What do you do if you're a Systems Engineer facing the decision of when to retire?

The thing of note here is that an engineer, like a doctor, can continue to practice in some capacity independently as a freelance consultant beyond their retirement from the corporate scene. Given the general vitality of engineering, it is the wish of some (but not all) to go on working as long as they physically can (as technical consultants, educators, designers, and/or craftsmen). However, the income provided by a career in engineering (particularly when well invested) can easily provide a comfortable complete retirement if that is what is desired, only take note that good financial management and investment practices (namely long-term, high yield investments) are typically crucial to any such retirement.

Again, don't feel the corporate workplace is required to reap the mental health benefits of being an engineer, as you can work with a smaller group of private clients on a more protracted schedule if you so choose after retirement. Managing your own health is crucial to aiding the health of others and maintaining optimal system efficiency and effectiveness and there's nothing wrong in admitting your physical stamina is less suitable than it once was to the unchanged task at hand, particularly considering the greatest imperative in engineering is safety.

This very much depends upon the person. I know someone who retired because they couldn't stomach the politics and stress of the job, but I can't personally relate to that sentiment, feeling instead that the joy of engineering and especially the importance of engineering outweigh any struggles with higher management. Our work as engineers is too important to the future, not only the present, for our spirits to be quashed by some executive who either doesn't know they don't know what they're doing or who doesn't care to learn as much about engineering as they know about money. I have always maintained within myself that if I were asked to compromise safety or integrity I would resign my position and seek employment in which these are upheld.

This is quite true of any position, and you would do well to remember that you are not rendering a disservice to the public by retiring as an engineer. Engineering is only one of many outlets for the love by which everyone can help make the world a better place for all. If your personal fulfillment is bound up beyond engineering, retirement may offer you the chance to explore other ways by which to help people to greater personal satisfaction (which tends to reciprocate in the happiness you bring to those you help).

This is basically everything I've said up to this point about how an engineer doesn't have to fully retire when they leave the corporate scene. As to what specifically you should do in continuing to work in a lesser capacity feel free to experiment until you discover what brings you the greatest fulfillment; we're in a service business, so when we're happy those we help are made happy too, which is why your job satisfaction as an engineer is so important. There is no ineffective or inadequate position in engineering, it just needs the person who most loves to do it for optimal results, so find the position you love the most and continue to make the world a better place through your work.