Why investing in identity early is as important as building a nest egg

“WHAT do you do?” In Singapore, this question opens many dinner conversations between new acquaintances. For most of one’s career, the answer comes easily. A job title typically tells the room who someone is without elaboration.

Then retirement arrives, sometimes by choice, sometimes not. The job title no longer applies.

Here, most retirement planning focuses on Central Provident Fund adequacy, withdrawal rates, property loans, financial commitments to children, and healthcare costs.

These are the right questions. But for those who have addressed them, a harder one remains.

Singapore is projected to attain super-aged status in 2026, with 21 per cent of the population aged 65 and above. From Jul 1, 2026, the statutory minimum retirement age has risen to 64 and eligible workers can be re-employed to the age of 69.

These policy moves keep people in the workforce longer, but they do not resolve the identity question that follows.

The importance of identity capital

Careers take decades to build, yet few people put the same effort into figuring out who they are without one.

Nobel laureate George Akerlof and economist Rachel Kranton argued that people gain satisfaction not only from money, but also from conforming to the ideals of their social category. Conversely, they may suffer anxiety for violating these norms.

Job titles are not just descriptions; they tell people who they are.

No financial adviser would recommend holding an entire portfolio in a single stock. Yet many professionals do exactly that with their identity, tying it entirely to a job that ends the day they retire.

I have seen retirees who overspend trying to buy back the status they lost. Some become irrationally cautious, clinging to capital preservation because their portfolio has become the only scorecard left. At that point, money decisions become identity decisions.

Identity capital is the collection of interests, relationships and roles a person builds independently of an employer. Crucially, a job title is not identity capital.

Those who transition well – out of a full-time career – have enough money, with a margin of safety. But the financial preparedness is not what sets them apart.

Thinking and planning ahead

Many were already sitting on non-profit boards years before retirement. They did not go looking for a purpose only after their last day.

Their family relationships tend to be strong because they have invested in them over decades, not because retirement freed up their calendar. They had looked after their health consistently, not just after they stopped working.

A study in the British Medical Journal Open followed 424 retirees over six years. Among those who had two group memberships before retirement, the risk of death was 2 per cent if they maintained both, and 12 per cent if they lost both. The authors noted the effect was comparable to that of physical exercise.

Indeed, many who struggle with retirement are often the ones with nothing to do the week after they leave the office. The phone stops ringing. I have watched sharp and capable people lose confidence and withdraw socially within a couple of years of stopping work entirely.

Research led by Singaporean scientist Reuben Ng suggests that outlook matters too. In a study tracking more than 1,000 older adults in the US across 23 years, Dr Ng and his co-authors found that people who held positive views of physical health during retirement lived, on average, 4.5 years longer than those with negative views.

What sets “successful” retirees apart, then, appears to be preparation. The board seats, the passion projects, the social networks and the healthy habits were already part of their lives while they were still working.

A career gives structure, income and purpose to life. But when it is the only thing a person has, retirement does not feel like a transition; it feels like a loss.

Whether retirement comes at 55 or 69, the identity question is the same.

Building a life beyond one’s job takes effort, time and planning. There are no easy answers or quick fixes. Most importantly, there is no point in delaying. Starting early is wise.

The writer is director of private wealth management at UOB Kay Hian. He writes about behavioural finance. The views expressed are his own.

Switching Lanes is a column exploring the diverse realities of life after a full-time career. From money strategies to finding fresh purpose, we are redefining retirement.

Have a perspective to share? Write to btletter@sph.com.sg with the subject, Switching Lanes.