Retirement doesn’t look like it used to — and for good reason. For prior generations, age 65 constituted a threshold between the working world and the leisure world. Once you crossed it, you took your gold watch, your pension, and your savings, and kicked back in some tropical locale.
Why 65? Because when Congress passed the Social Security Act in 1935, “Life expectancy for American men was around 58,” per The Atlantic. By 2020, according to the CDC, that figure had risen to 75.1 years, and the life expectancy for American females, whose labor force participation now sits at 57.4%, had risen to 80.5 years. In short, people are staying healthier for longer, and the all-play-and-no-work model of retirement just isn’t cutting it.
In 2019, Catherine Collinson, president of Transamerica Center for Retirement Studies, led a study that found that most people plan on doing some form of work in retirement, paid or unpaid. “The trend now is toward a much more active retirement,” read a New York Times article on the study. “The transition itself — to ‘retirement’ — is highly personalized.”
The Hybrid Approach
There are many channels available to people who dream of nontraditional retirements. Much of my work as an advisor revolves around helping my clients find and make the most of them.
Many people opt for a hybrid approach, where they work part-time on self-designed schedules and reap a myriad of financial and psychological benefits.
I have one client whose loved one requires fairly intensive medical care, and who, despite having a substantial net worth, is worried that the money will run out someday. Here, the issue is emotional — and they need peace of mind. Maintaining a revenue stream, however moderate, provides that added peace of mind.
Working part-time also gives retirees the comfort of discretionary spending. If their financial plan accommodates a certain lifestyle, supplementing it with some discretionary income will ease their financial burdens in other areas, which in turn will ease the psychological burden of wondering whether there will always be enough.
Additionally, remember that taxes are progressive, so when one works part-time, they keep more of what they earn. When clients see that they can work part-time and keep a higher percentage of their pay, many of them realize there’s no reason not to add some structure to their days and help keep themselves solvent in the process.
Human beings come programmed with a psychological urge to add value. Whatever we’re doing, we want it to be meaningful. Many who stop working altogether in retirement struggle with feeling like they’ve ceased adding value, that their lives are devoid of the meaning, and that they added to the world in their prime. But they can’t or won’t go back to the daily grind.
I tell clients that working part-time is a great way to satisfy that psychological urge to add value without overburdening themselves. Many of them choose to work part-time and set aside the earnings for certain discretionary spending such as travel or gifts. This gives them a sense of financial structure and personal gratification at the same time.
Quality of Life Benefits
Throughout our prime earning years, we get used to taking the good with the bad. We suffer some unpleasant projects, overlong hours, or exhausting travel, all in service of our overarching goals. But once we enter retirement, and our career goals are satisfied, we no longer have to take the good with the bad — we can structure our work lives to focus on what’s fulfilling to us.
For many clients, it’s no longer about the money. Instead, they view their retirement years as an opportunity to mentor young and aspiring members of their field. Having the luxury of choosing to work that way only makes it more enjoyable.
“By working part-time in retirement, we can pare away the unpleasant parts of our jobs, and keep what we value most.”
By working part-time in retirement, we can pare away the unpleasant parts of our jobs, and keep what we value most. A retired police officer, can work in private security without the added pressure. A retired teacher can leave the stacks of ungraded papers behind and focus on tutoring individual students. And a retired nurse can say goodbye to night shifts and begin making their own schedule. In short, clients can supplement their pension without sacrificing their freedom.
For those of you interested in unconventional twilight years, here are a few examples of clients for whom the road less traveled made all the difference.
James, 58: Same Job, Better Hours
James spent 34 years in a wide array of TV/media roles, focusing mostly on sales. By the end of his career, he was senior vice president of Sales at a major network, a role he had occupied for more than five years.
After decades of this work, James had accumulated enough expertise and renown in his field that he could leave his full-time job, found his own consulting firm, and design his own schedule. Now, James works whatever hours he chooses in his specialty field, balancing the need for professional engagement with his family and leisure preferences.
James maintains an income commensurate with his level of experience. But most importantly, he gets to spend as much time as he wants with the people who matter most to him.
Ralph, 60: Pro Bono Advocate
Ralph is an attorney who, like James, accumulated decades of experience in his field. About midway through his career, Ralph realized he’d made enough money to support his lifestyle.
Ralph decided to become a full-time pro bono lawyer, helping people work through immigration issues. Ralph works only with people at risk of deportation who would not otherwise be able to afford a lawyer of his caliber. In effect, Ralph donates his services, as a full-time, blue-chip volunteer.
Diane, 61: Back to School
For decades, Diane was a full-time mother — a role which, despite being uncompensated, is no less an occupation than any paid career. By the time her children had grown and flown, she found that her role as a parent had shifted from full-time manager to part-time advisor, and she had much more time on her hands.
Diane had always wanted to study Shakespeare. As a young woman, she had suppressed these dreams in favor of the more practical economics/business route, but the desire never went away. As a “retired” mother, Diane applied to a Shakespeare studies master’s program in Stratford-Upon-Avon, was accepted, and spent the next year in England, steeping herself in the subject she loved.
Mari, 63: From Real Estate to Rabbi
Mari had been highly successful in commercial real estate. But like Ralph, at a certain point, her passion overwhelmed her, and she felt compelled to follow a different path. Assured that she could afford to, Mari decided to become a rabbi, and now specializes in officiating interfaith weddings. This required extensive training and education that Mari was eager to complete.
Like James, Mari gets paid for her services, but makes less than she did in commercial real estate. The actual dollar figure is much less important to Mari than 1. knowing that she can afford to follow a passion, and 2. the mental benefits of having some income versus no income.
Michael, 55: From the Boardroom to the Links
Michael is a former colleague and current client who, at 55, is feeling burned out from the corporate grind. He told me this over lunch recently. Knowing he’s passionate about golf, I said to him, “Michael, why don’t you go work on a golf course? You’ll make minimum wage, but you can afford it, and it’ll keep you around the game that you love.” His face lit up, and he said, “That’s exactly what I was thinking.”
Just because he used to make $200,000 a year doesn’t mean he can’t take a job paying $15 an hour. Working on the golf course will give him structure, purpose, social involvement, and enough income to cover HOA fees on his condo. Michael just needed a push in that direction from me, who knew he could make it work.
Cal, 52: Mr. Fix-It
Cal worked as a firefighter and became eligible for a pension after 25 years. Throughout his career, Cal did home improvement work around his house, and gradually accumulated a comprehensive handyman’s skillset. By the time he hit age 50, Cal decided he would supplement his pension with part-time home improvement work. Cal gets paid for this, but again, much more important than the financial reward are the psychological rewards that come from helping out his community, choosing who he works for, and giving structure to his days.
It’s common in blue collar communities for people who get pensions early to do some version of what Cal has done. I know another man who, after decades as a police officer, began working in private security, mostly to stay connected with the people around him.
We see people using some combination of their skills, passions, and evolving preferences to design retirements that are right for them. Some, like James, continue to do the same work that was so psychologically and financially rewarding throughout their careers, albeit at reduced hours. Others, like Mari, go in completely different directions, overcome in middle age by a passion that commanded their attention.
Most maintain some level of income. But depending on how well they plan for retirement, they may be able to go headlong into causes that matter to them while continuing to sleep well at night.
It’s inspiring to see people taking such creative, fulfilling approaches to retirement.