The “Glidepath” to Semi-Retirement

Depositphotos_11509531_s-2015My latest MoneySense Retired Money column looks at a concept called “The Glidepath” approach to semi-retirement. Click on the highlighted text for the full version, which is headlined How to Transition Into Retirement.

The “Glide Path” is a term used by veteran and now semi-retired financial advisor Warren Baldwin. At 66, Baldwin still works part-time as a senior vice president T.E. Wealth, working out of Oakville, Ont.

When used in the context of airplanes and flight, glide path is a familiar image that Baldwin’s clients easily understand. His own “glide path” to semi-retirement began three and a half years ago. “Maybe it takes five years because it takes two years to plan and get your mind around it. For me, it was coming up three years ago, when I was 63. The timing was right.”

The “Work Optional” stage of life

Another way to describe this is the “Work Optional” stage of life, a term popularized by Emeritus Retirement Solutions’ Doug Dahmer, who is a frequent contributor to the Hub’s “Decumulation” pages. See for example, this post.

See also a recent two-part review of Victory Lap Retirement by NestWealth.com’s Kate Smalley that also focuses on this “Work Optional” theme: Work while you play, play while you work: the case for Semi-Retirement. Or my Hub blog talking about the same review: The Work Optional Stage: Work because you WANT to, not because you HAVE TO. Read more

Can’t afford to retire? Semi-retirement is more fun anyway!

otm-boomers-181016_frame_704My recent blogs on Semi-Retirement seem to have struck a chord.  After I wrote this online piece for MoneySense.ca: Semi-Retirement is the Future (and a version here on the Hub, under the headline The Next Boomer Wave: Semi-Retirement), I was interviewed by Peter Armstrong at CBC TV’s On the Money Show.

The context of the CBC’s Tips for Boomers segment was in part my new book Victory Lap Retirement, written with Mike Drak, who describes it as a “retirement book about NOT retiring.” The first of several excerpts ran in the Financial Post  a week ago Monday, and the second on October 31st.

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CBC’s Peter Armstrong (Twitter.com)

After the CBC segment aired, Peter published his own blog covering similar territory, which you can find under the headline You’re Never Going to Retire — and Here’s Why. He picked up on my statement that the Millennials are going to live a long time and therefore will have an 80-year investment time horizon. I mentioned that a few weeks ago, when I gave a talk to T.E. Wealth in Ottawa about financial advice for Millennials.

Long-lived Millennials need to be mostly in stocks

Citing the book The 100-Year Life (reviewed on the Hub here by Mark Venning of ChangeRangers.com), I suggested that anyone with an 80-year time horizon should be 100% in equities and certainly avoid fixed-income investments that pay virtually zero rates of interest net of inflation. I subsequently wrote a blog for Motley Fool Canada that came out of the T.E. Wealth session: it features an investment veteran in his late 60s who is himself still 100% in stocks and sees himself as having a 50-year time horizon even now. See Stock Pickers Rejoice: Markets aren’t Efficient, Investors aren’t Rational.

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Global study finds 15% of Canadians plan never to fully retire but many will embrace semi-retirement

nonameA global study on retirement finds 15% of Canadian workers don’t expect to ever fully retire, but many plan to downshift gradually into semi-retirement.

Compared to 14 other countries surveyed, Canadians do well in reaching their later-in-life goals, even if they have to spend all their wealth and leave less to their children.

HSBC’s latest global report — The Future of Retirement, Choices for later life – surveyed 16,000 working-age and retired people, including 1,000 Canadians.

When asked about their attitude towards spending and saving, 27% of working-age Canadians say “spend all your money and let your children create their own wealth.”

The study also found Canadian retirees are much more likely to reach their later-in-life goals than some of their counterparts in other countries. 44% of Canadian retirees have reached “at least one of their retirement hopes and aspirations,” well above the global average of 24).

Mixed sentiments on semi-retirement

Canadian retirees are among the most likely to feel forced into semi-retirement, but almost half of those still in the workforce are planning for it. Only 17% of today’s fully-retired Canadians say they semi-retired first, versus 45% of working-age respondents who say they plan to semi-retire before taking the traditional full-stop retirement.

While semi-retirement can be forced on some as employers look to downsize older more expensive workers, many full-time workers actually aspire to semi-retirement. 15% of Canadians who are retired say they made the decision to semi-retire due to a lack of employment opportunities later in life. Only Australian retirees (17%) reported a lack of job prospects in greater numbers than Canadians, and respondents from both countries were well above the global average (10%).

“This latest research suggests that older Canadians and those approaching retirement age may also be feeling the pinch of underemployment at time when saving for the future is often at its most crucial,” said Betty Miao, Executive Vice President and Head of Retail Banking and Wealth Management, HSBC Bank Canada, via a press release distributed Wednesday (April 29).

Semi-retirement can also be forced on mid-career workers

Even among younger workers, 10% of survey participants between the ages of 45 and 54 admit their shift into semi-retirement wasn’t their personal choice. HSBC suggests that in the post-downturn job market, many experienced workers are being overlooked for full-time positions. In fact, half of all semi-retired respondents globally say they changed careers when they stopped full-time work. HSBC says some of these will be high achievers who reached their career aspirations and financial goals before retirement, but the figures “also point to a pool of wasted potential among experienced employees.”

The research also shows a major shift in how Canadians plan to retire in the future. While only 17% of those now fully retired say they semi-retired first, 45% of working-age respondents plan to semi-retire before taking full retirement. Around the world, an average 26% of working-age people plan to semi-retire at some point.

Miao says that with expected shortages of skilled labour in some sectors and professions “career opportunities look bright for at least some of those planning to work into their golden years.”

The full global and Canadian retirement survey reports and online retirement planning tool are available online here.

Where do you want to semi-retire?

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Photo by Jonathan Chevreau

Once it’s no longer necessary to commute to and from a downtown or suburban corporate job, where in the world do you want to be? I touched on this in a recent MoneySense blog on reverse mortgages. Most full retirees know they want to be close to hospitals, universities and libraries. They don’t need to be as close to the downtown core or even be near major transit systems though that can be a nice extra if they value city culture and/or friends and family still live there.

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Every town needs a library

Throughout my personal Findependence journey this summer I’ve been posting photos of the community I live in: Long Branch, Ontario. It’s closer to downtown Toronto than its trendier neighbour to the west, Port Credit. The beach photo below, for example, I put on social media after biking along the (relatively) new boardwalk at the foot of 41st Street. As I commented at the time, at first glance you may think the photo is of some exotic beach somewhere in the south — it’s hard to believe it’s a mere 15-minute GO train ride from downtown Toronto. When I had one-hour commutes either to Don Mills or Bloor & Sherbourne, it sometimes seemed our home’s location was a bit of an inconvenience. It took a 12-minute car ride (or bus) just to get to the subway, which is why the three members of our family have three cars (though the youngest member is abroad so the car is on blocks).

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Long Branch boardwalk: 15 minutes from downtown Toronto. Photo Jonathan Chevreau

Now that I’m semi-retired (that’s what I’m calling it for the balance of the summer, anyway!), I’ve really come to appreciate the community in which we live. In addition to the beach and bike paths that go from Mississauga to downtown Toronto, there’s a post office (convenient in my line of work), a library (ditto!) and quite recently a Starbucks set up shop: always a good sign for impending gentrification. The photo below of the path by the lake is the indirect route from the Starbucks to my home, during which time I generally carry back a library book or two that was on hold, and listen to podcasts. Not a bad commute!

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The brutal commute: photo J. Chevreau

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Starbucks has landed in Long Branch

Mind you, one couple I know on our street doesn’t like all this change and are preparing to beat a retreat for small-town Ontario. Not us: for now, this place is perfect: it’s a great base for full-time employment or part-time and if and when it comes time to “fully retire,” it has all the necessary amenities, some of which I’ve shown in scattered photos in this blog. If you’re still on the “before” end of Findependence, you might want to think about the place you want to be once you do achieve it. Hopefully this blog gives you a few ideas of what’s important.

I’ve not included photos of medical facilities but clearly that should be a consideration too: there are walk-in clinics and hospitals here. Local universities or colleges are a nice extra too: my parents enjoyed their last years in London, Ontario because they were right next door to the University of Western Ontario and took full advantage of it.

Get ready for the Shift

theshiftA big aspect of planning for retirement is health and longevity. Earlier this summer, I devoted a blog to Mark Venning of ChangeRangers.com. Venning helps clients prepare for two things: making the shift from employment to entrepreneurship, and also to help prepare for a future of extended longevity and life expectancy. That’s “why the word ‘Retirement’ doesn’t work for me. It’s about longevity planning,” he told me, “My core message is plan for your longevity, not for retirement.”

One of several book recommendations from Venning to his students is a book by Lynda Gratton called The Shift: The future of work is already here.  It’s not brand new: my copy was published by Harper Collins in 2011. But it’s still relevant, especially to the generation of baby boomers, myself and Venning included, who are grappling with the issues of retirement planning.

Gratton, who is a business school professor, identifies five forces that are shaping the world of work, plus three “shifts.” They’re all worth summarizing here.

The 5 forces shaping our future

1.) Technology

2.) Globalization

3.) Demography and Longevity

4.) Society

5.) Energy Resources

The 3 shifts

1.) From shallow generalist to serial master

2.) From isolated competitor to innovative connector

3.) From voracious consumer to impassioned producer

For baby boomers and others who are nearing retirement, or moving into semi-retirement or self-employment, almost all of these forces and shifts need to be taken into consideration. In earlier blogs like this one — Never Work Again —  we looked at the revolution in Internet marketing, which is based on both the Technology force and Globalization. When you can run a web-based business from anywhere in the world merely with a laptop computer and a smartphone, you know you’re embracing these forces.

Gratton’s points on demography and longevity seem particularly apt: this was the topic that most fascinated the team of researchers she tapped into for the book. “We quickly understood that technology is changing everything and will continue to do so, and that natural resources are depleted and carbon footprints must be reduced,” she writes. But demography and longevity “is intimately about us, our friends and our children … It’s about how many people are working, and for how long.”

The dark side: some boomers will grow old poor

In 2010, when Gratton was writing the book, there were four distinct generations in the workforce: the Boomers’  parents, the Boomers, Gen X (born between 1969 and 1979) and Gen Y (1980 to 1995). And coming up is Gen Z, born after 1995.  Gen Y will be ascendent in the workplace by 2025 but increasing longevity means the Boomers and Gen X will still be hanging around, wanting to work and contribute in some capacity well into their 60s, if not beyond. Gratton also warns that “some baby boomers will grow old poor,” particularly if they don’t respond to the gift of extended longevity by embracing the forces and shifts that are confronting them.

Because of globalization and technology, the privilege of being born in North America may no longer be sufficient advantage for those who don’t embrace The Shift. Books like The Laptop Millionaire describe how those with wealth can take advantage of outsourcing: for example, hiring English-speaking Filipinos as full-time virtual assistants for something like $250 or $300/month. There is a dark side to these shifts: those not equipped to embrace change increasingly will have to compete for jobs or contracts with people half a world away who are technologically sophisticated and willing and able to work for much less than North Americans.

Gratton devotes big chunks of the book to fictional scenarios of the near future of work, some of them pessimistic, some of them optimistic. All in all, it’s well worth reading. It reinforced my own belief that “If you’re not sure whether you should retire or can afford to do so, then just keep working, preferably in a congenial line of work you can continue to practice well into your 70s.”

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