Retire or Re-wire: A Discussion

By Mark Rylance, CFP®, CFT ™

Throughout our 40 years in business, RS Crum has helped dozens of clients plan for, and ultimately act on, retirement. Fortunately, most of the people we have worked with engaged us early enough to develop the strategy and resources to maintain their lifestyle and retire at a reasonable age. However, many people throughout the United States will not be so lucky. They will need to be more creative in how they cover their expenses as they get older.

Recently we have seen an interesting trend where those normally looking to retire between the ages of 62 and 65 are not only delaying retirement, but they are choosing to continue working well into the future. This phenomenon could be for a variety of reasons—people are living longer, they still enjoy their work, or maybe they are stretching retirement so that they (or a spouse) can make it to Medicare age. However, the more likely reason is that many Baby Boomers are simply not financially prepared for retirement.

We have spent time coaching pre-retirees through a psychological shift in how they view work and retirement in general. A phrase that we have been using is: “instead of retiring, you need to look at re-wiring.” By re-wire, we mean changing the way you view work. Instead of simply collecting a paycheck, try and seek out meaningful work on your terms. This could be work with flexible hours, charitable work, consulting, or something you’ve always had an interest in, but never tried. This is limited only by your imagination. As Marc Anthony said, “If you do what you love, you’ll never work a day in your life.”

This applies to people that need to continue to work for financial reasons, but there are also those who continue to work longer because they are not emotionally ready for retirement. This emotional gap can occur for a variety of reasons. Take the business owner or highly skilled worker that suddenly becomes unneeded or unwanted. The phone no longer rings, the customers or coworkers no longer ask for help. If a person has their personal self-worth or identity tied to their work or their authority, that can be a tough void to fill. Others may come to realize that they have failed to build enough friendships or establish a community to support their newly found free time. For married couples, it can also be eye opening when the retiring spouse is with them eight more hours a day. In some marriages this can be viewed as a bonus, but in others, it can create tension.

Another obstacle we have seen is that many people value their financial worth at one level, but employers view it at a different level. If you are an attorney earning $400 per hour before retirement, you may only get paid $50 per hour working part-time for a non-profit or $150 per hour consulting one day a week. This is a difficult psychological shift, but a shift is required. People should avoid the temptation to view their pay from a dollars and cents standpoint, without taking into consideration the personal fulfillment received from the time you spend doing what you do. There is tremendous value in still being wanted or still being important.

Before retiring, we suggest a couple of exercises. First, find out if you can afford to make work optional (i.e. retire). Next, take some extended time off to see how “not working” works for you. The more time you can take off, the more you will come to realize what other outlets will fill up your time and interests. Pursue a hobby, take a class or volunteer. Another good exercise is to pencil out your first 30, 60, and 90 days of retirement. What would you do during that time? What about the rest of the year? What about next year?

A lot of people get retirement right, but for those that get it wrong – it is difficult, if not impossible, to reverse. Do your homework, and make sure that you get the retire vs. re-wire part right.