MONEY

These New Programs Help Workers Retire at Their Own Pace

The federal government will allow employees to phase in their retirement by working part-time. But private companies are slower to offer this benefit.

Gwendolyn Ross will turn 66 in November, but she isn’t ready to retire. A deputy comptroller for the U.S. Coast Guard in Miami Beach, Florida, she hopes to work until she’s 70—but she would like to cut back her hours.

“I have some health issues that require a lot of visits to the doctor, and I’d love to have more time to visit my family in Michigan,” she says. At the same time, she needs to keep working to prepare for retirement. “As I get closer to it, I realize I’m not as financially ready as I thought I would be when I was younger. The time went by really quickly.”

Ross is a great candidate for a new federal government program that will allow workers to opt for a phased retirement. Participants in the program, which launches this fall, will be able to work half-time while collecting half their pensions after they reach the eligible retirement age.

For the government, the program is expected to be a money saver. The Congressional Budget Office estimated recently that 1,000 employees might take advantage of phased retirement annually, and would continue work for three years. That would cut required contributions to the government’s pension system by $427 million from 2013 to 2022, and boost worker contributions by $24 million.

But phased retirement also will help the government retain talent and expertise at a time when the “brain drain” from an aging workforce is a major concern. About 600,000 people, or 31% of the federal civilian workforce, will be eligible for retirement by September 2017, according to the U.S. Government Accountability Office. Phased retirees will be required to spend at least 20% of their time mentoring younger employees.

“It can help people who want to phase out over time, but it makes sense for the whole workforce,” says Kevin E. Cahill, a research economist at Boston College’s Sloan Center on Aging and Work. “Younger workers can tap into the knowledge that the older crowd has, and make sure it doesn’t get lost lost.”

Worker interest in a flexible glide path to retirement is strong, and it’s not limited to the federal payroll. A survey this year by the Transamerica Center for Retirement Studies found that 64% of workers—of all ages—envision a phased retirement involving continued work with reduced hours. For workers closest to retirement, frequently cited reasons for continued work included financial need (34%) and a desire for income (19%). But 34% had a desire to “stay involved” or said they enjoyed their work.

Employers have been slow to respond. Just 21% of respondents to the Transamerica survey said their employers offer phased retirement—and that figure may be too optimistic.

The Society for Human Resource Management reports that 11% of employers provide some version of phased retirement, with only 4% having formal programs. Cahill’s research shows similar employer disinterest in phased retirement programs.

“Sometimes there are institutional or administrative restrictions,” he says. “And some employers may have good reasons not to offer flexible hours.”

Much more common, he found, are workers who find what they need by changing jobs. “These are bridge jobs that carry people through from their careers to withdrawal later on from the labor force,” he says.

Some experts think phased retirement options will become more popular as the economy improves and labor markets tighten, particularly as demand for specialized skills rises. And the federal government’s move could be a catalyst for change in the private sector.

Each federal agency will write its own eligibility rules, and phased retirement won’t be a guaranteed right for all workers. But basic eligibility will depend on which of the two major federal retirement programs covers an employee.

The government has a legacy Civil Service Retirement System (CSRS), a traditional defined-benefit system, and the newer Federal Employees Retirement System (FERS), a defined-contribution program with a small traditional pension component.

CSRS employees will be eligible for phased retirement at age 55 with 30 years of service, or at 60 with 20 years of service. FERS employees must be 60 with 20 years of service, or have 30 years of service and have reached their minimum retirement-eligible age.

Interest in the program is strong, according to Jessica Klement, legislative director of the National Active and Retired Federal Employees Association.

“The number of phone calls we get from members tells me there are a lot of people waiting for this,” she says. “Many of them are ready to take a step back, but they don’t really want to quit yet.”

MONEY Second Career

How This 66-Year-Old Launched a Second Career Raising Millions to Fight Cancer

Ysabel Duron
A former TV journalist and cancer survivor, Ysabel Duron founded and leads Latinas Contra Cancer to educate and support Hispanics fighting the disease. Photo by Eydie Mendoza

Ysabel Duron saw that Latinos needed more cancer support services. So she left the TV business and started a non-profit to help them.

When Ysabel Duron was diagnosed with Hodgkin’s lymphoma at age 51 in 1999, she was working as a news anchor for a local television station in San Francisco. It was a natural move for her to chronicle her treatment and raise awareness about cancer. Her documentary about her experience won awards. But after attending support groups for cancer patients, she realized a key audience wasn’t getting the message: Latinos. Relatively few were getting treatment or support services. So she set out to help low-income Spanish-speaking cancer victims in need of help.

She first volunteered with the Cancer Prevention Institute of California, educating Latina women about breast cancer. But she wanted to do more. In September 2003 she founded Latinas Contra Cancer (Latinas Against Cancer), an organization aimed at educating and providing services to low-income Spanish speakers. The issue is critical in the Latino community, Duron says. Cancer is now the leading cause of death among Hispanic Americans, overtaking heart disease, which is still the top killer of whites and African Americans in the U.S., according to the American Cancer Society.

One key reason for the high cancer rate is cultural. Among Hispanics, cancer is still a taboo topic, so they are less likely to get advance cancer screening. Economic barriers are also a challenges—one-third have no health care coverage. “I had access to good health insurance and knew how to research treatments,” says Duron, who has been healthy since she finished treatments in 2000. “So many Hispanics don’t have the advantages I did.” To help meet these needs, LCC runs cancer education workshops, as well as provides Spanish-language support groups, home visits, phone counseling and help navigating treatment and insurance

After launching LCC, Duron continued to work weekdays and evenings, while still maintaining her full-time weekend news anchor job. One of her first moves was to organize a fundraiser—using her news anchor connections, she persuaded local politicians and VIPs to attend by giving them awards. She also sought out regional grants from organizations focused on cancer issues, like the Komen Foundation.

“As we showed success, we were able to attract others to support us,” says Duron. She recruited local investors and persuaded a businessman to donate a small office space for $250 a month in a good neighborhood in San Francisco. “I was determined to make sure we had a good image,” say Duron. “You always have to look like you’re a good investment. We don’t operate like a nonprofit with its hand out. We operate like a business.”

Last year she retired from the TV business at age 66 and now devotes all her time to LCC as its CEO and executive director. “I spent 13 years doing two jobs. It’s a pleasure to focus all on my energy on this,” says Duron. Her organization has a $450,000 annual operating budget and nine part-time workers, up from $150,000 and two part-timers its first year and has so far raised more than $2 million. “It’s still a small organization and we work hard for every dime,” says Duron.

Even so, she is seeking to extend LCC’s services nationally, so it doesn’t just rely on local funding. To bring more recognition to the group, she sits on several national non-profit boards. In 2008 she started the first National Latino Cancer Summit, which brings together health care providers, researchers and community-based agencies. Duron also lobbies on national issues, such as extending Affordable Care Act insurance to more immigrants and including more minority women in cancer research.

Since embarking on her second career, Duron no longer makes a six-figure salary—as executive director of LCC, she earns about $50,000 a year and often uses her own money to cover expenses such as travel for work. But thanks to her pension, savings and Social Security, she still enjoys a comfortable lifestyle, she says—despite living in the expensive Bay Area.

As for her former life as a broadcaster, she doesn’t miss it. “I had a successful career. I was ready for my next act,” says Duron. “You need the ganas, the determination and will power to make something like this a success—but this is what I was meant to do.”

Ysabel Duron is a Purpose Prize winner. The Purpose Prize is a program operated by Encore.org, a non-profit organization that recognizes social entrepreneurs over 60 who are launching second acts for the greater good.

MONEY Second Career

How to Shift From Full-time Work to a Part-Time Second Career

Choir Teacher
Nicole Hill—Getty Images

Here are proven strategies for finding both money and joy in your transition to retirement.

If you’re a boomer you may remember small “hippie” shops selling fringe jackets. Maybe you still have one of them stored in a closet. If so, your Age of Aquarius memento might have been created by Lincoln Wolfe, now 60.

In recent years, Wolfe has made the transition from full-time (high stress) manager in the craft leather business to part-time (low stress) consultant to the industry. His job duties now range from training young workers to planning factory layouts.

“I didn’t want to work full-time for anyone,” he says. “I enjoy what I am doing at a more relaxed pace. This is retirement.”

Downshifting In the Field You Love
Transitioning from a 40-hour-plus workweek to a part-time schedule in retirement that’s less of a grind, but still in the field you’ve grown to love, may be your idea of retirement, too.

Here’s how Wolfe and professional singer Fay Putnam told me they did it and what you can learn from their experiences.

Wolfe decided he was done with school at age 16 and headed for Florida where he started a business with a 24-year-old, making sand-cast castles on the beach and selling them to various outlets. A customer in New Jersey hired him about a year later, launching his career in the leather craft trade.

Wolfe worked his way up in the industry, sometimes running his own venture and other times for an employer. In the early 1990s, Coach (the high-quality leather goods designer and manufacturer) hired him to oversee the technical development of new products — moving leather goods from the designer shop into mass production.

Coach grew dramatically and the job became increasingly intense, especially when production moved offshore to India and China. But since Coach went public in 2000 and Wolfe’s shares had appreciated some 13 times by 2005, he then had enough money to retire on.

Growing a Consulting Business
When he began consulting from his home in Lambertville, N.J., Wolfe’s initial contracts were, as you might expect, from Coach. His business then expanded through referrals. These days, Wolfe works about a third of the time, usually on the road.

His “unretirement” timing was fortuitous with the revival of the American leather goods industry—mostly designer products catering to urban hipsters. In 2012, Wolfe began consulting with Shinola, the Detroit-based Made-In-America producer of handcrafted watches, leather goods and bikes.

When we talked in late July, Wolfe was in Dearborn, Mich. writing an industrial sewing curriculum for the Makers Coalition, a trade group formed to apprentice a younger workforce into artisan leather manufacturing. The program will be housed at Henry Ford Community College’s Michigan Technical Education Center.

Singing a New Song
Leather craft is an art. So is singing. Fay Putnam spent her career as a professional singer, putting long hours into her craft, mostly with choirs such as the Gregg Smith Singers and the San Francisco Symphony choir. Putnam also had a side business as a voice coach.

She moved around fairly frequently because her husband, Frank, was a U.S. Navy aviator. Now 68, Putnam has started a part-time business in Portland, Ore. as a voice and speech coach.

“I love doing it,” she says. I wouldn’t keep doing this if I didn’t love it.” Although, she concedes, she’d welcome a few more clients.

Putnam and her husband moved to a condo in downtown Portland from the San Francisco Bay Area two years ago. Their son and daughter-in-law live there; so does her husband’s brother. And their money now goes farther. Most of all, Putnam says, they were tired of the San Francisco metro area’s horrendous traffic jams.

Frank is now retired, but Fay wanted to stay engaged in her art and teach the voice and breath control techniques she learned over the years. Most of her business is helping entrepreneurs and employees polish their public-speaking presentations. She coaches some singers, too.

Takeaways From Wolfe and Putnam
Wolfe’s and Putnam’s stories highlight a number of critical aspects that others in their 50s and 60s should take into account as they mull their next chapters.

Both built their new ventures on their existing knowledge and skills, rather than shifting to unfamiliar fields. For most boomers, I don’t believe there is any reason to succumb to the lure of reinvention—the urge to embrace a radical makeover—especially if the goal is finding part-time work that offers a financial and psychic reward.

And yet, much of the late-in-life transition narrative we often hear extols the new, the different, the dramatic change.

You know the story. Someone has labored long in a cubicle, or spent hours as a road warrior, for corporate America. Now, in the last third of life, she finds her passion, somehow manages to open a winery, basks in its growing sales and gets invited to speak about reinventing yourself at global conferences.

Okay, I’m exaggerating slightly. But I wholeheartedly agree with the cautionary wisdom of Marc Freedman, founder of Encore.org, in a recent Harvard Business Review column.

He wrote: “After years studying social innovators in the second half of life — individuals who have done their greatest work after 50 — I’m convinced the most powerful pattern that emerges from their stories can be described as reintegration, not reinvention. These successful late-blooming entrepreneurs weave together accumulated knowledge with creativity, while balancing continuity with change, in crafting a new idea that’s almost always deeply rooted in earlier chapters and activities.”

What I applaud about Wolfe and Putnam is that they smartly exploited what they already knew. It’s an insight echoed in a 2010 paper by professor Barry Bluestone of Northeastern University and Mark Melnick of the Boston Redevelopment Authority. When investigating jobs that might be available for aging workers, the authors felt boomers should exploit their skills — albeit, sometimes in a different setting or even industry.

“In many cases, older workers could carry their existing skills and credentials into a new setting,” they wrote. “For example, a registered nurse might move from a major hospital to a community clinic; a computer systems analyst at a private software company might take a job in local government; a civil engineer at a private construction firm might work on a state government highway project.”

Training for the Transition
Of course, you still may have to pick up additional training or education to ease the transition.

Putnam spent her career on the creative side, so she realized she needed to know more about the practical aspects of running a small business. “Most of the time, in the training that artists get, business savvy isn’t included,” she laughs.

To wise up, Putnam took a month-long business basics class called “Better, Smarter, Richer” at Portland Community College. It was designed specifically for solopreneurs and creative entrepreneurs like herself.

The course taught Putnam how to build her website and market her services to local business groups. Best of all, she says, her classmates continue to get together, share information and cheerlead for one another.

Flexibility Is a Must
Like Wolfe and Putnam, many boomers want to continue earning an income during retirement, but put in fewer hours. Their desire for the “big job” and to climb the ladder of the “big career” lies in their past. Phyllis Moen, sociologist at the University of Minnesota, says what many boomers desire are: “not so big jobs.”

Wolfe and Putnam found it much easier to create their flexible work schedules by tapping into their backgrounds rather than attempting ambitious life overhauls. “Older workers value flexibility,” says Richard Johnson of the Urban Institute. “They don’t want to work 9 to 5, five days a week.”

Wolfe’s story reinforces the benefits of flexibility in a different way that will strike a chord with many in their 50s and 60s. He has dialed back on his consulting services recently after being diagnosed with cancer. His prostate cancer has been successfully treated, but Wolfe must now spend more time paying attention to his health, watching his diet, exercising, meditating and so on.

He still enjoys consulting, but his priorities have changed. Cancer has that effect. “I think that I would try to be more engaged than I am now if it wasn’t for the stress of travel,” he says.

Thing is, assuming their health holds up, both Wolfe and Putnam have achieved something all of us desire: Control over their destiny. They can curtail working if they want to. They can stay engaged, if the work remains interesting. It’s their choice.

Not bad for a next chapter.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the forthcoming Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He writes about Unretirement twice a month, focusing on the personal finance and entrepreneurial start-up implications and the lessons people learn as they search for meaning and income. Tell him about your experiences so he can address your questions in future columns. Send your queries to him at cfarrell@mpr.org. His twitter address is @cfarrellecon.

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MONEY Second Career

How a 57-Year-Old On Her Second Career Launched a $10 Million Business

Im Ja Choi
Im Ja Choi (center, in white suit), founder of Penn Asian Senior Services, celebrates with clients at the opening of her agency's first adult day care facility, the Jubilee Center in Philadelphia. Courtesy Penn Asian Senior Services

Im Ja Choi saw a need for caregivers who speak foreign languages. So she started a non-profit that provides them.

After her mother was diagnosed with stomach cancer in 2002, Im Ja Choi knew it was crucial to get her a home health aide once she was out of the hospital. But Choi was quickly frustrated by the difficulty of finding a caregiver in the Philadelphia area who spoke Korean, her mother’s native language. Choi quit her job as a bank vice president to take care of her mom until she found one—a process that took seven months.

That experience became the catalyst for Penn Asian Senior Services, a non-profit home health aide agency that Choi, now 65, launched in 2005 to serve the local immigrant community in Philadelphia. Today PASSi serves 455 clients and provides home care services in 11 languages. And with 400 workers workers on its payroll, it’s one of the largest Asian immigrant employers in the area. Annual revenue is about $10 million, and earlier this year the agency opened its first senior daycare center.

It’s an impressive outcome for someone who had never run a business. Choi, who emigrated to the U.S. from Korea after finishing college in 1971, had a 20-year career as a top real estate agent in Philadelphia. Then, after getting a master’s degree, she worked her way up to vice president at a local bank. But starting a business from scratch at age 57 was a wholly new challenge for Choi.

To cover initial operating costs, she took out took out a home equity line of credit for $55,000. “It took some convincing for my husband to agree,” says Choi. A long-time volunteer on Asian women’s issues, she used her local network to find public funding. She got a $50,000 grant from the county and won $900,000 in grants during the first three years of operation. “I had to learn how to write a grant application well, but it was my contacts in the community that really helped. I knew who the decision makers were,” says Choi.

She had enough savings to get by without salary for the first year and was able to repay her home loan within a few months of starting the business. She started drawing a small salary at the end of the first year, after budgeting for that income in her grant applications. “Every step of the way I was fighting for funding and looking for clients,” Choi says. When PASSi reached 175 clients, its revenue covered operating costs; in 2009 the agency began turning a profit.

Today Choi earns about $114,000 annually. It’s less than she pulled down as a banker but she feels much more satisfied by her work. “We provide a service that’s really needed,” she says. She saw proof of that with her mom. Despite a grim initial diagnosis, Choi’s mother lived another eight years, passing away in 2010 at age 93. Choi believes the culturally-based care she got was key to her long survival.

“I consider this job a privilege,” says Choi. “When you have a dream, you somehow make it come true. Now I feel like I am doing the things that I want to do.”

Im Ja Choi is a Purpose Prize Fellow. The Purpose Prize is a program operated by Encore.org, a non-profit organization that recognizes social entrepreneurs over 60 who are launching second acts for the greater good.

MONEY working in retirement

How to Find Happiness in Your Second Career—and Earn Money Too

These days, the retirement-planning conversation goes something like this: How can I earn an income after my initial career and give back at the same time?

This article was originally published at NextAvenue.org.

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% 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.

Chris Farrell is economics editor for APM’s Marketplace Money, a syndicated personal finance program, and author of the forthcoming Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He will be writing on Unretirement twice a month, focusing on the personal finance and entrepreneurial start-up implications and the lessons people learn as they search for meaning and income. Tell Chris about your experiences so he can address your questions in future columns. Send your queries to him a tcfarrell@mpr.org. His twitter address is @cfarrellecon.

MONEY working in retirement

Three Retirement Trends to Be Happy About

Marketers are trying to reinvent retirement, but the best choices are the same ones we've always had. And they're getting better.

Just about anyone over the age of 50 has seen the barrage of new labels for today’s post-retirement lifestyle: Retirement 2.0. Encore Careers. Next Act. Third Age. Not Your Parent’s Retirement.

Forget the marketing hype. When it comes to figuring out your retirement plan, here’s the best strategy: take a good look in the mirror. What you’ll see, if you’re really paying attention, is the definition of retirement that matters to you. And the good news is there’s more opportunity today to design the kind of retirement you want than ever before.

The more research I read, and the more experts I talk to, the more I’m convinced that nearly every kind of retirement option has been heavily road-tested by those who came before. There have always been people who continued to work during retirement—the most powerful and successful people, in fact, tend to never retire. They are having too much fun. Bill Gates will never really leave Microsoft. He continues to work longer hours “in retirement” than the rest of us do at our office jobs. Warren Buffett? They will have to pry a can of cherry coke out of his cold, cold, cold hands before he stops working.

You don’t have to be Warren Buffett, either. Plenty of ordinary people have reinvented their lives in their later years. Older people have always made great entrepreneurs as well as creative artists and inspirational leaders. Often, having a lot of money has nothing to do with the levels of engagement and enjoyment that older people derive from being busy. Sunset years? Hardly.

Continued work in your later years will make your lifestyle during whatever-you-want-to-call-retirement easier to afford—and more comfortable and enjoyable as well. Here are three key trends that should put a smile on your face when you look in the mirror:

Living longer. Yes, you need to make realistic allowances for health problems. But most of us should assume we will live two or three decades past age 65. Take a look at this 2011 life expectancy data from the National Center for Vital Statistics. As you can see, someone age 70 can expect to live to nearly 86, on average:

Age Remaining Life Expectancy (Yrs.)
40 40.6
45 36
50 31.5
55 27.2
60 23.1
65 19.2
70 15.5
75 12.1
80 9.1
85 6.5
90 4.6
95 3.2
100 2.3

 

Of course, average numbers disguise a lot of differences. People with college educations, who tend to earn more money, will live a lot longer than average life expectancy. So run the numbers as if you plan on lasting to age 100, and update your will to bequeath what’s left over if you don’t.

Improved healthcare. The quality of your medical care will be better than ever. Once the wrenching transition to Obamacare has moved into our rearview mirror—and it eventually will—what we’ll see in front of us is a huge shift toward wellness. Not only will our lives be longer but we live more of that time in good health. Yes, there eventually will be a fall-off into frailty. But increasingly that period won’t occur until just before our death. The technical phrase for this doesn’t sound pretty: compressed morbidity. But the trend is terrific. Better healthcare, more effective drugs and physically active lifestyles are a ticket to a higher quality of life in our later years.

Market power. As our society ages, older people are becoming a new mainstream group. Companies are shaping new products and sales pitches for us—they know that older people control the lion’s share of the nation’s wealth. So we’re likely to see a new wave of positive attention to older Americans. Of course, that’s what companies do to sell stuff. What’s important here is the growing visibility of older Americans, which will encourage a celebration of the diverse and interesting paths they have decided to follow in old age. And in turn, more older Americans will be encouraged try and succeed at lots of different things in their later lives. That will benefit all generations.

Philip Moeller is an expert on retirement, aging and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

MONEY working in retirement

Don’t Buy Into the Retirement Gloom

Senior in the workplace
Thomas Barwick—Getty Images

In the emerging Unretirement movement, you are your best investment.

This story was originally published at Next Avenue.

Gray wave. Age wave. Geezer tsunami. (Pick your favorite — or most hated — euphemism.) Catchphrases like these capture the realization that we’re living longer and that older Americans make up a growing share of the population. As economist Laurence Kotlikoff and columnist Scott Burns say in The Coming Generational Storm: “The aging of America isn’t a temporary event. We are well into a change that is permanent, irreversible, and very long term.”

Living longer should be a trend worth celebrating. But many people believe that America’s boomers can’t afford retirement, let alone a decent retirement. They fear that aging boomers are inevitably hurtling toward a lower standard of living.

And here’s their evidence: We’ve just been through the worst downturn since the 1930s, decimating jobs and pensions. Retirement savings are slim. Surveys show that boomers aren’t spending much time planning for retirement. The prediction that the swelling tab for Social Security and other old-age entitlements will push the U.S. government and economy into a Greece-like collapse seems almost routine.

The Unretirement Movement

Don’t buy into the retirement gloom. I’m not.

Here’s why: The signs of a grassroots push to reinvent the last third of life are unmistakable. Call it the “Unretirement” movement — and it is a movement.

Unretirement starts with the insight that earning a paycheck well into the traditional retirement years will make a huge difference in our future living standards. You — and your skills and talents — are your best retirement investment. What’s more, if society taps into the talents and abilities of sixty-somethings and seventy-somethings, employers will benefit, the economy will be wealthier and funding entitlements will be much easier.

The Unretirement movement is built off a series of broad, mutually reinforcing changes in the economy and society that are transforming an aging workforce into a powerful economic asset. Boomers are the most educated generation in U.S. history and they’re healthier, on average, than previous generations. A century-long trend toward a declining average age of retirement has already reversed itself and — it’s safe to say — you ain’t seen nothin’ yet.

“Many people aren’t slowing down in their 60s and 70s,” says Ross Levin, a certified financial planner and president of Accredited Investors in Edina, Minn. Adds Nicole Maestas, economist at the Rand Corp., the Santa Monica, Calif.-based think tank: “Yes, America has an aging population. The upside of that is a whole generation of people who are interested in anything but retirement.”

Your ‘Next Big Thing

Just ask Luanne Mullin, 60. She has done marketing for a dance company, opened a theater company and run a recording studio. These days, Mullin is a project manager at the University of California, San Francisco, overseeing the construction of scientific laboratories (she does mediation at the school on the side).

“I think there’s more and more of us at 60 who are saying, ‘OK, what’s my next career? What do I want to do that’s fulfilling?’” Mullin told me. “I’m all for what’s my next big thing.”Mullin loves her work, but she’s also wrestling with the same questions as many of her peers. “What is this aging thing?” she wonders. “Am I living fully? Is this the second half of life I dreamed of, or if not, how do I pull it together?”

When Unretirement is Tougher

For many in their 50s and 60s, the transition to Unretirement is much tougher — especially for those who are involuntarily unemployed, like Debbie Nowak.

She didn’t see the layoff coming. Nowak worked for more than 30 years in customer relations for the pensions and benefits department at Evangelical Lutheran Church in America, in Minneapolis-St. Paul, Minn., In November 2011, at 58, she lost her job there.

Nowak, who has a high school diploma, let herself grieve until the holidays were over. In the New Year, she got her severance, went on unemployment and began thinking about embracing something completely different from her old job. “I never thought of myself as a risk taker,” she says. “After 30 years, I thought I should take a risk.”

Nowak had a stained glass hobby, making window panes, mosaic trays, and other objects. That led her to the idea of working in the wood finishing and furniture-restoring business. Last year, she got a certificate from The National Institute for Wood Finishing at Dakota Community Technical College in Rosemount, Minn. To pay for it, Nowak took out a loan and the state chipped in from its displaced workers fund.

Today, she has a part-time job at small furniture-restoration company. “It’s a crap shoot, a risk I was willing to take,” says Nowak. “This is also a way to produce additional income in retirement.”

As Mullin and Nowak demonstrate, we’re living though a period of experimentation while redefining retirement. Many people are stumbling about, searching for an encore career, a part-time job or contract work that offers them meaning and an income.

Some find it extremely tough to get hired, cobbling together a job here and a contract there, assuming they’re healthy. Especially vulnerable are less-educated workers who never made much money or never had jobs with employer-sponsored retirement and health benefits.

How Society Will Change

The rise of Unretirement calls for a whole cluster of changes in how society rewards work, creates jobs, shares the wealth and deals with old age. Unretirement will affect where Americans live out their lives, too, as they seek communities and services equipped for them.

Taken altogether, boomers will construct a new vision of their retirement years, which will impact how younger generations will think about their careers.

“People tend to learn from examples or stories handed down from previous generations — but there are few stories to navigate the new context of old age and retirement for the baby boomers,” writes Joseph Coughlin, the infectiously enthusiastic head of MIT’s AgeLab, a multi-disciplinary center. “When there are no set rules you make them up. The future of old age will be improvised.”

Send Your Unretirement Questions

This blog aims to take a first draft at the Unretirement improv act. I’ll particularly focus on the personal finance and entrepreneurial start-up implications of the movement. I’ll talk about successes and failures, the impediments of age discrimination and the lessons people learn as they search for meaning and income in their next chapters.

Most of all, I hope to hear from you and find out about your experiences so I can address your questions in future columns. Send your queries to me at cfarrell@mpr.org. My twitter address is @cfarrellecon.

Peter Drucker, the late philosopher of management, noted that every once in a while, society crosses a major divide. “Within a few short decades, society rearranges itself — its worldview; its basic values; its social and political structure; its arts; its key institutions,” Drucker wrote in Post-Capitalist Society. “Fifty years later there is a new world.”

The transformation of retirement into Unretirement marks such a divide. Welcome to a revolution in the making.

Chris Farrell is economics editor for APM’s Marketplace Money, a syndicated personal finance program, and author of the forthcoming Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He will be writing on Unretirement twice a month.

Related Links:

‘Partial Retirement’ Is On the Rise

A Manual for Encore Careers

 

MONEY working in retirement

It’s Never Too Late For A Second Act

Baby boomer entrepreneurs in bakery
Small business owners working in bakery together. John Lund/Marc Romanelli—Getty Images/Blend Images

Do you have what it takes to be a boomer entrepreneur? Get ready: you're likely to change gears in unexpected ways.

Heading toward retirement, but you want to keep working? The best move is to find another job in your field, perhaps part-time or or as a consultant—right?

Maybe not. Sure, you’ve amassed tons of expertise in your industry after working in it for the past decade or two. But there’s a wider world out there. Many older Americans are opting for a completely different career after they leave their former jobs, according to a new Merrill Lynch survey on work and retirement.

Nearly 50% of retirees say they either have, or intend to, stay employed during their retirement, according to the survey. Not a surprise, given today’s meager 401(k) balances. But what’s striking is how many people ended up with brand new careers.Nearly 60% of working retirees are in jobs that are completely different from their pre-retirement work, with many in education and white-collar jobs, according to demographers Age Wave, who contributed to the study.

Working retirees also tend to be entrepreneurs. They are three times more likely than other workers age 50 and older to own their own business or be self-employed, according to the study, which gathered data on nearly 7,000 pre-retirees and retirees, both working and non-working. “Retirees often make for the best entrepreneurs. Many have decades of experience, business contacts and the financial means to start a successful business,” says Bill Hunter, director of personal retirement strategy at Bank of America Merrill Lynch.

While some retirees are working primarily for the income, more report doing it to stay busy and involved: 62% of working retirees say they work to stay mentally active, compared with 31% who say money is the top reason.

Busting another myth, most older entrepreneurs say age discrimination didn’t drive them to work for themselves: 82% of these “retire-preneurs” as Merrill Lynch is branding them, say they started their own business because they wanted to work on their own terms. Only 14% reported that they had to start their own company because they otherwise couldn’t find work.

“Working in retirement is often a chance to try something new or pursue a dream,” says Mary Beth Izard, a start-up consultant and author of BoomerPreneurs. If a brand-new second act appeals to you, start developing your plans now. Taking on a new career challenge in your retirement years isn’t easy, and a start-up venture can drain your nest egg fast.

Lay the groundwork in the five years before you plan to retire, says Izard. If you want to go into a new career, begin by taking classes, as well as working part-time or or as a volunteer for an organization involved in the field you are interested in. And if you go the entrepreneur route, starting researching the costs and income potential of that new business well before you start sinking money into it.

For more tips on embarking on an entreprenurial second act, click here.

 

MONEY retirement planning

Social Security is the Best Deal

Alicia Munnell, 71, professor of management, Boston College, © M. Cody Pickens Photography 2013

Social Security isn't going anywhere. And it's time to get smart about how to use it.

Choppy markets and rising health care costs needn’t stop you from having the money for the retirement you want. We asked five of the brightest minds in retirement planning for their big ideas to help you cruise through the obstacles.

Below, advice from our fifth expert, Alicia Munnell, one the nation’s leading retirement researchers.

Big idea: Social Security is the best deal going

Just nine years ago President George W. Bush was leading a push to allow workers to direct a portion of their Social Security taxes into a personal account. By doing so, the thinking went, you could earn higher returns by investing in the stock market compared with what you would receive with Social Security.

You don’t hear much about ideas like that these days. “Since the financial crisis, we have seen a sea change in how people view Social Security,” says Alicia Munnell, the head of Boston College’s Center for Retirement Research. “Social Security paid benefits, paid them on time, and they didn’t go down.”

Munnell is a former Clinton administration hand and was never a fan of Bush-style private accounts to begin with. It’s clear, though, that the politics have changed. While Munnell has argued for keeping Social Security mostly as is, Sen. Elizabeth Warren (D-Mass.) is calling to expand the program’s benefits instead.

Don’t hold your breath. But it’s a good bet that Social Security isn’t going anywhere. And Munnell says you should get smart about how you use it.

What Social Security calls the full retirement age is 66 for those born between 1943 and 1954. (It gradually moves up to 67 for those born later.) If you claim at 62, the earliest possible age, you’ll receive 25% less than at 66. But “full” retirement is just jargon left over from old Social Security rules that have since changed. Now, for each year you defer to age 70, your benefit keeps increasing until it is 76% more than if you start at 62.

“The best-kept secret in America is that the real full retirement age is 70,” says Munnell. Actually there may be an even better-kept one: Munnell’s group has shown that today’s low rates make waiting on Social Security a particularly good deal.

Basically, it beats the alternative investment. Each year you hold off from claiming is like buying an annuity: The money you give up now comes back to you later as extra lifetime income. For example, you can get 8% more inflation-adjusted pay if you wait until 67 instead of collecting at 66. That compares with a 5.4% real income from an annuity.

MAKE THE RIGHT MOVES

Work, if that works. Not everyone wants to work longer, but it makes waiting to collect easier. It can increase your payout further if more peak-earning years go into the benefits equation.

Use savings, carefully. You may be able to defer claiming for a year or two by tapping your portfolio for more income. “As long as you don’t overdo withdrawals, this strategy makes sense since you end up with higher lifetime benefits,” says Christine Fahlund, senior financial planner at T. Rowe Price. When waiting doesn’t work: If you can’t do without the cash. Or if you think you won’t live to 80, since in that case the extra income doesn’t add up to as much.

Couples have more options. The strategies get more complex for married couples, since one of you may qualify for spousal benefits or receive a payout as a surviving spouse. If you both don’t want to wait until age 70 to file, a calculator like the Social Security Benefits Evaluator at troweprice.com can help you decide which spouse should file and when. With the right strategy, you can get some income now as well as a higher benefit later.

Extending your career gracefully

Work is a bigger part of what used to be considered the retirement years: One-third of people 65 to 69 are in the labor force, up from 22% in 1990. More years of pay can help make it easier to reach your retirement goals, but what if you can’t keep your job as long as you’d like? Or you just hate it? Here are some strategies to manage the late phase of your career:

Use online tools to stay sharp. Lynda.com offers online courses on business skills such as online marketing or using software tools. You can also get tips on networking or transitioning to freelance. The site costs $25 a month.

Ask for flexibility. If you still like working but the hours and office politics are wearing thin, talk to your employer about telecommuting or going part-time on a trial basis. “Bosses are more willing to make accommodations than you might expect,” says career coach Bobbie Jo Hunter. Now is a good time to ask: Employers are still cautious about staffing up, but the improving economy gives them an incentive to hang on to experienced people.

Early in her career Alicia Munnell headed research at the Boston Federal Reserve. In 1993 she became an assistant Treasury secretary and later joined the Council of Economic Advisers. She then moved to Boston College, where she founded the Center for Retirement Research. Her 2004 book, Coming Up Short, was one of the first to sound the alarm about the flaws of 401(k) plans.

Click below to see more big ideas from some of the retirement-planning world’s sharpest minds:

Forget the 4% withdrawal rule: Wade Pfau, professor of retirement income, American College

You’ll spend less as you age: David Blanchett, director of research, Morningstar Investment Management

Plan to pay for future health costs: Carolyn McClanahan, president, Life Planning Partners

Plan for the critical first decade: Michael Kitces, partner and director of research, Pinnacle Advisory

 

MONEY retirement planning

Do Your Retirement Dreams Match Your Partner’s?

Your dream is nonstop travel; your spouse wants to stay put. You’d like to quit now; she’s not ready. Learn about eight retirement issues that can cause a rift, and how to get on the same page.

  • Where to live

    Thirty-four percent of retiring couples disagree about where or whether to move.

    According to a 2013 Hearts & Wallets survey, deciding where to settle down in retirement is one of the biggest areas of disconnect between couples. “Typically the question of where to live is wrapped up in bigger issues like the partners’ connection to the community and obligations to other family members,” says Catherine Frank, executive director of the Osher Lifelong Learning Institute in Asheville, N.C.

    Can’t agree on a location? Start with a compromise: a season or two renting in the area that one of you dreams of. If the rental works out, you might buy a second home, assuming you can truly afford it.

    Expect to pay about 1% of the home’s cost annually for maintenance, on top of insurance, utilities, and any homeowners association fees. And don’t forget to factor in the cost of transportation to and from the new property.

  • Part-time work

    Many employees suspect they’ll be happier if they don’t quit work cold-turkey, but few end up actually taking part-time jobs.

    In fact, only one-quarter of people ever work for pay in retirement, according to the Employee Benefit Research Institute. The benefit of downshifting to a part-time job you enjoy, however, is far greater than the extra spending money.

    Studying several hundred college professors who cut down their hours upon retiring but didn’t completely quit, researchers found that the greater the involvement in part-time work, the more likely the professors were satisfied with both their retirement and life in general.

    While you may like staying in the game, be aware that you’ll increase strife on the home front if you use your workload as an excuse to avoid taking out the garbage and picking up food at the grocery store. A separate study of retired physicians — 95% of them male — found that the increased time that the doctors spent on household chores in retirement was significantly associated with wives’ life satisfaction. Sometimes love is just about making dinner — and doing the dishes.

  • Staying healthy

    Health dips for both men and women in the first years of retirement, according to a study by University of Missouri sociology professor Angela Curl. The likely culprit: a decline in social connections and physical activity.

    You don’t need drastic measures to stay healthy. A daily 45-minute walk can improve your blood pressure and blood sugar levels, according to recent studies. Researchers have also found that you’ll be more likely to stick with the program if you’re paired with a buddy — say, the one you’re married to.

  • Family finances

    Spouses often end up splitting household responsibilities, but that can create big problems with money in retirement years. Only 43% of husbands, for example, are confident their wives can manage the family finances.

    Women share this lack of confidence, according to a 2013 Fidelity survey — a big problem, since they will likely outlive their husbands.

    “Men have tried to shelter women from those details,” says Boca Raton, Fla., planner Mari Adam. “But that ends up as a huge disservice.” Along with mundane details like account numbers and passwords, both of you should know all about your investments, savings, and insurance policies.

  • Syncing retirement

    How happy you are in retirement might depend on whether you and your partner stop working at the same time.

    University of Minnesota professor Phyllis Moen found that newly retired men were least satisfied when their wives kept working; wives with newly retired husbands also reported lower levels of marital satisfaction than those in two-income or two-retiree marriages.

    Fewer couples nowadays — especially those with multiyear age gaps — are willing or able to sync retirement. Many boomer women who temporarily exited the workforce when their kids were young are nearing their career peak, says Miriam Goodman, author of Too Much Togetherness: Surviving Retirement as a Couple — just as their husbands are ready to taper off.

    To get the timing right in your household, analyze the costs and benefits for each of you of staying in the workforce. Is one of you just shy of a pension? How big could your Social Security checks grow? Weigh those benefits against each spouse’s desire to retire.

    If you decide one of you should go first, start planning how the retired spouse will be occupied and what you’ll be doing together. “When one partner feels abandoned, that’s when resentment builds,” says Goodman. And take heart: Moen found that marital satisfaction rebounded a few years after both partners retired.

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