MONEY working in retirement

This Is the Toughest Threat to Boomers’ Retirement Plans

Most employers say they support older workers. But boomers don't see it, and age discrimination cases are on the rise.

As the oldest boomers begin to turn 70 in just over a year, an important workplace battleground already has been well defined: how to accommodate aging but productive workers who show few signs of calling it quits.

Millions of older workers want to stay on the job well past 65 or 68. Some are woefully under saved or need to keep their health insurance and must work; others cling to the identity their job gives them or see work as a way to remain vibrant and engaged. At some level, almost all of them worry about being pushed out.

Those worries are rooted in anecdotal evidence of workers past 50 being downsized out of jobs, but also in hard statistics. Age discrimination claims have been on the rise since 1997, when 15,785 reports were filed. Last year, 21,396 claims were recorded. Not every lawsuit is valid. But official claims represent only a fraction of incidents where older workers get pushed out, lawyers say.

One in five workers between 45 and 74 say they have been turned down for a job because of age, AARP reports. About one in 10 say they were passed up for a promotion, laid off or denied access to career development because of their age. Even those not held back professionally because of age may experience something called microaggressions, which are brief and frequent indignities launched their direction. Terms like “geezer” and “gramps” in the context of a work function “affect older workers” and erode self-esteem, write researchers at the Sloan Center.

These are serious issues in the context of a workforce where many don’t ever plan to retire. Some 65% of boomers plan to work past age 65, according new research from the Transamerica Center for Retirement Studies. Some 52% plan to keep working at least part-time after they retire. In a positive sign, 88% of employers say they support those who want to stay on the job past 65.

But talk is cheap, many boomers might say. In the Transamerica survey, just 73% of boomers said their employer supports working past 65. One way this skepticism seems justified: only 48% of employers say they have practices in place to enable older workers to shift from full-time to part-time work, and just 37% say they enable shifting to a new position that may be less stressful. Boomers say the numbers are even more dismal. Only 21% say their employer will enable them to shift to part-time work, and just 12% say their employer will facilitate a move to a position that is less stressful.

These findings seem at odds with employers’ general perceptions about how effective older workers are. According to the survey:

  • 87% believe their older workers are a valuable resource for training and mentoring
  • 86% believe their older workers are an important source of institutional knowledge
  • 82% believe their older workers bring more knowledge, wisdom, and life experience
  • Just 4% believe their older workers are less productive than their younger counterparts

The reality is that most of us will work longer. The Society of Actuaries recently updated its mortality tables and concluded that, for the first time, a newborn is expected to live past 90 and a 65-year-old today should make it to 86 (men) or 88 (women). The longevity revolution is changing everything about the way we approach retirement.

Employers need to embrace an older workforce by creating programs that let them phase into retirement while keeping some income and their healthcare, by offering better financial education and planning services, and by declaring an age-friendly atmosphere as part of their commitment to diversity.

For their part, employees must take steps to remain employable. Most are staying healthy (65%); many are focused on performing well (54%), and a good number are keeping job skills up to date (41%), Transamerica found. But painfully few are keeping up their professional network (16%), staying current on the job market (14%) or going back to school for retraining (5%). Both sides, it seems, could do better.

Read next: How Your Earnings Record Affects Your Social Security

MONEY retirement planning

What Scrooge Can Teach You About Retirement Planning

Scrooge in A Christmas Carol
Scrooge in "A Christmas Carol" © Walt Disney Co.—Courtesy Everett Collection

Sure, he was tight-fisted. But Scrooge's money habits are a useful model for reaching your retirement goals.

I can hear the cries of outrage already. How can A Christmas Carol‘s Scrooge, the character Charles Dickens described as tight-fisted, squeezing, wrenching, grasping, scraping, clutching and covetous, possibly be a paragon of retirement planning? Bah humbug! If anything, he’s a role model for how not to live one’s life!

And I agree, up to a point. But if you’re willing to overlook a few of his, shall we say, flaws, good old Scrooge also possessed some qualities that make him a pretty decent role model for achieving a secure and meaningful retirement. Here are three we may well to emulate, albeit in moderation, to improve our retirement outlook.

1. Scrooge had a phenomenal work ethic. When the novel opens, Scrooge is at work in his counting-house late in the afternoon on Christmas eve. He didn’t duck out early to do some last-minute shopping. He wasn’t posting Happy Holidays photos on Instagram. He was putting in a full day’s work.

Granted, in recent years millions of people who would like to do just that haven’t had the option. Perhaps the recent upbeat employment report signals a more vibrant jobs market ahead. But the fact remains that the commitment to work that Scrooge displays is crucial to a successful retirement for two reasons: you can’t build a nest egg without regular income; and the amount you earn and number of years on the job largely determine the size of a key source of retirement income: your Social Security benefit.

Note too that Scrooge was still working relatively late in life. Dickens doesn’t give Ebenezer’s age, but many people estimate he was in his late 50s or 60s, which is getting up there considering life expectancy in mid-19th century England was about 40. So we can take a cue from Scrooge on this score as well. For example, in their new book Falling Short: The Coming Retirement Crisis and What To Do About It, authors Alicia Munnell, Charles Ellis and Andrew Eschtruth point out that just a few extra years on the job can go a long way toward improving one’s retirement prospects. And if that doesn’t do the trick, you can always supplement your income by working in retirement.

2. The man was a prodigious saver. Scrooge definitely knew a thing or two about saving a buck. And he didn’t resort to gimmicks like apps that round up credit card purchases to the nearest dollar and deposit the difference in an investing account, giving you the impression you’re saving while encouraging spending. He did it the old-fashioned way by keeping his everyday living expenses down.

He went way, way too far, of course, what with living in the dark, keeping a very small fire and eating gruel from a saucepan. But he had the right idea—namely, if you live below your means by not splurging on over-the-top vacations, expensive cars and big houses with mortgage payments to match, you’ll have a better chance of saving the 15% a year that can lead to a comfy retirement. And while Dickens doesn’t get into Scrooge’s investing habits, my guess is that ol’ Ebenezer wouldn’t fall for pitches for dubious or expensive investments. I think he’d be an index-fund kinda guy who realizes that reducing investment fees boosts the size of your nest egg and the amount of income you can draw from it.

3. Scrooge (eventually) understood what really matters. This may very well be the most important lesson we can draw from Scrooge. Sure, it took visits from his dead business partner Marley and a few ghosts to transform him. But by the end of the novel, Scrooge has morphed from a pinched and selfish man into a generous and compassionate person who anonymously sends a turkey to the Cratchit home for Christmas dinner and becomes like a second father to Bob Cratchit’s son, Tiny Tim. In short, he realizes that wealth brings happiness only when we share it with our families and others in ways that improve all our lives.

So while it’s important to focus on making good financial decisions, we should never forget that retirement planning isn’t just about the bucks. Ultimately, it’s about creating a retirement lifestyle that has meaning and purpose as well as financial security.

So if your thoughts happen to stray to your retirement over this holiday season and you find yourself wondering how you might improve your planning, ask yourself WWSD—What Would Scrooge Do? Whether it’s the stingy Ebenezer or the more benevolent version, he just might provide the inspiration you need.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at walter@realdealretirement.com.

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Still Working After 75—and Loving It

Singer Willie Nelson performs during an “In Performance at the White House” series event
One of many working seniors, singer Willie Nelson, 81, is still on the road. Jacquelyn Martin—AP

Growing numbers of Americans in their 70s and 80s love their jobs and have no plans to retire. You might be one of them someday.

Willie Nelson is 81; Warren Buffett is 84; Mary Higgins Clark is 86 and David Hockney is 77. All are still working and going strong. So are more and more Americans 75 and older. You might be one of them someday—and glad of it.

In a recent interview, British painter David Hockney—one of the world’s greatest living artists—captured the joy, meaning and youthfulness he continues to draw from his profession. “When I’m working, I feel like Picasso, I feel I’m 30,” he told Tim Lewis of The London Observer. “When I stop I know I’m not, but when I paint, I stand up for six hours a day and yeah, I feel I’m 30.”

‘It’s What I Enjoy Doing’

I imagine that sentiment rings true for Mark Paper, age 81. He’s President of Lewis Bolt & Nut Company in Wayzata, Minn., a firm owned by his family since 1927. Paper took the helm from his father in 1962 and remains deeply involved in the company’s expanding operations. He gets daily and weekly reports, stays in touch with its executives and flies out to visit the manufacturing plant in La Junta, Colo. several times a month.

“Why not stop working?” I asked Paper. “You have money. You’re 81 years old. Haven’t you heard of retirement?” His answer: “It’s what I enjoy doing.”

Plenty of other septuagenarians and octogenarians feel the same way.

Although people working at age 75 and over are a distinct minority—comprising less than 1% of the total labor force—roughly 11% of American men 75 and older are still at it and 5% of women that age are. By contrast, in 1992, only about 7% of 75+ men and 3% of 75+ women worked.

Indeed, after declining sharply in the early postwar decades, the average age of retirement in America has risen over the past two decades, to 64 for men and 62 for women, calculates Alicia Munnell, head of the Center for Retirement Research at Boston College.

While the labor force participation rate for men 75 and up is currently about double that of the rate for women, the gap is expected to shrink. Boomer and Gen X women are well educated and more attached to their jobs than previous generations.

‘I Can’t Imagine Not Being Employed’

Marilyn Tully, 75, loves working, too. She has been self-employed her entire working life in businesses mostly revolving around the home and interior design. “I can’t imagine not being employed,” she says. “Especially if you still have the energy, which I do and, like me, you have the creative urge.”

That doesn’t mean there haven’t been rough patches. In 2007, she and her husband had to shutter their Naples, Fla. furniture business, a casualty of the housing market implosion, and her interior design company suffered. These days, her design business is picking up, she represents a successful jewelry designer and consults on inventory management for high-end designers. (Her husband handles the administrative and IT sides of her firms.) When they aren’t working, they sail Florida’s gulf coast for two weeks at a time on the trimaran Tully’s husband built. “It’s a good life,” she says.

‘It Keeps Me Young’

Newspaper publisher Jerry Bellune of Lexington, S.C., 77, works at a pace that would leave many younger workers gasping. He says running the Lexington County Chronicle & Dispatch News with his wife, MacLeod, offers him “enjoyment, exhilaration, a strong sense of mission and purpose.” On top of that, says Bellune, “it keeps me young, working with younger people and helping them grow personally and professionally.”

And he has no plans to stop. “I’d like to work as long as I’m able and can still make a contribution,” Bellune told me.

Here’s a typical workweek for him: Mondays and Tuesdays, he’s usually at the office, writing, proofing pages and talking with the staff about coverage, and the rest of the week he’s mostly writing and helping with community endeavors. Weekends are busy, too, writing weekly and monthly articles for a business magazine and two trade magazines. (He’s also a consultant and manages a family investment fund. Tired yet?)

The Bellunes do take breaks, traveling abroad several weeks a year and spending time at their vacation home. “We have an excellent staff that permits us that leisure,” he says.

‘It Keeps Me Off the Streets’

Funeral assistant Jerry Beddow, 75, loves working, too. A year after retiring as a high school principal in 1994, Beddow began his current job at Patton-Schad Funeral and Cremation Services in Sauk Centre, Minn. He works about three to four hours a day, helping position caskets at the funeral home, carrying flowers, talking to grieving families and driving the hearse. “It keeps me off the streets,” he laughs.

After researching my new book, Unretirement, I’ve come to believe that the ranks of people 75+ earning a paycheck will expand in coming decades, especially among better educated employees and businesss owners. It isn’t inconceivable that the average retirement age when the youngest boomers reach their 70s in the early 2030s could approach 70.

“Public opinion in the aggregate may decree that the average person becomes old at age 68, but you won’t get too far trying to convince people that age that the threshold applies to them,” notes Pew Research in its report, Growing Old in America: Expectations vs. Reality. “Even among those who are 75 and older, just 35% say they feel old.”

The ones who are able to keep working well into their 70s, I think, will find themselves leading richer lives, both financially and psychically.

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. Send your queries to him at cfarrell@mpr.org. His twitter address is @cfarrellecon.

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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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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.

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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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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.”

Accurate, real-time salaries for thousands of careers.

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.

Accurate, real-time salaries for thousands of careers.

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.

More from Second Avenue:

Manual for an Encore Career

3 Essential Tips to Switch to a Second Career

Dipping Your Toe Into Encore Career Waters

MONEY retirement planning

3 Little Mistakes That Can Sink Your Retirement

141014_RET_3MISTAKES
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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