Retirement is Dead! Long Live Continuous Reinvention!

---

According to the American Heritage Dictionary, retirement is the “withdrawal from one's occupation or position, especially upon reaching a certain age.” Note that the definition uses the word “withdrawal” and not “end.” The definition of “withdrawal” uses the words “retreat” and “removal.” Again, not the word “end.” That should be instructive for us in the 21st Century.

Retirement is not an end. We do not expire. Ageism in society notwithstanding, we have choices:

· Fund retirement in our 50s to support ourselves in our 80s and 90s. Or don’t.

· Be curious and embrace lifelong learning to nourish our brains. Or don’t.

· Invest in our health so that our bodies will stand a chance of taking us the distance under our own steam. Or don’t.

We all have circumstances. We all have obligations. But with few exceptions, we also all have agency. And, as William H. Johnson wrote, “If it’s to be, it’s up to me.”

I’m heartened by the nytimes.com series highlighting the “unstoppables”–people who keep working like Martha Stewart, Joan Collins, and Giorgio Armani. I’ll add Carol Burnett, Jane Fonda, Lily Tomlin, the late Betty White and Madeline Albright. They’re not genetically lucky. They’re people who can do things in their eighth to tenth decades because they never stopped in their fifth, sixth and seventh. They simply changed how they approached their “work.”

I can offer two thoughts to this conversation. First, if you can’t afford to stop working for income, but you don’t like what you’re doing, plan to do something else in your next decade. Give yourself at least three years to grow your idea while slogging through your current employment. (Like seeds planted in a garden, your business pipeline will sleep, creep, and leap.) The sooner you put out a shingle, the sooner the clock starts ticking. And, if you’re shy and don’t yet have the strength of your convictions about your success, refer to it as your “retirement activity.”

I have a webinar coming out soon titled “From W-2 to Solopreneur” to guide you through the logistics of becoming a 1099 contractor/consultant. Look for it.

Second, if at some point you do plan to stop working for income, consider retirement as a process and not an event. There’s lots of data pointing to the regrets of those who went into retirement without a plan. Some of them even went back to work. This process is what I call a glidepath, a set of intentional, well thought out decisions that can keep you active, productive and healthy in your later decades.

Try this:

There will be a time, if you have saved diligently, when you can stop saving for retirement. This is because your money will now compound over time until you start the distribution phase. The trick is not to start distribution immediately after you stop saving.

Let’s say you stop saving at age 55, and you can delay distribution until age 67, or maybe even 70.

That means you’ve just put $30,500 or more back into your pocket every year leading up to your distribution target ($23,000 + $7,500 catch-up contributions your 401[k] annually).

At 55, maybe your corporate employment is giving you a headache; you no longer have patience for the “kids” to whom you report, and they don’t appreciate you. Simply put, the corporate grind is just that: a grind. It’s no longer fun.

The good news is that by delaying distribution and continuing to work, you’ve freed yourself to take a position elsewhere that pays you $30K less each year, with less aggravation and the same financial outcome on the “other side.”

By the way, this is hard to do and worthy of a totally separate discussion about transitioning from being someone with credentials, authority, and respect to becoming a “functional” player.

But damn, it sure does reduce our stress.

There will be a time when the only things keeping you in the workplace are healthcare coverage and corporate benefits. I highly recommend using other people’s money to pay for your health insurance until age 65, when you qualify for Medicare. There’s no crime in taking a job strictly for benefits. Maybe you even put benefits before income as you seek your next position … because you can.

Again, this time between 56 and 67 is about flexibility: reducing your stress, increasing your vacation time and ramping up the activities you want to pursue in “retirement.” Use it, enjoy it, and make it work for you.

There will also be a time when you need to claim your Social Security benefit. Everyone has an opinion on when you should take it, and I’m no exception. If you are a college-educated woman who uses healthcare, you will need every penny of your benefit. I do NOT recommend you take a “permanent haircut” and collect early unless you absolutely must.

That said, I want you to know this: Retiring and claiming your Social Security benefit are not the same thing. It’s important to disassociate those two dates. There is a range of dates–from age 62 to 70–that you can choose to begin claiming Social Security, and that date may NOT correspond to when you stop working for income.

When you realize that the annual increase in Social Security benefit above your full retirement age (FRA) is guaranteed and nothing else is, it may make sense to work and earn $36,000 per year to replace a $3,000/month Social Security benefit for a few years. Thus, in addition to asking yourself when you will claim Social Security, you may also ask yourself when you will stop earning income from employment.

Let’s say you earn an additional $36,000 annually from ages 67 to 70, while spending down a little of your IRA. Then at 70, you can decide whether or not to start spending down your assets. In addition, you will claim your 124% Social Security benefit, thanks to an annual 8% bump you’ll get because you waited to start claiming it.

I have proposed this to multiple clients who were short on savings for retirement and dismayed that, due to stress, gendered ageism, or competition, they would not be able to remain in the workforce until they could afford to retire fully. The best way to solve for that is to design your next thing and own it.

Aside: I love fabric arts, and I’m amazed by the community of artisans who also sell patterns, teach classes, and do affiliate marketing for manufacturers. It’s impressive and resourceful. What’s even better about this market is that revenue can be multiplied without adding precious hours of work. Just like all of us, these artists only have so many hours in a day or week, so having multiple streams of income–some of which come with little additional effort–are invaluable

For me, I’ve always embraced continuous reinvention. I’ve even been teased for it by my girlfriends. But opportunity favors preparedness, I’m told. And I’ve always been prepared to move on when the rules of the workplace no longer favored me. Maybe the startup failures of my youth made me realize earlier than most that my loyalty needed to be to myself and not to an employer. (I worked in the nascent high-tech industry of the early 1980s, and my first three employers failed.)

Who knows what brought me to this place? But I do know this: We all have more runway than we think, and we can tackle the challenge of longevity in two ways: We can save more, AND we can continue to earn income for a few more years to avoid spending down too early or depriving ourselves of our full Social Security benefit.

By approaching it both ways, we will have more satisfying retirements reinventions. #NotYoungNotDone #WeRescueOurselves #MoreRunwayThanYouThink

Reading: The Unstoppables

Copyright © Madrina Molly, LLC 2024. All rights reserved.

The information contained herein and shared by Madrina Molly™ constitutes financial education and not investment or financial advice

Sherry Finkel Murphy, CFP®, RICP®, ChFC®, is the Founder and CEO of Madrina Molly, LLC.

---

Related Posts