[This is a biweekly "unretirement" blog about working in retirement, focusing on the personal finance and entrepreneurial start-up implications and the lessons people learn as they search for meaning and income. Tell me about your experiences and send me your questions so I can address them in future columns. I'm at firstname.lastname@example.org. My twitter address is @cfarrellecon.]
Cindy Lennartson is a 48-year-old library specialist at the University of Texas Libraries, in Austin. She has worked for a university library system for 25 years and is excited about retiring from there at 52 (when she can collect her pension) to start her next career. But she’s not quite sure how to do it.
After Lennartson read my inaugural column on rethinking retirement, "Why I'm Not Buying the Retirement Gloom," she emailed me for insights on how she might make, and embrace, a life transition. I’ll offer them, as well as advice for others contemplating their move into “unretirement,” shortly.
The Lure of Trying Something New
To find out more about Lennartson’s situation and the future she envisions, I spoke with her. She told me that she’s a recently divorced mother of three who has loved her job and, until a few years ago, believed she’d retire at 62. But the lure of trying something new has convinced Lennartson to start reimagining her next chapter.
(MORE: Busting the Myths About Work in Retirement)
With her new plan of “retiring” at 52 when her children are out of the house, Lennartson said, she can use the next four years to find an encore career that will be meaningful and will come with a paycheck. "I'm rethinking the whole retirement thing — what else do I want to do," she says. "I'm in the exploratory stage."
Lennartson is far from alone. For more than three decades, the national conversation among people contemplating retirement was dominated by the haunting question: What is my number? Of course, the sum of savings we'll need to live comfortably when we’re no longer working is disconcertingly uncertain. There’s no way of knowing what the market will return, let alone how much money will be enough to fund a lifestyle and medical bills.
The New Retirement Question
That’s why, these days, the retirement-planning conversation is increasingly focused on a different question: How can I earn an income after my initial career and give back at the same time?
Recent polls have found that most boomers expect to earn a paycheck during retirement. For example, 72 percent of pre-retirees age 50 and over just surveyed by Merrill Lynch and the Age Wave consulting firm said they want to work during the traditional retirement years. (You can read more about the survey in the Merrill Lynch report: Work in Retirement: Myths and Motivations, Career Reinventions and the New Retirement Workscape.)
What I found particularly striking in that survey was that many of the respondents said they see retirement “as a chance to try something new and even pursue careers dreams they were unable to explore during their pre-retirement years,” according to the report.
(MORE: Bright Spots and Challenges of Growing Older)
The Payback for Working in Retirement
The personal financial return from earning even a slim paycheck well into the traditional retirement years is big.
Your savings can continue compounding and you’ll live off your accumulated assets for a shorter period of time. A job can also allow you to delay filing for Social Security. Benefits are more than 75 percent higher if you start claiming at age 70 than at 63.
The difficult issue, as Lennartson has discovered, is figuring out what to do next — locating a paying gig that is also engaging.
Lennartson is smart to have a four-year exploration horizon and I encourage you to do the same. “You should be looking for the kind of jobs you could do that are challenging and interesting and offer an acceptable income,” says Arthur Koff, the septuagenarian founder of Retired Brains, an online job and advice portal. “The time to do it is while you’re working.”
(MORE: Change Careers With the 'Sugar Grain' Principle)
Why Planning Ahead Can Help
Making inroads before you retire can also help make you more valuable in retirement, as Jake Warner, the founder of Nolo.com, the self-help legal publisher explained to me.
“Let’s say someone thinks of themself as an environmentalist and dreams about working in environmental causes when they retire. But because of work, saving money, raising kids — all the pressures of daily life — they don’t get engaged,” said Warner. “Now they’re 70 and they have time. They head toward an environmental group they admire and say, ‘Here I am. How can I help you?’ The answer is going to be probably not much. Now, take that same person who gets involved with several local environmental groups in their 40s or 50s. At age 70, they’re valued and they’re needed. They earned it.”
The Librarian's Encore Career
What might Lennartson do for her encore career? Well, she currently volunteers at a nonprofit, recording incarcerated fathers reading to their children and that’s an activity she finds deeply fulfilling. Perhaps there’s a paying job for her with the nonprofit or a similar endeavor.
Alternatively, since her undergraduate degree was in Spanish, she could try to land a job that would let her use her language skills.
Whatever she decides, a part-time gig would probably be best, since Lennartson wants the freedom to travel with her daughter, an activity they enjoy doing together.
Part of the equation revolves around her finances.
Running the Numbers
Lennartson had initially thought she would keep her house in retirement so her children would have a bedroom to come back to. Now, with her new next chapter mindset, she wonders if maybe just a couch is enough. A move into a smaller place would lower her expenses, giving her greater financial freedom.
Henry “Bud” Hebeler, founder of the retirement planning website Analyzenow.com, recommends Lennartson run the numbers to see how much downsizing will boost her cash flow. (That’s a useful site for anyone over 50 noodling a next act.) When she gets closer to making a shift, Lennartson could run her financial blueprint by a professional planner, he says.
As Lennartson is finding, transitions can be tricky and the process takes time. But they’re also liberating. “I feel like I am in college, so much is open to me,” says Lennartson. “It’s like I’m 21 or 22 once again,” she says. Now, that’s exciting.