ECONOMIC, SOCIAL AND PSYCHOLOGICAL EFFECTS OF RETIREMENT: A CRITICAL REVIEW OF LITERATURE
ECONOMIC, SOCIAL AND PSYCHOLOGICAL EFFECTS OF RETIREMENT: A CRITICAL REVIEW OF LITERATURE
Tartisio Machinga Kinyanki - University of Nairobi, Kenya
Prof. Mercy Gacheri Munjuri - Department of Business Administration, Faculty of Business and Management Sciences, University of Nairobi, Kenya
ABSTRACT
Retirement is a pivotal life transition that significantly influences individuals’ economic stability, social networks, and psychological well-being. This study critically reviews theoretical and empirical literature on these three interrelated dimensions, drawing insights from diverse global contexts and identifying gaps relevant to emerging economies such as Kenya. Guided by Life-Cycle Theory, Continuity Theory, and Role Theory, the review highlights how financial preparedness, social connectedness, and psychological resilience collectively shape the quality of life in retirement. Economically, the transition from regular income to reliance on pensions, savings, or social security often affects consumption patterns, healthcare access, and independence, with outcomes influenced by gender, occupation, and financial literacy. Socially, leaving the workforce alters identity and interpersonal relationships, potentially leading to isolation but also offering opportunities for stronger family ties and community engagement. Psychologically, retirement can challenge self-concept and purpose, with unprepared individuals facing stress, anxiety, and depression, while use of proactive coping strategies such as volunteerism and continued learning foster positive adjustment. The review identifies key knowledge gaps, including limited integrated analyses of these dimensions, an overreliance on Western-centric evidence, and methodological constraints such as cross-sectional designs and inconsistent measurement approaches. It recommends context-specific, theory-driven, and methodologically diverse research particularly in Kenya to examine the interactive effects of economic, social, and psychological factors on retirees’ well-being. The insights are essential for policymakers, researchers, and practitioners aiming to enhance retirement preparedness and support successful post-work transitions.
