The Effects of Retirement on Sense of Purpose in Life: Crisis or Opportunity?

Abstract

Does retirement lead to an existential crisis or present an opportunity to experience a renewed sense of purpose in life? Prior research has documented a negative association between retirement and sense of purpose in life, suggesting that retirement could lead people to feel aimless and lost. We revisited these findings using a quasiexperimental approach and identified the causal impact of retirement on purpose in life. In a nationally representative panel of American adults (N = 8,113), we applied an instrumental-variable analysis to assess how Social Security retirement incentives in the United States drove differences in the likelihood of retirement. Results showed a sizable increase in purpose in life as an outcome of retirement. These improvements were driven by individuals with lower socioeconomic status who retired from dissatisfying jobs. The findings suggest that retirement may provide an opportunity to experience a renewed sense of purpose, especially among socioeconomically disadvantaged populations.