MONEY working in retirement

Why Phased Retirement May Become the Hottest Boomer Benefit

Older federal workers will be able to work part-time before retiring. Other employers are likely to follow.

Many Boomers aren’t ready to retire (even if they’re eligible for Social Security and Medicare) but they’re eager to leave behind the demands of the 40-hour workweek, let alone the 50-hour grind.

Little wonder that the concept of phased retirement — gradually trimming back your workdays while holding onto some benefits — is growing in popularity. And the new federal-employee phased retirement program launching this month could make it more widespread, ultimately leading more businesses to offer the benefit.

“Phased retirement allows you to dip your toes into the shallow end of the retirement pool,” says Jessica Klement, legislative director of the National Active and Retired Federal Employees Association. “You get to test it out.”

The Benefit of Flexibility

But an official, employer-sanctioned phased retirement option open to all its near-retirees isn’t a common benefit yet. The 2014 National Study of Employers by the Families and Work Institute and the Society for Human Resource Management says 12 percent of employers with 1,000 or more employees let all or most workers phase into retirement.

“If employers would accelerate the drive for flexible work arrangements, everyone would be better off,” says Richard Johnson, labor market expert at the Urban Institute. “Flexibility is important.”

I particularly like formal phased retirement programs — rather than ad-hoc versions worked out quietly between particular employees and their bosses — because they let near-retirees dip their toe into what they’ll do next. And, when the programs are done right, they also include a mentorship provision, where the older workers phasing into retirement spend some of their last days at their employer passing on their accumulated knowledge and skills to their younger colleagues.

A Federal-Employee Phased Retirement Program Begins

The new federal phased retirement program, which technically began accepting applications Nov. 6, is one such program. To qualify, you must either be covered under the Civil Service Retirement System or the Federal Employees Retirement System. With the former, you must have worked at least 30 years and be at least 55; with the latter, the minimum age for someone with 30 years of service is age 55 to 57.

Federal employees who’ll take phased retirement will work 20 hours a week and receive half their pay and half their retirement annuity payout. They’ll also be required to devote 20 percent of their time mentoring other federal employees, most likely their successors.

The option should “help the federal government attract and retain skilled people,” says Jeffrey Sumberg, specialist leader in Deloitte’s Federal Human Capital Practice. “It’s potentially a win for all.”

Phased retirement has been on the federal government’s human resources wish list for years and the Obama Administration advocated for a program in 2010. The average age of the federal workforce is 47 (four years more than the overall workforce) and the fear has been that decades of accumulated skill and knowledge would leave in a boomer-led “retirement wave.”

Representative Darrell Issa (R-Calif.) proposed federal employee phased-retirement legislation in 2012, which was rolled into a transportation bill that became law. (The estimated cost savings from the program was used to offset the cost of a rural school initiative.)

A Slow Rollout

But government being government, the rollout of the program will be—to put it kindly—gradual. Each federal agency must come up with its own program design. Consequently, the Congressional Budget Office estimates that 1,000 workers will take advantage of the program initially, a small fraction of the federal government’s two million-person workforce.

Still, forecasts are that the phased retirement will become available for many federal near-retirees in 2015 and 2016 and that the program will grow in popularity. The Departments of Defense and Energy, for instance, are expected to let their employees begin applying in early 2015. “Everyone is really excited about this, but we’re waiting for it to get off the ground,” says Klement.

The impact could eventually be huge. The federal government’s program may well lead other industries and companies to add formal phased retirement initiatives to their benefits offerings.

“Hopefully the federal government will encourage more companies to be more supportive of the phased retirement option,” says Anna Rappaport, a Fellow of the Society of Actuaries and head of her own firm, Anna Rappaport Consulting. Adds Deloitte’s Sumberg: “The federal government gets a bad rap on many things, but when it comes to work flexibility they have been ahead of the curve. To the extent the government can be a model, it could encourage private industry.”

What Two Phased-Retirement Workers Say

What is it like holding down a job in a phased retirement program? To find out, I spoke with two employees of Herman Miller, the office furniture manufacturer based in Zeeland, Mich.

At Herman Miller, employees who are 60 or older with at least five years of service at the company qualify. They can phase into retirement over a period of six months to two years, keeping their full-time benefits all the while and receiving take-home pay based on the number of hours they work. As with the federal program, phased retirement employees at Herman Miller must mentor younger workers — in this case, their eventual replacements.

Tony Cortese, senior vice president of people services at Miller, says his firm’s employees who sign up for phased retirement have the view that “I’m ready to retire, but I’m not ready to go today.”

Jake Boeve retired from Herman Miller at 68 in June, where he was in charge of information technology inventory management, after entering the phased-retirement program two years earlier. A nearly 49-year Miller vet, Boeve worked four days a week the first year of his phased retirement and three days the next.

The transition helped him get into a retirement mindset, he says. “You have to be physically, mentally and financially ready for retirement,” Boeve says. “I would highly recommend phased retirement.”

Tom Riemersma, 64, has six months left in his Herman Miller phased retirement. For much of his 46-year career there, he worked in the model shop, creating prototypes. He says his life has been so structured around hard work at Herman Miller that he wanted to ease into retirement. “Phased retirement has worked well for me,” he says.

Riemersma enjoyed training his replacement, though he says that did lead to a few “awkward moments” personally. “You’re phasing yourself out. Not always easy to do,” he notes.

He’s now working three days a week, down from four during his first year in the program. “Now, I find my weekends are too short,” he says.

That’s just a phase he’s going through. It’ll end soon.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the new book 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 retirement planning

What Are the Biggest Surprises in Retirement? The Experts Weigh In

141106_RET_Surprise
David Clapp—Getty Images

Retirement is a major transition—and not just financially. Here are some lifestyle changes you may not be planning for.

The Great Recession served up some nasty financial surprises to people approaching retirement—the housing crash, job loss and shrunken 401(k)s, for starters.

But retirement can bring lifestyle surprises, too. It’s one of life’s biggest transitions, and a major leap into the unknown. Hoping to lessen the guesswork for people who aren’t there yet, I asked experts who work with people transitioning to retirement about the surprises they hear about most often.

“Time freedom” is a shock for many, says Richard Leider, an executive career coach and co-author of Life Reimagined: Discovering Your New Life Possibilities (Berrett-Koehler Publishers, 2013).

“Without the time structure of working, folks often go on autopilot, the default position of repeating old patterns,” he says. “However, there is no status in the status quo. So, at about the one-year mark, they realize that time is their most precious currency. Often a wake-up call—health, relationships, money or caregiving—forces reflection and helps them to say ‘no’ to the less important things that simply clutter up a life and ‘yes’ to the more important things that define a purposeful life. They choose fulfilling time.”

Wealth psychology expert Kathleen Burns Kingsbury also sees people struggling to structure their new lives. “One of the biggest surprises retirees face is the adjustment to not working full-time,” says Kingsbury, author of How to Give Financial Advice to Couples (McGraw-Hill, 2013). “While people typically fantasize about what life will be like without a job, the reality is sometimes it’s a bit of a shock to the system.

“Work provides structure, social connections and a sense of purpose. It is important for pre-retirees who are not going to work in retirement to consider how they will meet these needs outside of a work environment,” she adds.

Sometimes, that leads to greater spirituality, says Carol Orsborn, editor-in-chief of FiercewithAge.com and author of 21 books about the baby boomer generation.

“The heightened search for meaning in the face of mortality comes as no surprise,” she says. “The bigger surprise is that as it turns out, many of the things we most fear—loss of identity, erosion of ego, increased marginalization—hold the potential to transform aging into a spiritual path.

“Many retirees report that they are achieving levels of fulfillment, peace and joy not despite the things that happen to them as they age, but because of them. This transcends individual experience, with sufficient mass to constitute what is being termed ‘the conscious aging movement.’ “

Not that there aren’t earth-bound worries. “The biggest surprise is about money,” says Helen Dennis, a specialist in aging, employment and retirement. “This is true particularly among women who have earned a good income and find that eight or 10 years into retirement, they fear running short and need to change their lifestyle, all within an uncertain economy. Add to this their surprising initial discomfort in spending their retirement income without depositing a work-earned check.”

Changing housing needs also can surprise, especially for single retirees. “For single retirees, recognizing that their current home or location no longer ‘works’ is a common surprise,” says Jan Cullinane, author of The Single Woman’s Guide to Retirement (AARP/John Wiley, 2012). “Upon leaving a primary career, the daily social support built into a job is yanked away. Pairing that with becoming suddenly single through divorce or widowhood, the home that served them well may no longer be appropriate.”

For married couples, the surprise might be a desire to get away from one another. “Many retirees end up bored with too much free time and often discover, if they’re in a relationship, that they get on each other’s nerves and want some space and time apart,” says Dorian Mintzer, a coach and co-author of The Couple’s Retirement Puzzle: 10 Must-Have Conversations for Creating an Amazing New Life Together (Lincoln Street Press, 2012).

“They often haven’t thought about the role work played—providing structure, self-esteem, time together and time apart from a partner as well as connection engagement and purpose and meaning. Each partner may experience the transition differently, and they may be ‘out of sync’ with each other. For example, one may want to travel and the other wants to start an encore career.”

I received many more comments about retirement surprises than fit here. You can find thoughts from a broader array of experts on my website.

More on retirement:

Can I afford to retire?

Should I delay my retirement?

Should I work in retirement?

MONEY Second Career

Finding the Perfect Balance Between Work and Fun in Retirement

Ranger with snowmobile, Yellowstone National Park, Wyoming.
Ranger with snowmobile, Yellowstone National Park, Wyoming. Blickwinkel—Alamy

These retirees found a way to spend all their time on pursuits they love.

“Damn the submarine. We’re the men of the Merchant Marine!” That singsong phrase woke me up every morning for seven months on my first ship, the SS San Francisco. I went to sea after graduating from college. For four years, I worked on ships, mostly tankers, steaming through the Suez and Panama canals, past the Rock of Gibraltar at midnight under a full moon, stopping in ports like Athens, Dubai, and Yokosuka. A number of my peers had similar adventures after college, including leading wilderness trips, tending bar, teaching English overseas and traveling around Europe picking up odd jobs. Ah, those were adventurous days before the desire for a career and family responsibilities took over.

Peter Millon is living the adventure, too—in his Unretirement, at age 69. Last year, he spent about 70 days skiing the slopes in Park City, Utah, when he wasn’t working four days a week for ‎Rennstall World Class Ski Preparation, repairing skis and waxing skis for racers. Essentially, he split his retirement time 50/50: working half-time and pursuing his passion the other half. In the off-season, Millon plays golf with his oldest son who lives in Salt Lake, fishes and takes target practice. Not bad.

Leading a Wealthy Life

A wealthy industrialist? A Wall Street master of the universe? A high-tech titan of business? Hardly. Millon isn’t wealthy, but he leads a wealthy life. “Do something you love, something for you,” he says. “Don’t do it for anyone else.”

Millon began his career working at a small ski maker in St. Peter, Minn. He then spent decades as a technical director at Salomon North America and its various competitors. During the real estate bubble years, Millon was selling high end appliances for the home, living in a townhouse in Massachusetts. Business tanked when the bubble burst, and he took advantage of an early retirement package. Three years ago, he sold the townhouse and moved to Utah where he was known in the ski community, picking up a condo on the cheap. These days, Millon lives comfortably off Social Security, some investments and the income from his part-time job.

The ‘World’s Oldest Intern’

John Kerr is living the 50/50 life in his Unretirement, too, working as park ranger in Yellowstone between May and September. He didn’t plan on becoming a ranger, though. Kerr had a four-decade career at WGBH as a marketing and fund raising executive, retiring at 65. “It took the shock of the change to rattle my bones a bit,” says John Kerr. “I had way too much energy and experience to sit around.”

His exploration took him out to Jackson Hole, Wyo., where Kerr has a small condo. While walking around Bozeman, Mont., he saw a sign for the Yellowstone National Foundation, which supports Yellowstone National Park. He walked in unannounced and from an off-hand remark during a conversation with the organization’s head, he learned it had an internship opening. Kerr applied and for the next year he was “world’s oldest intern,” talking to visitors about wolves.

Kerr became a Yellowstone ranger five months a year for the next nine years, living close to Jackson in the winters and using his time off to visit family. Now 76, he recently moved back to New England to be near family. Still, he expects next season he’ll return to Yellowstone. “It has been a great adventure,” he says.

Advice for Your Unretirement

When I asked Kerr and Millon what advice they’d give to others in their 60s and 70s eager for adventure, Kerr emphasized the importance of an open mind. “You have to have your eyes open and your ears flapping,” he chuckled. Millon suggested drawing on the relationships you’ve made over the years and the skills you’ve developed without trying to compete for the kind of job you had earlier in your career.

What I took away from both men is that the financial penalty of working fewer hours and doing more of what you love can be much less than you might think.

“The key is that when your interests align with your work, there is nothing from which to retire,” says Ross Levin, a certified financial planner and head of Accredited Investors in Edina, Minn. “We save money to ultimately create a lifestyle. If that lifestyle doesn’t need much money, then we need to save less.”

Think of it this way, says Levin: You earn $10,000 a year in your fulfilling work on a ski slope or in national park or down in the Florida Keys. That’s the equivalent of having $250,000 in investment assets, assuming the 4% withdrawal rule (a standard guideline for safely taking money out of retirement savings). A $20,000 income is the equivalent of $500,000 in assets, and so on.

Much of the conversation about prospects in the traditional retirement years often forgets how creative people are at coming up with solutions. Many Unretirees I’ve interviewed over the years have found they made significant cuts in expenses without slashing their standard of living.

So, if your career didn’t leave you with the kind of portfolio that pushes you into the ranks of the wealthy, that doesn’t mean you can’t construct a comparable lifestyle. The question is: What’s your adventure?

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the new book 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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Doing Great Work After 60

Shifting From Full-Time to Part-Time Work

12 Takeaways From a Mini-Retirement

MONEY Second Career

The Secrets to Launching a Successful Encore Career

These prize-winning social entrepreneurs built non-profits that make a difference.

“You must do the thing you cannot do,” Eleanor Roosevelt once wrote. It’s the only way to overcome the fears we all face in doing something new, she thought, and take a leap into the unknown.

Kate Williams quoted Roosevelt earlier this week here when she accepted a $25,000 Purpose Prize, one of the awards given annually by Encore.org, a San Francisco-based nonprofit that works to engage baby boomers in “encore careers” with a social impact. The awards, now in their ninth year, recognize trailblazers over age 60 who have tackled social problems creatively and effectively. Cash prizes range from $25,000 to $100,000.

Williams, 72, lost her eyesight to a rare degenerative disease after a long career as a corporate human resources professional. She overcame her own fears, first by moving away from friends and family in Southern California to start over in San Francisco and later by starting an employment training program for the blind. Today, she runs a similar, larger program for the national non-profit organization Lighthouse for the Blind.

Encore.org’s mission is to promote a game-changing idea: Greater longevity and the graying of America present opportunities, not problems. This year’s Purpose Prize winners underscore that point. They’re rock stars in the world of social entrepreneurship, having started organizations that work on issues like sex trafficking, disaster relief, autism and education in impoverished neighborhoods.

The idea of second careers with social purpose has broad appeal. Millions of older Americans want to stay engaged and work longer, sometimes out of economic need but often out of a deep motivation to give back. An Encore.org survey this year found that 55% of Americans view their later years as a time to use their experience and skills to make a difference, though just 28% say they are ready to make it happen.

Many people have trouble figuring out where to start—which brings us back to Roosevelt. Fear of the unknown is a key hurdle in starting down a new path later in life, and I had the chance to ask some of the encore experts gathered for the awards about how they would advise others seeking to begin.

The juices get flowing when people connect their experiences and knowledge with a problem they are passionate about. But first they have to make the leap.

“I had been in the corporate world, not part of the blind community,” Williams says. “I was frightened, but what I thought would be overwhelming turned out to be a beautiful thing. As soon as we started our training classes, I was hooked.”

The Lighthouse for the Blind program has worked with 100 blind job seekers over the past three years, and has placed 40% of them.

David Campbell, winner of a $100,000 prize this year, wanted to help after the Indian Ocean tsunami that devastated parts of Southeast Asia in 2004. A senior executive at several software and Internet technology companies, he figured he could help by creating a Web-based tool to organize volunteer tsunami relief efforts. That led him to start All Hands Volunteers, which has worked on 45 disaster relief projects in six countries and dozens of U.S. locations. The non-profit uses the Internet to route volunteers to places where they can be put to work effectively.

“People just want to know that if they go, they’ll have a place to sleep that won’t be a burden to the local people, and a contact to start with,” he says. “We give you exact instructions on how to get there, and assure that you’ll have a bunk bed, food and someone will have organized work and that you’ll have the right tools to be productive.”

Campbell talks often with people looking to get started on encores. “I always advise people to start by volunteering with some organization with social purpose – it’s an easy, great way to start. But the question many people have is, ‘Which one, and what might I do?’ “

Campbell suggests people consider geography and the focus of the work. “Do you want to work locally, nationally or internationally? Do you care about health, education or some other thing? That starts the conversation and helps people narrow it down.”

Then, he says, visit a non-profit that interests you, and take the time to understand its needs.

“Be willing to help understand the mission, and do whatever it is they need help with. And don’t treat volunteering as a casual activity. You need to commit to a certain number of hours of work a week as though it were a paying job, and take responsibility for it.”

To paraphrase another famous Roosevelt, the only thing you have to fear is fear itself.

Related:

Can I afford to retire?

Should I work in retirement?

Does working affect my Social Security benefits?

 

MONEY retirement age

Australia’s Brilliant — and Brutal — Retirement Crisis Solution

Sydney Opera House and downtown skyline, Sydney, Australia.
Jill Schneider—Getty Images/National Geographic

Australia is asking workers to work longer. Would it work in the United States?

Americans are quite familiar with the challenges threatening the Social Security system, with an aging population starting to retire and putting more strain on the shrinking group of workers paying the Social Security taxes that support their benefits. But America isn’t alone in facing a retirement crisis, and other countries are taking much more dramatic steps to shore up their systems for providing financial assistance to people in their old age. In particular, Australia plans to force its workers to stay in their jobs for years beyond their current retirement age in order to qualify for benefits — and it’s giving employers incentives to make sure older workers can get the jobs they need to hold out that long.

The Australian solution: Work until you’re 70

Australia has seen many of the same things happen to its old-age pension system that the U.S. has seen with Social Security. When Australia first implemented what it calls its age pension more than a century ago, only 4% of the nation’s population lived to the age at which they could claim benefits. Now, though, life expectancies have grown, with the typical Australian living 15 to 20 years beyond the official retirement age of 65. As a result, 9% of the Australian population gets benefits from the age pension, and the potential for some of those recipients to get support from the program for two decades or more has threatened the financial stability of the system. Currently, 2.4 million Australians receive about $35 billion in benefits from the program, making it the Australian government’s largest expenditure.

As a result, Australia has made plans to increase its official retirement age. Over the next 20 years or so, Australians will see the age at which they can officially retire climb to 70 if the plan is approved, putting the land down under at the top of the world’s list of highest retirement ages.

When you just look at the age-pension portion of Australia’s retirement system, that sounds draconian, and plenty of Australians aren’t thrilled about the move. With a significant part of Australia’s economy based on extracting natural resources like oil, natural gas, coal, and various metals, the back-breaking work that many Australians do makes the prospect of staying on the job until 70 seem almost physically impossible. Proponents of the measure counter that argument with the fact that 85% of Australians work in the services industry, and many of those jobs don’t require the physical exertion that makes them impractical for those in their 60s.

Moreover, younger Australians worry about the need for older workers to stay on the job longer. Many fear a “jobless generation” of young adults who can’t get their older counterparts to give way and make room for them to start their careers.

What Australians have that the U.S. doesn’t

Yet before you bemoan the fate of the Australian public, it’s important to keep in mind that the age pension system isn’t the only resource they have going for them. In addition, Australians participate in what’s known as the superannuation system, under which employers are required to make contributions toward superannuation retirement accounts equal to 9.5% of their pay. Like American 401(k)s, employees are allowed to select investment options for this money, with default provisions usually investing in a balanced-

Over time, superannuation assets have built up impressively. As of June 30, assets in superannuation accounts rose to A$1.85 trillion. Australia is also seeking to have those fund balances rise more quickly by requiring more from employers on the superannuation front. Over the next seven years, the employer contribution rate will rise to 12%, accelerating the growth of this important part of Australians’ retirement planning.

Like 401(k)s and IRAs in the U.S., Australians can make withdrawals from their superannuation accounts at earlier ages than they can claim pensions. For those born before mid-1960, access to their retirement savings opens at age 55. That age is slated to rise to 60 over the next decade, but it will still give Australians access to money well before age pensions become available to help them bridge the financial gap.

Should America follow Australia’s lead?

Calls to increase Social Security’s retirement age have met with strong opposition in the U.S., and the Australian plan won’t change that. Yet without the backstop that superannuation provides, raising the retirement age to 70 in the U.S. would be even more painful for aging Americans. Some workers are fortunate enough to have employer matching and profit-sharing contributions that mimic what most Australians get from superannuation, but it’s rare for anyone to get anywhere near the 9.5% to 12% that Australian workers have contributed on their behalf.

Many see Australia’s answer to its retirement crisis as brutal, but given the aging population, it’s consistent with the original purpose of old-age pensions. If the U.S. wants to make similar moves, American workers need the same outside support for their retirement that Australians get — and that will also require more effort on workers’ part to save on their own for retirement.

MONEY Second Career

How to Find the Right Match for Your Second Career

Signing up with an encore career matchmaker can be a smart way to find fulfilling, paid work in retirement.

WANTED: Retirees looking for flexible, paid part-time work in their field of expertise.

Now, that’s a help-wanted ad many boomers dream of running across in their Unretirement years, isn’t it? Well, for Harry Coleman of Cincinnati, Ohio, that’s pretty much what happened, thanks to a “matchmaking” service.

Coleman worked for Procter & Gamble (P&G) for 30 years, mostly in product development, and decided to grab P&G’s juicy retirement package at age 51 in 2008. “The last nine years at P&G were a blast,” he says. “But I wanted more of a work and life balance and you can’t do that if you’re working 50 to 60 hours a week.”

A Three-Bucket Approach

These days, Coleman, now 57, embraces a “three bucket” approach to life.

The first two buckets are for volunteering and charitable activities (mostly through his church) and for “goofing off”—golfing, traveling and taking on projects around the house.

The third bucket relates to that ideal help-wanted ad. In this bucket, Coleman takes on flexible, fulfilling, paid part-time consulting positions he has found since he retired mostly through a firm called YourEncore. “The jobs keep me engaged mentally on the work side; I can pick and choose projects,” he says. “Yet I have the capacity to be more involved in other things.”

YourEncore, based in Indianapolis, Ind., is essentially a matchmaker between large corporate customers around the country looking for experienced brainpower to address a pressing business problem (typically for about 10 weeks) and seasoned, skilled Unretirees who are eager for a challenge and part-time income.

YourEncore was created in 2003 when P&G and Eli Lilly, the Indianapolis-based pharmaceutical giant, asked consultant John Barnard for a way management could draw on the knowledge and expertise of retired employees. Boeing quickly joined the venture to recruit “retired engineers for urgent and complex technical projects,” as an internal company online newsletter put it.

Companies using YourEncore are largely in the food, consumer product and life sciences industries. So far, more than 8,000 people have found work through the matchmaker; 65 percent of them have advanced degrees. The pay is good, although the exact amount depends on the person’s experience, the company, the difficulty of the project and the time commitment.

Encore Career Matchmaking Services Are Sprouting

YourEncore is just one example of the growing number of matchmaking services targeted at retiring boomers. It focuses on private sector work, but many others specialize in the social venture space, creating bridges between for-profit careers and nonprofit encores for the greater good. Some are regional, such as Experience Matters in Maricopa County, Ariz. ESC of New England runs an Encore Fellows program in greater Boston. Other matchmakers like ReServe, headquartered in New York City, have national and international ambitions.

Though the Unretiree matchmaking business is pretty new, it’s already starting to puncture a common stereotype: that the idea of gray hair and creativity is an oxymoron. For example, YourEncore workers have earned a reputation for creative problem solving, says Peter Kleinhenz, manager of the its P&G office. “You can be really productive when you don’t have a career that needs to be advanced or turf to protect,” says Kleinhenz.

New York City-based ReServe offers a very different business model, but it, too, acts as an encore career matchmaker.

ReServe connects 55-plus professionals with local nonprofits, public institutions and government agencies. Aside from its New York operations, ReServe also places candidates — typically former lawyers, doctors, nurses, teachers, accountants, corporate recruiters and the like — in Baltimore, Md.; Miami, Fla.; Newark, N.J.: Boston, Mass.; southeast Wisconsin and New York’s Westchester County. ReServe has placed more than 3,300 workers at more than 350 organizations.

ReServists work for a $10-an-hour stipend, well below their market value during their earlier career. (Another $5-an-hour is split between the company managing payroll for the person and ReServe.) The job is between 10 and 20 hours a week and the average ReServe contract lasts nine months to a year.

“A good proportion—50%—are not really looking to do what they have done before. They want to use their skills in a brand new setting. The common denominator is transferable skills,” says Lorrie Lutz, chief strategy officer at Fedcap, a New York-based nonprofit that combined with the smaller ReServe in 2012.

For example, Lutz says, an accountant with a passion working with kids might spend a stint as a math tutor. A marketing professional might employ her skills at a government agency struggling to get its policy message out.

Giving Back for Your Next Career

ReServe plans on operating in every state and taking its program overseas. “We think we have a great idea here. There’s a generation of talent here and abroad. Boomers are the most-educated generation,” says Lutz. “They have so much to give back.”

That’s certainly the case with Scott Kariya, an IT recruiter for 23 years who “retired” at 52 in 2006. Quickly bored, Kariya reached out to ReServe. He didn’t find an open position at the time, but in 2008 talked his way into a job at ReServe’s main office.

He worked there three days a week using his recruiting skills, spending the rest of his time volunteering at the local Red Cross, managing his investment portfolio and doing other things. “Everyone wants to stay busy,” says Kariya. “But I think a lot of people get tired of the 50-hour workweek.” Today, he heads up ReServe’s information technology operations.

A common denominator among encore career matchmakers is the amount of effort they put into finding the right people for clients’ needs. YourEncore gains an understanding of the proposed project from P&G, Lilly or another corporate customer, and then uses that to find the right experts. ReServe learns about the skills and passions of its applicants so the client partnerships are fruitful.

I’ve witnessed the same matchmaking ethos at Experience Matters in Phoenix and with the national Encore Fellowships Network. Although the infrastructure is still being built, the future looks bright because corporate America and nonprofits seem more aware of the talents and skills of available boomers.

Locating a Local Matchmaker

To find an encore career matchmaker in your area, you might start at the Encore.org site. But you may need to take a more indirect route, by networking locally. For example, in Portland, Ore., Life By Design NW serves as an information clearinghouse. JV EnCorps (part of the Jesuit Volunteer Network) recruits people 50 and older in Portland and Bend, Ore. and Seattle, Wash. In Kansas City, you could check out Next Chapter Kansas City, a grassroots networking group for boomers.

At the moment, the supply of people eager to keep using their accumulated knowledge and creative insights exceeds the demand for their services. But organizations like YourEncore and ReServe point the way toward a model that allows for engagement and compensation for people who’d otherwise have lots of time on their hands.

It’s a model that may well end up defining Unretirement the way Sun City symbolized retirement for a different generation in the 1960s.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the new book 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 retirement planning

3 Little Mistakes That Can Sink Your Retirement

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Cultura RM/Korbey—Getty Images/Collection Mix

Big mistakes are easy to catch, but even a small miscalculation may jeopardize your retirement portfolio. Here are three common missteps to avoid.

We think it’s the big mistakes that cost us in retirement, like hiring an unscrupulous adviser or funneling savings into a risky investment that goes belly up. Major errors can certainly hurt. But the smaller seemingly sensible decisions we make without really examining the rationale behind them can also come back to bite us in the…

Assiduous planning is key to a secure retirement, but the effectiveness of plans we make depends on the assumptions behind them. And when you’re making a plan that extends well into the future, as is the case with retirement, even a small miscalculation can take you way off course. Below are three mistakes that may seem minor, but that can seriously erode your odds of achieving a successful retirement. Make sure you’re not incorporating these errors of judgment into your retirement planning.

1. Relying on an unrealistic rate of return. Clearly, the higher the return you earn on the money in 401(k)s, IRAs and other retirement accounts, the less you’ll have to stash away in savings each month to build a sizable nest egg. For example, if you start saving $600 a month at age 30 and earn a 7% annual rate of return, you’ll have $1 million by age 65. Bump up that rate of return to 8% a year, however, and you have to put away only $480 a month to hit the $1 million mark by 65, leaving you an extra $120 month to spend. Earn 9% annually, and the monthly savings required to get to $1 million shrinks to just $385 a month, freeing up even more for spending.

Problem is, just because a retirement calculator lets you plug in a higher rate of return or a more aggressive stocks-bonds mix, doesn’t mean that loftier gains will actually materialize. Shooting for higher returns always involves taking on more risk, which raises the possibility that your aggressive investing strategy could backfire and leave you with a smaller nest egg than you expected. That can be especially dangerous when you’re on the verge of retirement.

For example, just prior to the financial crisis, nearly one in four pre-retirees had more than 90% of their 401(k)s in stocks. A pre-retiree with a $1 million retirement account invested 90% in stocks and 10% in bonds would have suffered a loss in 2008 of roughly 33%, reducing its value to $670,000—enough of a drop to require seriously scaling back retirement plans if not postponing them altogether. No one knows whether recent market turbulence will be a prelude to a similar meltdown. But anyone who has his retirement savings invested in a high-octane stocks-bonds mix, clearly runs the risk of a experiencing a significant setback.

A better strategy when creating your retirement plan is to keep your return assumptions modest and focus instead on saving as much as you can. That way, you’re not as dependent on investment returns to build an adequate nest egg. To see how different savings rates and stocks-bonds mixes can affect your chances of achieving a secure retirement, check out the Retirement Income Calculator in RDR’s Retirement Toolbox.

2. Factoring pay from a retirement job into your planning. It’s almost become a cliche. Virtually every survey asking pre-retirees what they plan to do in retirement shows that the overwhelming majority plan to work. Indeed, a recent Merrill Lynch survey found that nearly three out of four people over 50 said their ideal retirement would include working. Which is fine. Staying connected to the work world in some way can not only offer financial benefits, it can also keep retirees more active and socially engaged.

It would be a mistake, however, to factor the earnings you expect to receive while working in retirement into your estimate of how much you have to save. Or, to put it more bluntly, you’re taking a big risk if you assume that you can skimp on saving because you’ll be make up for a stunted nest egg with money from a retirement job.

Why? Well for one thing, what people say they plan to do in 10 or 20 years and what they end up doing can be very different things. You may find that the eagerness you feel in your 50s to continue to working may fade as you hit your 60s and 70s. Or even if you wish to work—and actively seek it through sites like RetiredBrains.com and Retirementjobs.com, it may not be as easy as you think to land a job you like. Maybe that’s why the Employee Benefit Research Institute’s Retirement Confidence Survey finds year after year that the percentage of workers who say they plan to work after retiring (65% in the 2014 RCS) is much higher than the percentage of retirees who say they have actually worked for pay since retiring (27%).

So when you’re making projections about income sources in retirement, keep work earnings on the modest side, if you factor them in at all. And don’t fall into the trap of believing you can get by with saving less today because you’ll stay in the workforce longer or rejoin it whenever you need some extra cash in retirement. Or you may find yourself working some type of job in retirement whether you like it or not.

3. Taking Social Security sooner rather than later. Although a recent GAO report found that the percentage of people claiming Social Security at age 62 has declined in recent years, 62 remains the single most popular age to begin taking benefits, and a large majority still claim benefits before their full retirement age. But unless you have no choice but to grab benefits early on, doing so can be a costly mistake.

One reason is that for each year you delay between 62 and 70, you boost the size of your benefit roughly 7% to 8%. You’re not going to find a low-risk-high-return option like that anywhere else in today’s financial markets. More important, waiting for a higher monthly check can often dramatically increase the amount of money you receive over your lifetime. That’s especially true for married couples, who can take advantage of a variety of claiming strategies to maximize their expected benefit.

For example, if a 65-year-old husband earning $90,00 a year and his 62-year-old wife who earns $60,00 claim Social Security at 65 and 62 respectively, they might receive just over $1.1 million in today’s dollars in joint benefits over their expected lifetimes, according 401(k) advice firm Financial Engines.

But they can boost their estimated joint lifetime benefit by roughly $177,000, according to the Social Security calculator on Financial Engines’ site, if the wife files for her own benefit based on her work record at age 63, the husband files a restricted application for spousal benefits at 66 and then switches to his own benefit based on his work record at age 70.

Although you may not think of it this way, Social Security is, if not your biggest, certainly one of your biggest and most valuable retirement assets. And chances are you’ll get more out of it by taking it later rather than sooner and, if you’re married, coordinating the timing with your spouse.

Walter Updegrave is the editor of RealDealRetirement.com. He previously wrote the Ask the Expert column for MONEY and CNNMoney. You can reach him at walter@realdealretirement.com.

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Why I Want a Real Retirement, And You Should Too

Senior on sailboat
Monika Lewandowska—Getty Images

Working longer may improve your finances. But that doesn't mean it will make you happier.

Looking forward to retirement seems irrational these days. Rising life expectancies and the increasing funding problems for Social Security and private pension plans have led to the recommendation that we defer retirement past the traditional age of 65—perhaps into our 70s and beyond. It’s getting to the point where many in my generation have started to assume that they might never retire at all.

It’s true that delaying retirement into your 70s will likely improve your financial situation. Yet in an age when work has come to permeate most of our waking hours, it seems even more important to delineate at least a decade when you’re still healthy enough to both reap the benefits of that hard work and devote your time to other pursuits. And yet the concept of a real retirement has come to symbolize financial irresponsibility or laziness or both.

This was not always the case. Over the last century, the retirement age has gone through enormous fluctuations, mostly dictated by public and corporate policy, not personal preference. In the period of 1950 to 1955, the median age of retirement was 66.9 for men and 67.7 for women, according to the U.S. Bureau of Labor Statistics. But changes in defined benefit plans increasingly encouraged early retirement as a way to cut the work force, and by 1990-1995 the median retirement age had dropped to about 62 for both men and women.

But as defined contribution plans such as 401(k)s have overtaken traditional pension plans, employers no longer have as much sway over the timing of their workers’ retirements. Instead, that decision is more often dictated by savings rates and the financial markets that drive investment performance. Once again employment rates for Americans ages 65 to 69 and 70 to 74 have begun to rise, a trend only accelerated by the Great Recession. As of September, 60% of workers age 65 or older had full-time jobs, up from about 55% in 2007.

Meanwhile, for anyone born after 1960, the “full retirement age” (meaning the age you get full Social Security benefits) is now 67, and there are strong incentives to delay benefits until 70.

The consequences of working longer on our health and well-being are largely unknown, but researchers at the University of Southern California have recently examined data from 12 countries, including the U.S., and their preliminary results are telling. Contrary to conventional wisdom that working longer provides a buffer for mental health, retirement actually reduces depression, their analysis shows. What does increase the probability of depression, and reduces life satisfaction, is not being bored by not working, but health conditions that impact the ability to go about your daily activities. While household wealth, being married and one’s level of education are all positively related to life satisfaction, income alone does not seem to have a significant effect on depression or life satisfaction.

Granted, many of us still won’t have a choice about when we retire. We may not be able to afford to stop working when we want to, or we may get forced into early retirement by the loss of a job. But we may also want to take a look at whether the work-until-you-drop ethos has become more of a cultural commandment then a financial imperative—“I’d get bored if I didn’t work” is the new corollary to the often-uttered “I’m crazy busy.” It’s as if retirement has become so elusive that we’ve decided to tarnish the whole concept. But there is nothing wrong with looking forward to retirement if one has done a decent amount of saving and planning.

I love working, but two decades from now I think I would prefer to downsize rather than stay in the workforce an extra five or 10 years in order to maintain my standard of living in retirement. (From a purely balance sheet perspective, if continuing to work has adverse effects on well-being, then the fiscal savings from delayed retirement may be offset by increased health expenditures.) Medicine may be prolonging our life, but that doesn’t necessarily mean that it’s improved the quality of the later stages of that life. I want to make sure that I have not just the time also but the ability to enjoy more than just a few years when work is no longer the priority.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

MONEY Second Career

How to Jump from a Second Career to a New Dream Encore Job

Senior painting in studio
Lynn Koenig—Getty Images/Flickr

You aren't limited to a second career. Be ready to embrace a third or fourth career as opportunities come along.

Most of my boomer friends tell their adult children to plan on multiple jobs and careers. The era of corporate loyalty and the organization man and woman is long gone, they (and I) say—due to a hypercompetitive global economy and their likely desire to embrace new opportunities throughout their work lives. Good advice.

But boomers ought to heed this insight, too, embracing multiple acts during the second half of life. I think you shouldn’t just plan on a second career, but maybe a third or a fourth.

Linda Lyman: On Her Third Career

That’s also what Linda Lyman told me with a smile when we met at a Phoenix breakfast event for UMOM, a nonprofit helping families break the cycle of homelessness. She’s exploring her third career in what I call Unretirement (also the title of my new book on the trend).

Lyman moved to Phoenix 31 years ago, eventually managing legal services for a land developer. On the 17th anniversary at this job, a colleague congratulated her and asked: “What will you do for the next 17 years?” The thought of spending another 17 years at one place jolted Lyman, then 46.“I have to get out of here,” she thought. “I am going to do something more meaningful.”

Lyman next began working at a small nonprofit that mentored at-risk kids, New Pathways for Youth, and ran the group successfully for a decade. She loved the work, but decided it was time to “retire” earlier this year. “Ten years is a long time,” Lyman says. “I needed to have more life balance. I left on my own terms. It’s good.”

Now Lyman, 58, is eager to teach in an inner-city school. “I want to do something that I’m passionate about,” she says. “Teaching is what I thought I was going to do when I was in high school. It’s nice to be circling back.” Her husband is 65 (he’s retired from Intel) and the couple is open to relocating for Lyman’s teaching job, with Wisconsin and Minnesota high on her list.

Ginia Desmond: Heading Toward Career No. 5

Ginia Desmond is now on her fourth career and may be heading towards No. 5. My sense is that she has danced from one adventure to another.

Desmond was a serious artist early on, with a Masters in Fine Art. She painted in Argentina while living there with her first husband and then in the Phillippines, where her second husband—Charles Kepner, founder of the Kepner-Tragoe consulting firm—worked.

Desmond brought some Philippine fabrics back when they moved to Tucson about a year later and sold them to a local boutique. The store owner wanted to buy more fabrics, so for her second career Desmond created Sangin, a trading company importing baskets, fabrics, lighting fixtures and similar items from the Philippines and elsewhere in Southeast Asia.

She ran the business for 27 years and sold Sangin in 2003. “I never got rich,” she says. “But we didn’t go broke and I employed a lot of people.”

Time to return to her first career, she thought. So Desmond again picked up her charcoal, oils and watercolors and worked at becoming an established artist.

But Desmond took a screenwriting course at the University of Arizona in 2004 and fell in love with writing screenplays, which led her to career No. 4.

She’s since written a dozen-plus scripts; some have been optioned and she has been hired to write a few others. One of her scripts is Lucky U Ranch, about a bullied boy living in a trailer park in the ‘50s who is helped out by an angel appearing in a Cadillac that’s pulling a shiny silver trailer. A local director liked it and offered to turn the script into a movie if Desmond could find a producer.

She thought about the offer and finally landed on a producer—herself. Could this be career No. 5?

“I could buy a home or I could make a movie,” says Desmond, now 72. “I’ve bought several homes. Why not make a movie?”? She put up the money, is hoping for a winter release and is now working on another screenplay, Singapore Fling, about revisiting the island nation late in life to meet up with an old flame.

While Lyman and Desmond have led very different lives, they’ve both taken a savvy approach in approaching their encore careers.

For example, Lyman took advantage of her retirement from New Pathways for Youth to think through her options. When she kept coming back to becoming a teacher, she reached out to a few that she knew to glean insights about the job.

At the moment, Lyman is thinking about applying to Teach for America. The program is best known for hiring young college graduates and placing them in schools in low-income communities, but the organization has been increasingly opening its doors to midlifers.

Desmond has a talent for finding intriguing opportunities, but was careful to ensure that she could afford her latest venture: movie producer.

She didn’t let her enthusiasm for the project put her finances at risk. An unusual source of income helps: she gets royalties from her songwriting father, whose best known hit is Here Comes Santa Claus.

Turns out that for many of us, our Unretirement may not be our encore career but encore careers. Pretty cool.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the new book 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.

MONEY Second Career

When You’re Bored Silly in Retirement

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Martin Diebel—Getty Images

After taking a break from your career, you may need a break from retirement. Here's how three retirees found their next act.

Ah, retirement! Playing golf whenever you like. Fishing when the mood strikes. Cocktails in the afternoon and barbequing on the patio. But what do you do when you try out retirement and you’re bored stiff?

Ask Ken Howard, 67, of Greer, S.C., who built a successful trash hauling business and sold it to Waste Management in 1997. “I was really looking forward to getting rid of all the everyday headaches that come from running a company,” Howard recalls. So he built a house on a golf course, but soon found that after “playing a good bit of golf I got bored.”

His retirement lasted about five months.

Howard then bought a car wash…and then another….and then another. He now has eight. He has also bought a septic pump business (largely run by his son and nephew) and owns a small real estate investment company.

“I still get excited about cutting a deal,” he says. “Doesn’t matter if it’s $200 or $200,000.” These days, Howard says, he spends a lot of time at his family’s lake house, “but when I am in town I’m usually at the office.”

Even Del Webb Got Bored

Former utility executive Jackie Hauserman, 72, took a retirement package in 1998 when her company, Centerior Energy, was bought. She moved from Ohio to Florida, first to Naples and then to Bonita Bay. Retirement didn’t take, so Hauserman got a real estate license in 2001, at 59, and has been selling for John R. Woods Properties ever since. “I have been really busy. It is fun,” she says.

Even Del Webb, developer of America’s most famous retirement community — Sun City, near Phoenix, Ariz. — couldn’t live the life of leisure. A 1962 Time cover story about him said: “Del Webb, the hulking, slope-shouldered, long-striding 63-year-old who hates to be called Delbert, could not stand the life in one of his own Sun Cities for more than a few days — or a few hours.” He preferred working.

Here’s the thing I’ve learned while researching my new book, Unretirement: Most people desire to live their third age doing something between full-time work and full-time golf. And many new retirees find themselves easily bored without working part-time, even if they don’t need a paycheck.

Certainly, that sentiment was repeatedly expressed at a recent talk I gave at Verrado, a new multigenerational development outside Phoenix, where residents found the initial joy of sleeping in and enjoying an early cocktail faded with time. All were now working part-time or looking for the right retirement job.

The Shock of the New

The swing from racing to embracing leisure to seeking work isn’t really surprising. Put it this way: You spend many years holding down a full-time job (or multiple part-time jobs), so freedom from bosses and job stress is liberating at first. Many people have a bucket list of delayed projects and postponed travel, too. But… Your career and the expertise you’ve built up over a lifetime are also a big part of who you are.

So putting it all behind you can be a shock.

“After awhile, you then wake up and something isn’t quite right,” says Joel Larsen, a certified financial planner at Navion Financial Advisors, in Davis, Calif. “Successful retirement means finding fulfillment and meaning. And a lot of fulfillment and meaning comes from being good at what you do.”

4 Myths of Aging and Retirement

His insight echoes the results from the recent Merrill Lynch survey, Work in Retirement: Myths and Motivations, Career Reinventions and the New Retirement Workscape.” Conducted in partnership with Age Wave, the demographic consulting firm, the survey disputes four popular myths about aging. They are:

  • Retirement means the end of work
  • Retirement is a time of decline
  • People only work in retirement because they need the money (the reality: meaning and purpose matter, too)
  • New career ambitions are only for young people

I’ve grown convinced that most people need to take a break from their careers — they need to retire — before they can Unretire. It takes a break to figure out the next stage.

Adopting a Fresh Perspective

“You have to get out of the work mindset and take a fresh perspective,” says Ellen Griggs, 59, an excellent example of someone who has taken deliberate steps toward Unretirement.

Griggs had a successful career in finance with some storied firms (Paine Webber and Strong Capital Management among them) as Chief Investment Officer, Chief Operating Officer, Client Advocate and Investment Consultant. In 2011, at 56, Griggs took a year off, traveling spending time with her family and working on a 160-year-old home on Cape Cod.

She also hooked up with Boston-based New Directions, a career transition organization focused on helping executives and professionals figure out what’s next. “During my career I had never been introspective about what I was going to do when I retired,” she says. With New Directions, “I got to kick the tires.”

She’s since ended up filling her days with a mix of for-profit and not-for-profit activities, including being a member of the philanthropic trust board at the Boston Medical Center and a board director at Evanston Capital.

How to Beat Boredom in Retirement

So, what should you do when playing golf isn’t enough and you want more meaning and purpose in retirement?

Reach out. Talk to your network of friends and former colleagues who know your skills and strengths; ask them what they think you should do next.

If you’ve decided what field you’d like to migrate into, part-time, attend a local industry meeting and find out how others made their transition. This is a low-cost way to glean information and make contacts.

Potentially even more powerful is hooking up with similarly challenged retirees who’ve decided to put their leisure days aside.

For instance, Experience Matters in Phoenix matches talented private sector workers looking for their next act with community-based nonprofits. Similarly, Shift is a Twin Cities-based organization with a goal of guiding midlife life transitions toward “purpose, passion and a paycheck.” And the Encore Fellowships Network is another path for experienced professionals who want to devote time at social-service organizations.

Another resource: your local community college. These schools are creating courses and meeting spaces for boomers looking for a next act. You can look up programs near you at the website for the American Association of Community Colleges’ Plus 50 program.

It’s a safe bet that in coming years, people will talk less about golf and leisure in retirement and more about preparing for a new stage of productive and creative work in their Unretirement.

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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