By FPA member Joseph R. Hearn
Last Updated: February 13, 2012
If you asked a group of people to define retirement, chances are good that almost every person’s answer would somehow revolve around no longer working. In fact, “working during retirement” sounds like an oxymoron to most people.
In reality, though, working during retirement is becoming more and more common. According to the recent SunAmerica Retirement Re-Set Study1, pre-retirees are delaying retirement by five years — from age 64 to 69 — and when they do retire, two-thirds anticipate that they will continue to work in some fashion. Reasons for staying on the job include longer life expectancies, the high cost of health insurance, the recent market downturn and a desire to stay active. So how do you know if working during retirement is right for you? Here are five questions to ask yourself before quitting your job.
- Do I need to work? The volatile markets and economic downturn of the last several years have dealt a serious setback to the retirement plans of some pre-retirees. In many cases, continuing to work is the most effective way to get your retirement plans back on track. Staying on the job means more income, more time to save, continued employer provided benefits and increased Social Security benefits. It also gives battered investments time to recover and means that your nest egg will need to provide income for a shorter period of time. While continuing to work may not be your first choice, it can be a great way to increase your security and peace of mind.
- Do I want to work? A growing number of people are working not because they have to, but because they want to. Fyodor Dostoevsky once said “Deprived of meaningful work, men and women lose their reason for existence.” In other words, all of us are designed to do something meaningful and productive. Retirement doesn’t somehow remove that need, it just means that we no longer have to base our choice on how much something pays. Before leaving the workforce, think about the non-financial benefits you get from working. If you derive a great deal of satisfaction and purpose from your job, you may want to think twice before leaving it. And if you do decide to leave, be sure to have a plan for how to fill the void. Otherwise, you might find yourself frustrated and dissatisfied.
- Will working even be an option? The SunAmerica Study also found that almost half of those already retired left work sooner than expected. The number one reason sited for exiting early was personal health problems (41 percent), but many also lost their jobs (19 percent) or quit in order to take care of a family member or friend (13 percent). As you think about working in retirement, it’s important to remember that the choice is not always up to you. If you have a physically demanding job or a poor health history, your working days may be numbered.
- Does a work-retirement hybrid make sense? If your answers to any of the above questions were yes, it might make sense to design a solution that offers the best of both worlds. Whether this means doing a phased retirement with your current employer or choosing something else entirely, working part-time or at a less demanding job can give you increased freedom to follow some of your retirement dreams while still providing income and a connection to the working world.
- What is Plan B? If we’ve learned anything from the last several years, it is this: Things don’t always go as expected. A plan to continue working can get cut short by a pink slip. The market might dive and take your income with it. You might head into retirement with a number of meaningful pursuits in mind and find that none of them really meet your needs. Whatever the reason, it’s important to have a Plan B, just in case. Derek Sievers once said, “Success comes from persistently improving and inventing, not from persistently doing what’s not working.” When it comes to retirement, don’t be afraid to change course and make improvements until you get it right.
As you can see, work and retirement do not need to be mutually exclusive. By striking the appropriate balance, you can design a retirement that is uniquely yours and will result in a rewarding, meaningful new chapter in life.
FPA member Joseph R. Hearn is the Vice President at Teckmeyer Financial and author of the books If Something Happens to Me and The Bell Lap: The 8 Biggest Mistakes to Avoid as You Approach Retirement.