Are you one of the many baby boomers who have done the math and determined that even with Social Security you have not saved enough money to retire? If so, welcome to a very large club. The Employee Benefits Research Institute(EBRI) and the Federal Reserve estimate the average accumulated wealth for workers in their 50s and 60s is less than $150,000. That amount will surely not support a 30+ year retirement, especially in the coastal areas of the U.S. Most financial advisors are recommending accumulating assets of at least $1million to ensure you will be able to finance your full retirement, including health care costs and care for yourself and your spouse or loved one.
If you don’t have quite that much, does it mean you will have to work forever or live in your wealthy cousin’s basement? Probably not, but it depends. First of all, if you are in good health, why do you want to retire? If you aren’t sick of what you are doing, hang in there for a while and accumulate a bit more savings. If you are chomping at the bit to leave your current employer or stop doing whatever draws a 1099 at the end of the year, then it may be time to consider what else you might want to do that would still earn a paycheck and be more aligned with your current interests and values.
If less stress and a reduced time commitment are what you are looking for, consider a “phased retirement” plan like Bill’s:
Bill and his wife Deirdre, both in their early 60s, wanted to do some traveling once they left their jobs. Deirdre had sold her business the year before and was ready to go, but Bill was reluctant to leave his employer for fear of losing the opportunity to further pad their retirement account and because he was afraid he would feel somewhat untethered without his work as an engineering project manager.
One day while he was out on the golf course, he overheard an acquaintance talking about working part-time for her old employer, a large construction company. She was explaining that because she knew all their accounting systems she was the ideal person to come in on a seasonal basis and help out with tax reporting and end-of-year bookkeeping. Plus, she explained, it kept her connected to her old friends and brought in just enough extra income that she felt more secure financially.
Unsure of what he would unleash, Bill timidly broached the idea with his boss and to his amazement his boss thought it was terrific. He had known that Bill was approaching retirement age and was wondering how he would replace his knowledge and skills when he left. Bill’s proposal gave him the perfect opportunity to provide some training to his younger project managers. Bill and his boss worked with human resources to create a plan for Bill to take his retirement and come back as a contractor through a temporary agency.
In Bill’s case, the resulting plan was a win-win for all concerned. However, in an odd twist, we find phased retirement still on the back burner or getting no heat at all with many large employers. Why?
Kerry Hannon, AARP’s jobs expert, explained in her 2017 article for Forbes.com why formal phased retirement programs are rare among large employers. Although many companies report they believe their older employees want to continue working beyond a typical retirement age and envision a phased retirement, few of the companies themselves actually have a phased retirement plan – in existence or in the works. Kerry reported that some employers have concerns about liability related to age discrimination while others reported too much challenge and disruption in managing a part-time workforce. Still others believe phased retirement would cost them money to administer and weren’t eager to pay employees’ health care and retirement benefits.
Research and statistics can be disappointing, but they shouldn’t stop you from trying. If you have been drawing a paycheck from the same company for 10+ years, chances are they will find a way to retain your institutional knowledge and skills in some way if you can make it relatively painless for them, as Bill did. For Bill and many others a desire to keep contributing and a little creativity led to the right solution for employee and employer.
But what if you are tired of your old gig and want something completely different? Then consider yourself lucky to be around at a time when whole organizations exist to help you find just the right next adventure. You’ll need to do a little self-reflection and possibly work with a coach to help you assess your talents and skills to find your sweet spot. You can start that task online with websites like retired brains, flexjobs, and AARP’s job search page.
The retirement transition is challenging and a gradual pulling away from the working world is what works best for many.