I’ve been reading several books on Encore Careers, second acts and the like. A few weeks ago, we reviewed Marc Freedman’s The Big Shift. Over a one-week break in Florida, I read Freedman’s earlier book, Encore, subtitled Finding Work That Matters In the Second Half of Life.
Work that matters
If you believe that living to 100 is a distinct possibility rather than a one-in-a-thousand outlier event, then it follows that financial planning needs to take these extra years into account.
All these books start with the premise that the baby boom generation may end up living a lot longer than they may have once imagined, which goes double for their own children and the generations coming after them.
Freedman’s Encore does suggest that a lot of American boomers (that’s the book’s focus) may need to keep working in part because of limited financial resources, but as the subtitle suggests, it’s mostly about finding “work that matters” in the second half of life.
There’s a lovely quote Freedman uses at the outset, attributed to Marge Piercy in the book “To be of use”:
The pitcher cries for water to carry and a person for work that is real.
A new stage of life
Freedman suggests there’s an entire new life stage between MidLife and what used to be called Full Retirement. This phase may begin after either an involuntary or voluntary departure from paid employment in giant corporate or government organizations. It could last 20 years, meaning there’s enough time to reinvent oneself and find an entirely new career, even if that means going back to school to qualify for it.
“The emerging reality looks like this: Retirement as we have known it is in the midst of being displaced as the central institution of the second half of life. It is being supplanted by a new stage of life opening up between the end of midlife and the arrival of true old age, a period that essentially amounts to the second half of life, at least adult life. And that’s just the half of it: The new phase under development is every bit as much a new stage of work.”
Funding Encore Careers
Freedman describes some Encore acts that were funded by raiding 529 plans, which are the equivalent of Canadian RESPs (Registered Education Savings Plans). Canadian RRSPs (like IRAs in the US) are similarly well-suited since the government has made it possible to tap retirement savings for higher education, as long as the money is eventually repaid.
All this also is strongly connected to the other blog category over at our sister site, The Financial Independence Hub, which we call Longevity & Aging. Read this post from last week on Why Longevity Changes Everything: Why you should think twice about Early Retirement.
Great online resources
But back to Encore. This is one book I’d suggest buying as an e-book because the appendix contains many pages of useful web links to useful resources in government, education, health, the non-profit sector and much more. I’ve touched on a few here:
Retirement Jobs: http://www.retirementjobs.com
Nonprofit Times: http://www.thenonprofittimes.com
Exploring Careers in Aging: http://www.exploringcareersinaging.com
Troops to Teachers: http://www.proudtoserveagain.com
The American Medical Association: http://www.ama-assn.org/ama
The Career Key: http://www.careerkey.org/
Seniors are now twice as likely to rely on their home equity to fund their retirement than before the financial crisis, says a Fidelity retirement survey. They’re also more likely to work in retirement, provided they can find employment.
Since 2005, the number of Canadian retirees relying on home equity to fund retirement has more than doubled from 14% to 36%, says the survey, commissioned by Fidelity Investments Canada ULC.
Conducted by The Strategic Counsel, the 10th Fidelity Canadian Retirement Survey of retirees or workers 45 or older also finds:
• Since the financial crisis, the number of retirees saying it has been more difficult than expected to retire has dropped from 28% in 2009 to 20% in 2014
• More pre-retirees expect to work full or part-time in retirement (62% in 2014 compared with 55% in 2005)
• An increase in reliance on savings held inside a RRSP or RRIF (58% in 2014 compared with 53% in 2005)
• Despite changing trends over the past decade, the vast majority (85%) of Canadian retirees have a positive outlook on life in retirement
Half retired earlier than planned
Fidelity says 48% of retirees polled had retired earlier than planned, often for involuntary reasons. Of this group, 19% had to retire early because of health problems. Another 9% attribute early retirement to work stress and another 9% said “work stoppage” was the reason for early retirement.
Of those retirees not working, one in five would like to work if they could. The main reasons for retirees not being able to work are heath (38%), feeling employers are not interested in employing retirees (23%) and not being able to find a job (15%).
Planning to work is not a retirement plan
“Planning to work in retirement is not a retirement plan,” says Peter Drake, vice president of retirement for Fidelity Canada. “Having a viable plan in place to generate sustainable income in retirement is arguably the most important aspect of retirement planning. Working with a financial advisor and setting goals for retirement is the best way to ease uncertainty and reduce stress around how to create the retirement paycheque. A good retirement plan should have flexibility in case circumstances change, as they often do.”
The survey of 1,390 adult Canadians was conducted online between October 22 and November 3, 2014.
Via Linked In comes this insightful article listing ten reasons to quit your job in 2015.
Click above link for the full article. I’ve reproduced the ten headings below, after which I make a few additional observations, based on my own transition in 2014 from employment (21 consecutive years of it.)
The bottom line is this is what Findependence (Financial Independence) is all about, and the raison d’être of this website. In fact, the cover of the US edition of the book to which this website is focused is very similar to the illustration to the left, except that the calendar date circled is Findependence Day.
As I note below, there may also be good reasons NOT to quit your job in 2015 but instead in 2016 or later. I wrote the original Findependence Day in 2008 but the day didn’t actually arrive until 2014, so you could say it was six years in the making. Sometimes, big life events need to be planned out that far ahead.
In any case, here are the ten reasons for quitting sooner than later.
1.) Work from Anywhere
2.) Do What You Love
3.) Make More Money
4.) Crush Boredom
5.) Express Yourself
6.) Gain Confidence
7.) Get Excited about Going to Work
8.) Explore Limitless Possibilities
9.) Be More Flexible
Lots of food for thought there. I’d also add to point 3 about making more money that the odds are you can keep more of the money you do earn, since self-employment has tax advantages that don’t generally accrue to salaried employees. Similarly, there should be lower out-of-pocket costs, such as commuting and parking, snacks and lunches etc.
As I noted when I blogged from Turkey in October, the Internet and mobile devices certainly facilitate “working from anywhere,” all of which relates to points 1 and 7 to 10 above.
“My boss is a slave driver”
The article doesn’t single out avoiding having a particular boss but that’s certainly a fringe benefit. When you’re your own boss, you can quip “My boss is a slave driver,” assuming you push yourself as hard or harder than any external boss would.
Of course, as many entrepreneurs have noted, business owners actually have multiple bosses: every client is in effect a boss and it can seem at times that so are suppliers, bankers and anyone else you depend on. Still, the freedom to decline assignments is a luxury few full-time employees enjoy.
But does this all add up to quitting your job in 2015? I’d have to say “Not necessarily.” If you’re in debt and have extensive financial obligations, just up and quitting may have severe consequences. If you’re debt-free and “findependent,” leaving a full-time job is a lot easier, particularly if it’s accompanied by severance or Employment Insurance. (Note that you may not qualify for EI if you abruptly quit: much better if you can engineer being laid off!).
Don’t forget that there are many good things about traditional employment. This is the second time I’ve been self-employed (the first was between 1984 and 1989) and both times I soon observed that the first thing you miss are paid vacations and sick days. Consider too the many benefits like health and dental plans and group insurance, and employer contributions on CPP or Social Security.
Think long and hard before acting, and plan in advance
As for the softer concepts like passion, confidence, creativity and the like, I suppose it’s all true but you don’t have to quit a job to enjoy those. Focused time spent on nights and weekends to creative projects, night school, and weekly events like Toastmasters, can all provide those things without having to quit your job.
As with anything, you need to plan well in advance. If you enjoy your work, have a congenial boss and compensation, by all means investigate entrepreneurship but check with your spouse and family and your financial adviser to see whether quitting in 2015 is realistic or even advisable. It could be that 2016 or 2017 might be better in your circumstances.
If on the other hand, you hate every moment at work, your boss is the proverbial jerk, you’ve not had a raise in years, and you are generally unappreciated, clearly you have little to lose and much to gain by taking the plunge sooner than later.
If you need help to motivate yourself to quit there are various blogs and podcasts on the subject. One is this from Freakanomics on the upside of quitting. Or try this one or just Google “quit blogs” or “quit podcasts.”
On Friday, veteran CBS broadcaster Andy Rooney passed away at the age of 92, just a month after retiring. This news came too late for a package of stories in the FP this weekend about retirement but it could easily be added as an example. As I wrote here, if you have passion about your work, age is almost irrelevant, assuming you still have your marbles physically and mentally.
When I flagged this story on social media, one family member seemed to be relieved by this theme, since her own finances are in such a state that she doesn’t expect to retire any time soon. But even if you take the case of Andy Rooney to heart, that doesn’t mean you should see this as a license to stop saving and investing for the future.
For one, there may indeed come a time when you do lose your marbles — physically or mentally or both. The years when that occurs will be costly and you won’t be generating new income.
Second, even if you’re ready, willing and able to work (As the EI forms ask), you may not always be able to find a willing employer.
So even if you don’t think you’ll ever retire, you still need to shoot for a degree of Financial Independence. The book to which this web site is devoted makes continued reference to the distinction between Retirement and Financial Independence, or what I call Findependence.
In short, plan to work as long as you’re passionate about your calling, even into your 90s. But that doesn’t mean you can take a pass on saving for the future. It’s still prudent to cut debts and maximize pensions, RRSPs/IRAs, TFSAs/Roth plans and even keep adding to your taxable accounts.
— 61 —