This has become a more common concern in an age of unstable employment, high healthcare costs, under-reported inflation and short-circuited careers. If you believe that you may have to work for the rest of your life, welcome to the new, unsecure retirement world of the 21st Century. This is the last part of the series I started last week, leading with Retirement Will Be a Fantasy for Most Americans. And here we’ll try to tackle how best to handle the prospect of needing to continue to work during the traditional retirement years.
I get questions on this blog and on others that go something like this: I’m 60 years old and I have no retirement savings; what can I do so that I’ll be able to have a comfortable retirement? I’m sympathetic, believe me, but if this or anything close to it is your situation, you shouldn’t even be asking that question.
Retirement will be off the table. The better, more relevant question then is I’m 60 years old and I have no retirement savings; what can I do with the rest of my life?
That’s a much more rational starting point. The hope of retiring to blessed nothingness shouldn’t even be on your radar screen. But that doesn’t mean a life of perpetual misery and cat food dinners either. Or at least it doesn’t have to be – if you change both your mindset and your strategy.
Figure Out What You’re Going to Do with the Rest of Your Life
You came into this world with nothing, and you’ll leave it with nothing – those are the facts. What happens between those two endpoints is largely up to you.
One of the problems facing people of limited means – which is most of us – is living a life that is not in sync with the preferred script of the day. For example, that script holds that you will go to college, get a degree, start a career at say – oh, $50,000 per year, work your way up to $100k by the time you’re 30, and progress to the point where you’re one of the people running the joint and earning a quarter million per year by the time you’re 35.
Along the way, you’ll payoff your student loan debts (early), get married, buy a McMansion in the suburbs (being careful to buy it with an 80-10-10 mortgage set-up so you won’t have to pay private mortgage insurance), have a couple of kids, fully fund their college educations with the requisite 529 Plans, payoff your mortgage early, max-out your 401(k) each and every year, and then retire to the beach by age 50 or 55.
Or at least that’s the way it’s supposed to be.
The reality is that some people actually are able to follow that script and reap the rewards – at least enough to perpetuate the advice. But that’s hardly what the majority of people do. More likely, you’ve failed in at least one of those categories, and almost certainly several of them.
But don’t kick yourself for it; it actually means that you’re quite normal. You see, along the way there are failed marriages, family members gone bad, bouts with physical or emotional distress, career crises, bad business decisions, a failed business venture or two, a real estate meltdown, a couple of stock market crashes, and less-than-perfect decisions. You sure tried to do all the recommended right things, but there were a few detours along the way. Life is like that, isn’t it?
But maybe now you’re moving toward (or past) the half-century mark, and you’re realizing that you’re not even close to being ready to retire. Worse, you may never be. Or maybe you’re in your 20s or 30s and finding it difficult to imagine that you’ll ever have enough money to fund your retirement, while your income is consumed by high housing costs, health insurance, uncovered medical bills, monster student loan debts, a cornucopia of taxes, the high cost of public education for your kids, and the slow, steady rise in the cost of food, utilities and entertainment.
What do you do?
My best suggestion: stop fantasizing about retirement, and instead focus on what you’re going to do with the rest of your life. That may not be comforting, and not what you were hoping to read, but that’s the reality. The sooner you embrace it, the greater the likelihood that you will successfully create a worthwhile life for yourself. And that?s much more important.
Assess the Strengths of Your Life – And You DO Have Them
Perhaps you’ve never thought about it this way, but there are strengths that build up over the course of your life that can benefit you when you reach retirement age, even and especially if you never retire.
Here are some common examples – you almost certainly have a few of them:
- You no longer have dependent children. If you did earlier in life, think back to when you did, and reflect on how much easier life is now. It’s just you and your spouse – or maybe it’s just you. If you get into a tight spot, you only need to worry about yourself. Struggle is infinitely more difficult with kids in tow.
- No family to support. That means you no longer need a 3-4 bedroom house, an oversized SUV or van, or even extra seats for air travel. Money goes farther when it’s only needed to support one or two people.
- No more alimony or child support. These typically end by the time your children reach age of emancipation, but they’re usually gone by the retirement years. Their disappearance should help your situation a lot.
- Life’s experience. How many “schoolboy mistakes” did you make in your youth? If you’re like me, probably dozens. Experience brings a large measure of wisdom and that helps you to avoid a lot of problems. You’re better able to assess situations before you get into them, and to discern advice that’s thrown your way.
- You’ve likely built some trustworthy relationships. When you’re young, a social life is often a numbers game – whoever has the most friends is the most socially successful. At this point in your life you probably have fewer relationships, but the ones you have are a lot stronger, and more reliable.
- Faith in God. Not everyone develops this, or even believes in God. But if you do, this point it not to be minimized. If you believe in God, then you can know that your eternal destiny is secure, even if you have to go through some twists and turns between now and then. That faith alone can give you more conviction about your own future, despite the prospect of advancing age. That’s more valuable than a seven figure retirement portfolio.
- Tradable skills. Even if you’ve never made a lot of money in your life, you probably have a fairly wide set of skills that have enabled you to at least make a living. Those skills will be a basic foundation for whatever you do in the future to pay your way.
- A sense of value. If you’ve never earned a lot of money, you probably have a keen sense of what really matters. For example, you probably realize that a lot of the crap that the media tells you that you need to have to live really isn’t necessary. You don’t, after all, need a 60 inch TV, a late model car, the latest and greatest cell phone, or vacations in Europe. Celebrate that frugality – it will serve you well.
These are just some examples of the strengths that you have going in your favor, even if you’ve never really thought about them.
Work to Turn Weaknesses into Strengths
One of the best ways to prepare for retirement is by eliminating financial weakness. Eliminating debt is a primary example. If you’ve been carrying a lot of debt through much or most of your life, eliminating it can be the single best financial step you can take to secure your financial future as the retirement years approach. Not only will that free up more of your income for savings, but it will also lower your cost of living.
But don’t stop at getting out of debt. Plan to cut your living expenses across the board. Move to a less expensive housing situation. Trade down on your car. Give up products and services that you never or rarely use. Replace costly habits and hobbies with simple, inexpensive ones. Most people can live on a lot less, but it requires overcoming lifestyle patterns. The less you need to live on, the easier it will be to live in the retirement years.
Here’s another “weakness” to jettison: people who are relying on you for support. There are two main categories here. The first is adult children. Kids grow up, but their dependence on the Bank of Mom and Dad doesn’t always follow. Decide on a cut off age – 21, 25, 30, whatever it might be – and close that window for good. I’ve seen adult kids who rely on their parents for support and it usually goes on until the grave. You’ve taken care of your kids when they were young, but there comes a time when they have to stop relying on you. If you have little saved for retirement – perhaps because you kept giving it to your kids – it’s time to put a stop to that.
The second group are expensive friends. They could be people who are always “borrowing” from you, but never lending in return, and never paying back. Or they could be friends with expensive hobbies and lifestyle patterns that you can’t afford to follow. If you’re serious about lowering your cost of living, you can’t afford such friends.
Focus on What You Actually Want to Do With Your Life
This step is critical to the whole process. Think about how you would live and what kind of work you would do if you had only yourself to be responsible for. Now give yourself permission to do it.
This isn’t a quirky mind game. Most of us have desires in life that we don’t give ourselves permission to follow. That’s often because there are bills to pay, people to support and the expectations of others to meet. All are common constraints early in life. But the day will come when all that will be gone, and you will be beholden only to yourself. What kind of life will you want to have at that point?
One of the benefits of getting older is that you only have to provide for yourself and your spouse, if you’re married. That means that you only need shelter for one (or two), transportation for one (or two), food for one (or two), and entertainment for one (or two). I think you get the picture. You no longer need to pay for all of the extra space and stuff.
Let your mind run free here. Maybe you’ll be tired of life in the suburban subdivision and all of its attendant expenses. Fine, what about moving to a one bedroom downtown loft? Maybe you’re tired of having a car payment on a late model car; ditch it and buy a beater for cash (if you’re living downtown you won’t much need a car anyway). Do this with everything in your life. Not only does it lower the cost of living, but it can be incredibly empowering. You’re saying goodbye to the Rat Race, or at least to the stuff that keeps you in it.
Once you jettison some stuff and lower your living expenses, you’ll be in a better position to pursue that occupation you’ve been putting off most of your life. Maybe you’ve put it off because it wouldn’t pay the bills to raise a family. But once there is no family to support, that door can open up once again.
Building a New Occupation From Scratch
Think of what you’d really like to do, and pursue it. If you’re not sure how, find blogs and YouTube videos about it. You might be surprised to learn that what you want to do is already successfully being done by others. Network with those people, the internet makes it possible.
Here’s something I’ve discovered in my transition from washed-up mortgage originator to blogger/freelance blog writer: the resources that you need will appear when you start pursuing them intentionally. I found everything I needed when I got serious about making the change, including contract gigs that helped pay the bills while I was building my business.
When I got into this I had no idea how to do it, and absolutely no credentials to qualify me. But when you start pushing into the darkness, soon enough you start to see daylight. You find it because it’s out there waiting to be found. If you’re never going to be able to retire, you really have nothing to lose! And everything to gain.
I’ve come to the conclusion that life doesn’t pass us by – we watch it go by, and cling to the notion that we missed our chance. Nonsense. Opportunity is out there waiting for us to step up, get serious, and make it happen. There?s really no other choice.
There WILL be Trade-offs, and that’s OK
My wife and I visit the city of Portsmouth, New Hampshire, on a fairly regular basis. It’s one of those colonial-era ports that’s been restored, and is comprised of quaint shops, wonderful seafood restaurants, tree-lined streets and cozy residential neighborhoods. If you’ve ever been to Savannah, GA, Portland ME, or Annapolis, MD, you have the idea. The city oozes with charm.
There’s a musician who moves from place to place downtown, playing both the accordion and piano for the street crowds and restaurant patrons, and he’s incredibly accomplished. Since I always find such people to be infinitely more interesting than the corporate suits that our culture says we should aspire to be, I interviewed him on the fly. And yes, his story was beyond interesting.
Turns out this guy has a college degree, but is self-taught in both instruments. He decided to pursue music because that is his passion. He revealed that he’s poor, but he likes his life. I asked him what his “day job” is – turns out he doesn’t have one. He survives on the donations given to him by people who hear his music. I judge him to be about 50 years old.
Did you get that? He’s poor but he likes his life. How many people who aren’t poor don’t like their lives? This guy has made a trade-off in his life. He’s chosen poverty to live life on his own terms. He’s not some homeless guy soliciting donations from people who feel sorry for him. He’s providing a service that people are willing to pay him for (his music is outstanding, especially on a complex instrument like an accordion).
This guy is an extreme example of what a person might do to live a worthwhile life. Hopefully the work that you choose to do after your formal career ends won’t force you into poverty. But this does show that doing without material comfort isn’t fatal, and might even be satisfying.
Here are some career ideas. They may take you a while to develop, but that’s OK. Nothing worth doing ever comes easily. Writer (choose your subject area – the web has created all kinds of opportunities), photographer, cook/chef, tutor (choose? your subject), wedding/event planner, professional speaker, sports pro (golf, tennis, skiing, etc.), florist, home remodeler, repair work (any capacity), substitute teacher, session musician, bookkeeper/tax preparer, sports referee, driver/courier, career coach, hair dresser/barber (they seem to be making a comeback), or full- or part-time work with municipal or county governments.
This list is by no means comprehensive. It’s just to get you thinking about the possibilities that are out there.
Any of these occupations are possible if they’re something you really like to do, you don’t have a family to support, and you’re prepared to supplement the income from other sources (remembering that you’ll also have Social Security when you reach retirement age).
Sooner or Later You Will Have to Make a Choice to Change Direction
In the last paragraph I mentioned “after your formal career ends”, and that’s something to be keenly aware of. Even though age discrimination is completely illegal, employers practice it all the time – and get away with it cleanly. After all, in most cases it’s close to impossible to prove that age is the reason why you were let go.
For most people, that will come no later than 65. For many it will come much sooner. You start becoming a target at about age 50, but it can be as early as 40 in some careers. This is partially because older workers make more health insurance claims, raising the cost of employer health insurance. But it’s also because many employers believe that younger workers are more cutting-edge. Still others vainly prefer to keep a more youthful-looking staff.
Whatever the reason, you had better be prepared for the end of your current career, at least if you are employed by someone else. And while there is a chance of you finding a job with another employer, that may prove difficult or impossible for all of the same reasons that led to the layoff from your current employer. The youth movement is real, and it’s happening across the board.
There are two ways you can manage this outcome. The first is to wait for it to happen, and then go about finding or creating a replacement occupation. The second is to be proactive. That means acknowledging that it?s coming, and being ready when it arrives. That means that you start preparing now, even though it doesn’t seem likely.
Preparing in advance is obviously the better of the two choices. Since it will be very difficult to replace a job in middle-age in any capacity, you will very likely have to create that occupation that will carry you through the second half of your life.
That will include your retirement years. And that’s the reason why you should focus heavily on finding work that you like. Even if it doesn’t fully replace your current job income, the fact that it provides you with a reasonable income level, and represents work that you like, will enable you to do it for the rest of your life. And you can often supplement that income with part-time jobs or contract work that?s related your current occupation. Those kinds of positions are usually easier to get when you?re over 50, than the full-time variety with complete benefits.
Summing It All Up
What we’re really talking about here is creating a multiple income situation. You have to create a new occupation for yourself ? most likely in a self-employed capacity ? while supplementing that with more traditional job income.
I frequently recommend this combination to people of all ages. But it’s much more important as you get older. The job market has been breaking down there since the 1990s. Neither the government nor the mainstream media are anxious to reveal that. But it is having a profound affect on people all ages and in most careers.
If you’re over 50 – or even 40 – and you lose your job, that could be the end of your current career. That would not only force major adjustments to your financial plans, but it will also make a traditional retirement extremely unlikely.
How will you react to that? You could continue to pursue career salvation in the form of another job. Or you could prepare for the longer term by focusing in on what it is you really want to do with your life. In today’s job market, it’s actually less risky pursuing work that you are passionate about than it has been at any time since World War II. Job stability simply no longer exists, forcing you to create a new and very different occupation than what you’ve ever imagined up until this point.
But the silver lining is that you may finally find that work/life balance that makes retirement unnecessary. And you may even find that it creates a better, more worthwhile life that enables you to make more money than you ever have. It happens when you go forward into the unknown. You learn things about yourself that you never suspected, and even that you’re far more capable than you ever imagined.
That’s better than retirement – wouldn’t you agree?
When we were building our present home, I often looked at the laborers and wondered what would become of them when they got too old to do this type of work. Some would be able to work for some time and did speak of their retirement accounts. But others, mostly the young ones, didn’t appear to have much other than their tricked out pickup truck. I guess retirement wasn’t on their radar. But I wonder if they really think they will be able to do roofing work well into their 70s. At any rate, my suggestion would be to find work that isn’t so physically taxing so that if you do have to work well into old age, at least you can physically perform the duties of the job.
That’s an excellent point Kathy. Though I do know people who continued doing physical work into their 70s, not everyone can. That’s another reason why I think it’s so important to develop a second career. Whatever you choose to do will have to be work that will be doable at an advanced age. And like I wrote in Saving for Retirement Late in the Game, you should still plan to save for a distant retirement at age 75 or 80 anyway. Sooner or later you will have to stop.
Just one thought about the homebuilding laborers though. A lot of those workers come from third world economies where people don’t retire. But they have economic and social structures in their families and communities that enable them to contribute and to live when they become older. Our “modern” system of putting every aspect of life into a dedicated box is what has really created a lot of the problems that we have. We just don’t have the social structures to keep people going. The complex systems we’ve created have done away with those social structures. That’s a major reason why we’re also a disconnected culture, but that’s an entirely different topic.
Good article. While I think people need to plan for their retirements, I think they need to take into consideration that things might not go as planned. I looked back on my plans from 10 years ago and thought I could eventually move my investments over to 30 year t bills paying 5.25% tax free, giving me a comfortable retirement income stream. Additionally, my assumptions relating to LTC costs were lower than what they now look to be. Obviously, things have changed and my plan has had to evolve as well. Given the expectation of lower returns for the next decade, many people that planned an early retirement will have to join the others that will be working for a longer than expected timeframe.
Hi Jim – Excellent, excellent point about interest rates and I’m sorry I didn’t think of it! It was only a few years ago that retirees expected 5% returns on safe investments. They could have survived forever on those returns. Now they get less than 1%. That means that even if you have saved for retirement, you may still have to work. The idea that everyone should invest in stocks doesn’t work for retirees, especially those over 70. They realize that a major downturn could leave them financially impaired.
But getting back to your main point about changing circumstances, I think that’s another core reason to have some sort of post-retirement career. You never know when unexpected circumstances will force you to change direction. Having an ability to earn money can help with those turns and twists. But then with as complicated as life has become, I’m not sure retirement is even practical anymore. A better strategy might be to just get yourself to the point where you can live a more relaxed life.
Kevin, while I usually find you a voice of reason, in this case, I have to say that some of your examples for second-stage-of-life career possibilities seem a bit unrealistic. For example, becoming a skiing or golf pro? Is that really an option for the average person entering his or her fifties (or beyond) with a limited income? It seems kind of in the league of becoming a movie star (which is highly unlikely for anyone, much less a 50, 60 or 70 year old.) I don’t mean to be rude as I respect what you do. But I do feel that you weren’t quite on the mark with this one. Suggesting that someone should do something that he enjoys to earn a bit extra is one thing. Suggesting that a fantasy is a viable option is another, at least in my opinion…
Hi Suzy – I can see where such suggestions would seem a bit “off”. But there are a few people who are passionate about certain sports hobbies, especially golf, tennis and skiing, who it might work for. It certainly wouldn’t be me. But if you were sufficiently accomplished in such a capacity, it would be a real opportunity. You don’t have to be an Olympic athlete – you just have to be better than most people.
The purpose of the list that I provided was to get people thinking – what is it that you may be good at, even if you’ve never thought about it as a way to make money? One thing I’ve learned on the road of life is that people are making a living doing all kinds of things that most of us never think about. I’ve actually known people who have turned sports into such careers, so it isn’t something I pulled out of a hat. I’ve known people who have also made a living instructing/coaching people in areas like swimming, fishing, deep sea diving, aerobics, horseback riding – you name it. People are doing it all the time. What makes it easier is that there are senior citizens clubs/centers, resorts and swim/tennis/golf neighborhoods that create natural markets.
We’re going to have to think outside the box for career and business ideas, and where your passions are is very frequently where you find the answer.
Does that make any sense?