Encore career gives boomer hope of retiring

The Bakersfield Californian
April 20, 2012

Couples often disagree about if and when they should retire from jobs that have maintained their lifestyles for decades. Shaping retirement as a transition into an “encore” career can be a reasonable compromise to help resolve these disputes.

Consider my clients, who I will call Sally and Tom. In their late 50s, the couple has been married for about 30 years. They both work for public agencies. When they retire, each will receive pensions and Social Security checks.

Sally has worked for her public agency significantly longer than Tom has worked for his. As a result, her income at retirement age will be slightly larger than Tom’s. Both also will receive Social Security benefits. Sally likes her job and her present income. Likely she will work until her “full retirement age” to maximize her benefits.

For whatever reason, Tom doesn’t like his job. Sally is pressuring him to work overtime whenever possible to maximize his pension, since he will only have 20 years of service, compared to her 30, when he turns 60.

Sally also wants Tom to work past 60, pointing out how much larger his pension and Social Security checks will be. If he retires at 60, he will receive about $36,000 – a combination of his pension and projected Social Security, which he would begin receiving when he reaches 62. If he starts drawing from his investments at 60, it could provide about $350 per month, or $4,200 per year, to supplement his pension until he reached 62.

The dilemma: Balancing Sally’s correct conclusion that the couple would be financially better off if Tom delayed his retirement, with Tom’s desperate desire to quit his job.

I asked Tom: With the certifications he holds relating to his present job, could he find another job or transition into an encore career after retirement that would pay about $1,000 a month? If he could, that would keep him from tapping his investments until his Social Security checks started arriving when he turned 62.

Tom was not 100 percent sure he could do that, but he wanted to try, rather than continue working at his present job.

And if Tom found another job and could work past 62, he could delay taking “early” Social Security, resulting in that source of retirement income growing. If he started his own business or consulted, self-employed wages would add into Social Security and “grow” the benefit, as well.

Although still disappointed by Tom’s insistence on retiring from his public agency job, Sally was satisfied with her husband’s plans to keep working after retirement, at least part time.

In the end, Tom still has a few years left in his present job before he reaches 60. He should use those years to prepare for “after retirement” job-hunting, or to explore encore career opportunities.

For a variety of reasons, many boomers, like Tom, are finding it necessary to work beyond their “ideal” retirement age. Encore careers, or part time jobs can stretch retirement incomes.