7,000 people aged 65 and older found that volunteering can be very effective at keeping your mind sharp. And if you always wanted to learn a new language or musical instrument, it might help to know that both have been linked to improved cognitive function.
Foster strong social connections
Staying connected with people is essential for a happy retirement, but it can be hard without the built-in socialisation that work provides. This can give way to a host of problems — loneliness, depression, and even early mortality.
Try to stay socially active by reaching out to friends, joining community groups, or taking up new hobbies that involve others. You don’t even have to leave your home sometimes — regular online calls have been shown to be very effective at boosting your mood and warding off social isolation.
Strike a balance between over- and under-spending
Attitudes towards money tend to shift in retirement. Your super is no longer being topped up and each withdrawal you make means that money no longer has the chance to keep growing (or recover if markets are down).
Sometimes a bias known as loss aversion kicks in, prompting retirees to tighten their pursestrings. While this instinct is understandable, it’s possible to take it too far.
Yes, you don’t want to deplete your savings too quickly. But you probably don’t want to let the fear of depleting your savings cost you a worthwhile retirement either. Instead of hoarding your cash, try to find a sensible middle ground between over- and under-spending that lets you enjoy the fruits of your hard work over the years.
Try to forge a new identity
Having given so much of yourself to your job over the years, it’s only natural to feel a sense of loss once it’s no longer there. The existential vacuum that pops up in its wake can be scary, but it’s also the perfect opportunity to reinvent yourself.
Look for new interests you can explore or old ones you can re-discover. Carve out time to indulge in creative pursuits. Research shows that you can develop your creativity through practice just like any other skill, so try to find outlets that are both enjoyable and challenging.
Carving out a new identity can be difficult, especially when so much of your time, energy and self-worth were tied to what you did for a living. But as you pursue new interests and develop new routines, you might come to realise how fulfilling the unfamiliar can be.
