Careers After Retirement

By Laura Koss-Feder

A WHOLE NEW LIFE MAY BE BECKONING--IF YOU PLAN IT

Robert Sarnoff, 60, of Belle Harbor, N.Y., says his friends have dubbed him "the poster child for retirement." A former high school art teacher and assistant principal, Sarnoff left the New York City school system five years ago, and since then has worked part time directing a program that teaches art and computer skills to the homeless. But that's just the start. Sarnoff has showcased his paintings at two art exhibits, written five plays that were produced off-off-Broadway and acted in five independent films. "Even though I loved teaching, I knew in the back of my mind that I wanted to explore my creative side," says Sarnoff. As varied and fascinating as his recent achievements are, however, none can be described as lucrative.

So how has he afforded it? Sarnoff's pension is worth $36,000, he has made a number of successful stock-market investments, and his wife's salary as a school administrator adds $80,000 annually. "We're not millionaires, but since we always saved our money and invested wisely," says Sarnoff, "I knew we would be able to swing my retiring when I did."

Alan Ouimet, 61, of Madison, Conn., feels the same way. He embarked on a charitable second career 10 years ago, after retiring as a special agent with the FBI. With a pension worth $41,000, or 70% of his previous annual salary of $59,000, the security of a $250,000 life-insurance policy and his $280,000 home as assets, Ouimet began running the Franciscan Family Apostolate Inc., a Guilford, Conn., charity that is helping 1,100 impoverished families in India rebuild their lives. His current salary: around $30,000 a year. "I enjoyed my 31 years with the FBI," says Ouimet, the father of four grown children. "But the work I do now is fulfilling in a totally different way."

MORE AND MORE BOOMERS ARE TALKING TO FINANCIAL PLANNERS

For Ouimet, Sarnoff and a growing number of professionals who are retiring in their 40s and 50s to embark on second careers, a whole new life is just beginning. Their motivations are as individual as the people involved, but from a macro-economic point of view, they represent the baby-booming future. As the giant demographic bulge of the boomers moves deeper into middle age, many of them are severing connections with the institutions where they have worked for decades and are striking out afresh, while they are still hale enough to do something rigorous and challenging with the rest of their lives. "People in their 50s are starting to examine today's professional climate and are asking themselves what else they can be doing," says Deborah Arron, a Seattle career consultant.

The common thread is that the members of this new boomer bulge have the financial stability to retire comfortably and interests and passion that are leading them in new directions. About one-quarter to one-half of all clients seeking the help of financial planners these days are early retirees between the ages of 50 and 55, notes Michael Chasnoff, a Cincinnati, Ohio, financial planner and chairman of the National Association of Personal Financial Advisors (NAPFA), which represents fee-only planners. And of the 20 million or so self-employed people in the U.S., 41% are in the 45-to-64-year-old age group, says Bennie Thayer, president of the National Association for the Self-Employed.

The early retirees are by no means all rich. Edith Flowers Kilgo, 52, of Jonesboro, Ga., is a former free-lance writer and a university-press editor at Georgia State University who retired in 1994 to share her special expertise: saving money. Kilgo is publisher of the bimonthly newsletter Creative Downscaling, in which she passes on ideas gleaned from her own life-style, including the best way to purchase used cars, plus tips on buying clothes (wait for end-of-season sales) and making your own snacks. "I grew up in poverty as the daughter of sharecroppers," says Kilgo, whose husband Randal, 55, retired in 1997 after 32 years with the U.S. Postal Service. "But my parents were smart and frugal and taught me how to save money. This kind of knowledge allowed us to retire early and still be secure financially." The Kilgos are earning about 80% to 90% of their previous income.

TIMING IS IMPORTANT, AND YOU SHOULD LOOK BEFORE YOU LEAP

One of the first tricks of launching a new career is knowing when to fold the old one. "Examine if you can really afford to do this, take an honest look at your skills and abilities and hook up with a good financial planner before you run out and do something too quickly," says Sam Cotton, 52, of Arroyo Grande, Calif., who retired in 1996 from his job at Pacific Bell. Cotton wanted to retire two years earlier than he finally did. "I looked at my financial options and realized that it would not be in my best interests," he says. In his two remaining years on the job, he got a promotion from repair technician to business-marketing manager but then was told he had to relocate to San Francisco. Not wanting to leave the area he had called home for 22 years, Cotton opted for a $400,000 cash buyout. With the help of a financial planner, Cotton learned that he and his wife Stacy, 46, who earns about $55,000 a year as a nurse, not only could stay put but also had enough assets to move into a bigger home. He then gambled on a new career--as a mortgage banker working just on commission. Cotton expects to top $60,000 in earnings this year. That's what he was making when he left Pac Bell.

Another important preliminary condition for plunging into a new life is self-awareness. "Be honest with yourself," says Robert Wacker, a San Luis Obispo, Calif., financial planner who worked with Cotton. "Are you the kind of person who wants to travel to Europe after retiring, or would a trip to the lake to fish be enough?"

Then do the numbers carefully. Assuming a conservative rate of return of 7% to 8% on investments, you should plan to be able to live off 4% of your assets, says Ray Russolillo, director of personal financial services with PricewaterhouseCoopers in New York. About a year before you retire, you may want to switch some of your portfolio to more conservative investments, says Paul Westbrook, a Ridgewood, N.J., financial planner. Total up your annual personal expenses--such as rent or mortgage, utilities, food, health insurance, clothes, car, entertainment--and plan to have liquid assets--such as Treasury bills and money-market mutual funds--available to cover three years' worth of those demands, Chasnoff recommends.

"If you start eating into your principal before you are 70, you're going to find yourself in trouble down the road," Wacker cautions. "With inflation at just 3% a year, you have to think that in 10 years, it's going to cost you 40% more to live the same way you're living now."

RETIRING EARLY WILL PROBABLY MEAN A DROP IN PENSION

Of course, having a pension--which can sometimes provide a substantial percentage of your current salary--adds a nice cushion for early retirement. Pension plans typically pay 1% of salary for every year of service (e.g., if you worked for a company for 20 years, your pension would be 20% of your annual salary), although government and union jobs tend to have much loftier pensions. "But remember that you will earn less pension with an early retirement," Westbrook points out. Plans can pay as much as 35% less if you retire at 50 or 55, vs. 65, Westbrook says. Again, this can vary according to the job you are leaving.

Then get good help, but keep in mind that any outside expertise you seek doesn't come free. Depending upon the complexity of your portfolio, a basic financial plan will run between $500 and $3,000, according to NAPFA. If you want your assets managed on an ongoing basis, the financial planner will charge an additional 1% or so of the total assets. Many in the financial-planning industry consider fee-only planners, who do not receive commissions on investments they recommend, to be the most objective in their suggestions.

Once you decide to retire early, change your life-style to meet your new circumstances. In other words, cut back. This can mean using coupons at the supermarket, eating dinner at home instead of going to a restaurant, and buying some clothes at thrift shops, says Marc Eisenson, co-author of the new financial-management guide Invest in Yourself (John Wiley & Sons; $22.95). This also means cutting back on debt by paying off mortgages, winding down car payments and paying off credit-card bills. "The less debt you have, the more freedom you have," Eisenson says. "You don't have to earn the maximum amount of money if your overall expenses have been lowered."

Assuming that the numbers place you in the black, you then have to decide what to do in this new chapter in your life. Don't wait for inspiration. Experts advise getting some experience in a career field or business area that interests you a year or so before you plan to retire. This can be done many ways, including a part-time job or volunteer work. "If you want to own a coffee bar, get a part-time job dishing out caffe latte and see if it's for you. If you want to be a teacher, volunteer in a school," says Richard Knowdell, executive director of Career Planning and Adult Development Network, an international organization of career counselors based in San Jose, Calif.

A CAREER SHIFT MAY TAKE YOU BACK TO SCHOOL

You may need to hit the books or get some additional training at a local college, or even earn a certification or accreditation, depending on what you're considering. That's the way Irwin Weinstein, 57, of Wyckoff, N.J., moved from the corporate world of IBM, where he worked for 29 years as a program manager, to a classroom at Elizabeth High School in New Jersey, where he's now a math teacher. After getting a buyout package in 1991 that included a year's salary, a full pension worth one-third of his salary and a guarantee of continued corporate-paid medical benefits for himself and his wife Judith, Weinstein went to the Teaneck, N.J., campus of Fairleigh Dickinson University for a teaching certificate. With a background in math and science, a longtime interest in teaching and a desire to spend more time with his wife and seven-year-old daughter Susan, Weinstein took a big pay cut--from $100,000 to $35,000 annually--to pursue his new career. "I now have the schedule and hours available to spend time with my wife and young daughter, which is very important to me at this point in my life," Weinstein says. "This was a good opportunity for me, and the right time in my life to make this change."

For people like Weinstein, knowing what to do next is a snap. But others may not be that sure. For them the answer is the same: better to decide than drift. "Even if you don't know exactly what you should do after retiring early, examine your strengths and desires and take it from there," says Arron. This is what Sam Cotton did. He enjoyed sales and marketing and always considered himself a "people person." When a friend offered him the chance to work for her mortgage-banking firm, Cotton had a good feeling about the career change, even though he had never considered the idea before.

IS IT YOUR NEW CALLING TO BE YOUR OWN BOSS?

"Know what kind of innate skills you have that are easily transferable to another profession," Cotton says. "For instance, I knew I could learn the mortgage-banking business. But enjoying working with people is something you just can't learn if it isn't there."

Others may find that their true calling is to be their own boss. If so, it's best to have earned some experience running your own business, maybe even doing it part time before you retire early from your full-time career. That was Alan Ouimet's route. He began running his charity part time in 1971, so he had 17 years of experience and knowledge when he made the 1998 switch from his job at the FBI. "If you have always worked for someone else in a structured setting, you have to determine if you are self-motivated enough to get out of bed in the morning and get right to work on your own," says Bennie Thayer of the National Association for the Self-Employed. "Then you have to ask yourself if you are physically and mentally ready to take on the competition." Entrepreneurs age 50 and over tend to be more successful because they are more mature, more stable financially and better able to judge how much risk they should take, Thayer notes. The downside is that they can be less flexible and find it harder to change work habits.

Of course, you also need to analyze your product or service to make sure there is a viable market for it, Thayer adds. Put together a business plan for your new venture about two years before you expect to retire, Westbrook says. And examine the tax ramifications, lack of stable income and costs involved in running your own show.

If you're unsure which direction is best for you, a career counselor might help. Expect to pay anywhere from $65 to $100 an hour for a professional career consultant, Knowdell says. With more and more people retiring early, about 20% of career consultants' clients are 50 and over, he adds.

Whatever path you take, networking with others can provide valuable job contacts. Join trade or professional associations in your field. A growing number of college alumni associations have databases that allow them to match up graduates who are looking for career guidance and job contacts from other alumni. About 8,000 graduates of UCLA, out of a total of 276,000, use the university's alumni database annually, says Cindy Chernow, director of the institution's five-year-old alumni career-services department.

Another place to turn to for job contacts is a temporary-staffing firm, which can find short-term assignments in your area of interest. About 10% of those employed by such firms are 55 and over, notes Richard Wahlquist, executive vice president of the National Association of Temporary and Staffing Services. Some of the biggest industries looking for temporary professionals include law firms, engineering companies and information-technology firms. "It's not uncommon today to see companies looking for temporary CFOs or doctors or accountants," Wahlquist says.

Temporary-staffing firms don't charge job seekers a fee; they get their money from the hiring companies. They can assess your skills to determine if you need any further training. Wahlquist recommends starting with these firms about six months before your planned retirement.

Whether you hang out your own shingle, work part time for a new company or go into a fresh field, almost everyone agrees that the key to personal success and happiness in retiring early is to do something you are passionate about--but with enough assets to cushion this renaissance. "If you didn't do something when you were young, don't resent it," says Sarnoff. "Just go for the dream."