The CEO’s Guide to Retirement

“I don’t quite know what to do next,” said Simon, a media CEO. Simon had been a chief executive for 15 years, and CFO before he was 30. He had turned around private and public companies, quadrupled profits and quintupled revenue. But, with his company recently sold, Simon was considering retirement. Like many CEOs, he had had no time to plan his retirement — all his focus had been on running the company.

Each year, over one hundred CEOs retire from the S&P 1000. Even in the most well-oiled CEO succession processes, one piece is almost always missing: preparing the current CEO for the next phase in his or her career. “I was so focused on the CEO job, I didn’t spend time figuring out what I would do next,” says Scott Davis, former CEO of UPS. Bill Weldon, former CEO of Johnson & Johnson, echoes what most CEOs tell us, “I didn’t do a lot of thinking about post-employment while I was still the CEO. As a result I went off the off ramp at 110 miles an hour and quickly hit zero. Retirement was a black hole.”

On average, CEOs step down at age 62, relatively young by today’s standards. Few have to work for a living. But almost all want to work, and they do. We studied the post-CEO careers of 50 Chief Executives in the Fortune 500, and interviewed 13 of them. Not one retired to the golf course.

While only a few take on another CEO job, almost all former CEOs are contributing to the U.S. economy and to societal wellbeing. More than a quarter of past Fortune 500 CEOs become active in private equity. Over half assume leadership positions at nonprofit organizations and almost all are philanthropic. Two thirds serve on public boards. Many teach and some even write books.

After retirement, CEOs must grapple with a loss of power, prestige, and immense responsibility. As Ron Sugar, former CEO of Northrop Grumman told us, “The first few days, it does feel like maybe you’ve fallen down the elevator shaft.”

It can be especially hard on CEOs who are women. As Anne Mulcahy, former CEO of Xerox warns, “there’s a special place in hell for retired women CEOs. By the time you are at retirement age, your kids have left the home too. It’s double retirement.”

Mulcahy further cautions that, “the things that work for you as CEO work against you as a retiree, such as being in command and your high energy level.” It took her a while to find her footing — she reports “calendar filling.” But not for long, as lead director of Johnson & Johnson, chairman of Save the Children, and a guest lecturer at Harvard, she found work that gave her purpose and passion. “For me, it wasn’t about making money or visibility, but about impact and usefulness.”

Any immediate sense of loss is short-lived. Almost every CEO we interviewed reported great satisfaction in their work lives after being CEO. While deeply proud of their accomplishments in the job, they were relieved at breaking free from the corporate calendar.

CEOs find themselves highly valued after retirement. “It was almost a surprise to me how much you really have to contribute,” says Dick Parsons, former chairman of Citigroup and former chairman and CEO of Time Warner. “But you soon realize: ‘I’ve seen this movie before, I can help here.’”

“It was surprising how quickly opportunity came my way,” agrees Doug Hodge, former CEO of PIMCO. “Within weeks of retiring I had opportunities to join a major board, and exciting invitations from venture capitalists to play an active role in FinTech companies. I have rebooted myself.”

So how do CEOs stand up and find fulfillment in their second phase? Most CEOs we spoke to, like Simon, had no time to plan their retirement while running their companies. In our research, we identified some advice to guide retired CEOs as they plan for “Act II”:

Plan your off-ramp. Ken Chenault, former CEO of American Express, advises CEOs to plan their off ramp while they are still in the CEO job by “identifying the categories of things that are important to them” but not necessarily the “specific opportunities.” CEOs who don’t plan risk “falling into the abyss” warns Chenault. “Take the time to plan what is important to you. Don’t ignore it. It is very important to be thoughtful.” Chenault recommends thinking through one’s business, philanthropic, and family priorities. For example, Chenault knew that in his business work he wanted to focus on digital and technology. “In this way,” Chenault says, “when opportunities came my way I was ready, because I had thought about them.” At the beginning of his off-ramp, Ken did not know exactly what he would do, but he knew what was important to him, which allowed him to move quickly and decisively.

Take your time. The most common CEO error is to rush to fill the void, and accept invitations too quickly. As Ron Sugar says, “For the first six months, say ‘no’ to everything that is offered to you. Usually the first offers you get are not the things you should do.” CEOs told us repeatedly that the only thing they got really wrong was to move too fast — which then required unwinding obligations. For example, one CEO accepted a board seat only to have to wiggle out soon after in favor of a better, larger board opportunity. It would have been wiser to take it slow. Say “no” often, “yes” slowly.

Prepare to deal with yourself. Retirement can put even the most self-assured chief executives in the unfamiliar position of self-questioning and self-doubt. “It prepares you for dealing with yourself,” says one CEO. “You need to know who you are when you’re done being CEO,” says Mulcahy. She adds: “That means reflecting on aspects of your personality and temperament and sometimes modifying some CEO traits.” Parsons told his wife that he could write and teach, and she said, “And what will you do next week?” It took him a while to find his passion. He asked himself, what did he want to do as a kid? He always wanted to run a jazz club, so he opened one. He also bought a vineyard, reasoning, “In the worst case, I could drink the results!” And he loves it: “there I am in the soil, it’s a product, there is dirt under your fingernails, it’s tangible.” This is deeply personal. Ask yourself, “What are the things you will enjoy?” advises Bill Weldon, former CEO of Johnson & Johnson.

Partner with your partner. If a CEO has a significant other, it is critical to “align expectations” — to apply a business term to a family environment. If your spouse has been waiting patiently and now wants to travel, and you want to go back to work, now is the time to develop a shared plan endorsed by your family, or at least understood by them. Every CEO we interviewed planned to spend more time with family, and did. Ken Chenault and his wife scheduled out together time to spend time on activities important to them.

Assume the role of mentor. There is one feeling of loss that CEOs find hard to overcome. It’s not the plane, nor the power. It’s the people. When asked what he missed from the job, Scott Davis said what many echoed, “The people. I developed a lot of comrades over the years, and you don’t see them as much anymore.” Ex-CEOs who embrace mentorship opportunities find a great way to fill this gap, and find fulfillment in passing down their wisdom to an eager student. As Bill Weldon told us, “We have experienced things other people have not. We can draw on those experiences to help other people.” Pat Woertz, former CEO of ADM, sits on the boards of P&G and 3M, is on the Northwestern Hospital board, and advises a startup accelerator in Chicago. She is also mentoring women, “saying yes to more people than I was able to before.”

Plan your allocation of time. Write down the hours/day and days/year you want to work. Leave room, as Ron Sugar reminds us, “for surge capacity” as a portfolio of interesting activities can sometimes lead to unpredicted time requirements. Divide your time between for-profit and not-for-profit. Determine where you want to earn money and where you want to give money. Finally, write down how much time you want to spend with family or personal hobbies. Jeff Kindler, former CEO of Pfizer, notes, “The beauty is you can try things out you haven’t been able to before,” and he asks, “What are the things in your professional life you never got around to?”

Give back. Bill Weldon says it best: “The philanthropic side of retirement provides psychic reward and payback far better than any money we receive in our for-profit work.” This is the time to build a foundation, and begin to distribute your wealth. All of the CEOs we interviewed give back. For example, Ken Chenault chairs the board of the Museum of African American History at the Smithsonian and is a member of the Harvard Corporation; Ron Sugar is trustee of the University of Southern California, director of the Los Angeles Philharmonic Association, member of the UCLA Anderson School of Management’s board of visitors, director of the World Affairs Council of Los Angeles, and national trustee of the Boys and Girls Clubs of America; and Scott Davis serves as a trustee of the Annie E. Casey Foundation, and is a member of The Carter Center Board of Councilors. The 13 former CEOs we interviewed for this article collectively serve on at least 25 philanthropic boards.

With this guidance, CEOs can take one of the hardest steps of their career: exiting. Boards can help by supporting the transition, offering planning guidance, and practical support. Well-performing CEOs who have given their all for the company’s success should be provided critical services, including travel support, IT, and an administrative assistant. Aetna, Verizon, and Northrop Grumman even provided an office — and we think this is best practice.

In return, it is easier for CEOs to leave.

And, as Jeff Kindler told us, “The opportunities are immense. If I had the opportunity to understand what the retirement world would look like before retiring, I would have been able to get my plans together in a matter of months rather than years.”