The sunk cost fallacy locks many people into miserable situations that they don’t need to be in. It’s so common because we get used to certain people or situations, and we don’t want to change them. The unknown is intimidating, so we tend to stay in things that don’t work for us out of a sense of comfort and familiarity.
That, however, will only lead you to a miserable life. Everything changes, for better or worse. You have to be willing to change things up when they are no longer working for you, and that includes during your golden years. The best way to avoid miserable feelings is to identify what isn’t working for you, so look for these common sunk cost fallacy traps that many retirees fall into, so that you can avoid them.
1. Holding onto old resentments from your earlier years.
Resentment is a poison that erodes you from the inside out. John Hopkins Medicine informs us that it causes so much sadness, anger, and even ill health, because it is a clump of unresolved feelings. Unfortunately, life is challenging, and we sometimes get hurt in ways where we don’t get an appropriate resolution.
The result is that accumulated resentments can poison what should be your most freeing years if you let them. Retirement can be a great opportunity to start a fresh chapter, yet many retirees carry decades of workplace grudges, family conflicts, or regrets about career paths not taken into their golden years.
The sunk cost fallacy convinces you that because you’ve invested so much emotional energy into these grievances over the years, you can’t just “let them go.” Somehow, it feels like the anger is justified because of how long you’ve carried it. But nursing decades-old resentments doesn’t validate them; it just ruins your present.
At some point, you have to decide to let that anger go. Your retirement is too precious to spend it dwelling on slights from 10, 20, or 30 years ago. Instead of focusing on the frustration of the emotions or anger at the offender, contemplate how to let go. Personally, I find the easiest way to do this is to focus on how messy and imperfect humans are. I mostly feel pity for people who can’t take responsibility for their own actions anymore.
Why? Well, as someone who’s made a lot of mistakes in life, many of which I tried to avoid responsibility for, I didn’t understand how much it damaged my life. People hold you at arm’s length because they now understand that you’re not trustworthy. Any new relationships that person forms are doomed to worsen if they can’t take responsibility for their mistakes. That’s lonely and sad. Understanding that doesn’t mean tolerating poor treatment, but it does help you to have compassion for people and let go of some of the anger you feel toward them.
2. Maintaining friendships and relationships out of obligation.
This happens all the time. People maintaining friendships purely because “we’ve been friends for 40 years!” or “they were there for me back in the day.” The sunk cost fallacy convinces many people that the decades they’ve invested mean they owe these people their retirement years, too, even if they’re draining the life out of you now.
And familiarity can be comfortable, even if it’s an unhappy familiarity, but that’s no way to live. Surrounding yourself with people who make you feel unhappy, miserable, or unsafe undermines your own peace and happiness.
Sometimes, you have to let the people go who are not adding positively to your life, even if they are old relationships. At some point, you just have to say enough is enough. Don’t let the obligation to past investment cost you the joy and peace you’ve worked so hard to earn in retirement.
Take some time to think about the different people in your social circle, friends, and family. How do they make you feel? Do they add joy and peace to your life? Do you feel energized and happy after spending time with them? Or do you feel drained and depleted? If you feel drained and depleted, it may be time to reexamine that relationship to ensure it’s what you want for your retirement years.
3. Staying in a lifestyle that no longer fits your life.
Many people feel like they should continue the lifestyle they had in their working years into their retirement because that’s who they’ve been for so long. The sunk cost fallacy tries to convince them that because they’ve lived a certain way for 30 or 40 years, changing it now would somehow invalidate all that time. However, there’s no reason that you need to believe that. If you are ready to change things up to enjoy your free time, then do that!
Take my grandmother, for example. She worked for around 45 years at a bakery. After she retired and my grandfather died, she got herself a new “man friend” and traveled around the country in an RV with him up until she decided she’d had enough of that. Then, she bought a convertible to drive around in until she was 92 while living with other family.
That was definitely not the grandmother I grew up with! Well, she was, as far as personality goes, she was always that kind of woman. But once she retired from the bakery, she said, “I’m never baking again. Don’t even ask. I’m going to do what I want to!” And so she did, and spent her last years doing exactly that until she couldn’t anymore.
4. Keeping too much of a house when you no longer need it.
If you had a family, you likely had a big enough house to raise them all in. But for some, that can be too much space as they get older because of upkeep. Bills are expensive, rooms need to be cleaned, things need to be dusted, all to maintain a neat and tidy home.
Of course, it’s hard to let go of some place with so many memories attached to it. It’s hard to let go of something that you’ve put so much time and money into, especially when you’ve put your own stamp on it.
On the other hand, it’s also not wonderful to watch the place you created so many memories in fall into disrepair. It’s hard and expensive to keep up with, particularly if your retirement funds aren’t going to provide the means to properly maintain the property. It’s one of the challenges that comes with retirement, and it’s okay to downsize if you need to.
5. Clinging to your old identity.
As life changes, we adopt new identities as we have different experiences. And for many people, this includes defining themselves by their career. They view themselves as a business person, professional, or some other job title because it’s taken up such a big portion of their life. It’s hard to set that aside when it’s something you’ve defined yourself as for such a long time.
As such, it may be that it’s time to create a new identity. To do that, it’s best to get involved in other activities if you feel like you are defined by what you do. Of course, you aren’t required to define yourself anyway at all. You can just be you if you can let that go.
Alternatively, you could also consider doing nonprofit work or consulting work in your previous field for some extra money. It’s what a lot of people do to help them adjust to the psychological challenges of retirement. That way, you can still maintain that portion of your identity if that’s what brings you joy.
6. Staying busy with meaningless commitments.
Some people tend to keep themselves busy just for the sake of being busy. As a retiree, it’s a good idea to audit all of the responsibilities that you’ve agreed to over the years. You may want to consider cutting activities that don’t create connection with other people, provide enjoyment, or fulfillment.
There’s no reason to waste your time doing meaningless things that don’t bring any benefit to your life, just because you’ve always done them. You want to have passion and purpose in your retirement. Even if you’re doing something for someone else, that should be helping that relationship and reinforcing the connection. If it’s not something you truly want to do, or if you feel like the friendship has run its course, it’s okay to stop. Your time is valuable.
7. Waiting for life to start “someday” in the future.
It’s a bit ironic that a retiree with much more free time ahead of them may be putting off the life they want to live. It’s less of an active choice and more just a habit that you get into when you maintain a career for a long time. There were probably countless times when you had to sacrifice your own time or dreams to make the career work, support a family, or do whatever else was needed of you, so it feels natural to keep doing it. You’ve waited this long; what difference will a little longer make?
It’s time to let that mentality go before it steals the retirement you’ve worked so hard for. “Someday” is today! Hopefully, you now have the time and ability to get out there and do something you want, for you. It’s okay to start being a little more self-interested, rather than putting everyone else’s needs ahead of yours.
Final thoughts…
Reaching the finish line of retirement is an exciting time. It’s a time for you to change your life, try new things, or completely reinvent yourself if that’s what you want to do. But, to do that, you have to let go of the things that aren’t working for you.
Just because you’ve done something for a long time doesn’t mean it was good for you, or that you should keep doing it. Sit down, take the time to think about what is adding to your life and what is subtracting. Cut out the things that are subtracting, and then you can start adding even more!
