Some years back I remember hearing a fictional story of a businessman trying to convince an islander of reasons to go to work as a regular employee. The islander who was quite happy relaxing in the sun and living simply off the land did not understand reasons to do this. The businessman explained that, after many years of work and saving, the islander, now an employee, could finally retire. The islander asked what that was. The businessman further explained this was when he could finally stop work and live off the land and relax in the sun. The humorous story had a point. Decisions what to do with one’s life are highly personal and very individual. What works for one does not necessarily work for another.
So, today the question for many in the “boomer” age group and for some younger and older is whether to continue to work at jobs they have become accustomed to or retire or possibly something in between. The pandemic closed some options but also made it easier for those contemplating retirement to decide whether it should begin now or later or somewhere in between. A “Forbes” article by Aviva Wittenberg-Cox — “Is the Great ‘Resignation’ Actually a Mass Retirement?” — suggested the trend referenced as the “Great Resignation” could really have been a massive move to retirement. One question could be “is it really necessary to choose ‘all or nothing?’” Stated alternatively, could you keep one metaphorical “foot” in the businessman’s world and one in the islanders?” In a time when it seems almost everything is being reinvented, why not?
Wittenberg-Cox noted that “The traditional retirement is a move from 100% employed to 100% retired. Overnight.” She suggested as an alternative that employers could “flex the model and offer employees a range of flexible employment options that can taper over time…” The benefit to employers to retaining experienced workers in some capacity is obvious. Losing an entire work force and training new employees takes time and effort. As to employees who have expertise and experience, I have seen many return as consultants or assuming control in a related field that keeps them involved and stimulated but not overwhelmed. The other benefit to keeping one foot in is to deal with financial uncertainties than the “100% retired” model might not address. Obviously there are huge differences for individuals and for couples regarding retirement with some retirees comfortably fixed and others not so much.
• Financial considerations in retirement — when do you take social security?
A “Washington Post” article among others addressed Social Security as a way to deal with financial uncertainty in retirement or semi-retirement. The author, Andrew Van Dam, “The latest twist in the ‘Great Resignation’: Retiring but delaying Social Security,” concluded “For better-off Americans, the pandemic economy created some of the strongest incentives to retire in modern history, with generous federal stimulus, incredible market gains, skyrocketing home values and health concerns drawing many Americans into early retirement…The surprising twist? Many of these retirees also opted to put off claiming Social Security benefits…”
The general impression these days is to delay taking Social Security if it does not cause too much of a hardship. You can take Social Security as early as age 62 but could boost your benefit 76% if you wait until age 70. The difference between taking it at what is now full retirement age (66 +) and age 70 is 32%, a fairly generous secure rate of return. This may also be relevant to your spouse’s financial survival if your spouse earns less than you since if your Social Security is higher on death than your spouse’s, she (or he) may claim on your higher benefit.
• How do you figure how much you need to live comfortably?
If you have a trusted financial advisor you may be able to project well into your future making, however, certain assumptions. Two of the greatest are —how long are you likely to live and what is the likelihood you or your spouse will need serious long term medical intervention before you die. You also need to set reasonable goals and expectations. Do you want to travel or mostly remain at home? Do you plan on gifting either to family members or charity and amounts.
So what do you do? You make reasonable assumptions and build them into your plan. If conditions change, you change the assumptions. We work on this with clients. It is the new way.
Janet Colliton, Colliton Elder Law Associates, PC, is a Certified Elder Law Attorney and limits her practice to elder law, retirement, life care and special needs planning, Medicaid, estate planning and estate administration and guardianships and is located at 790 East Market St., Ste. 250, West Chester, 610-436-6674, [email protected] She is also, with Jeffrey Jones CSA, co-founder of Life Transition Services LLC, a service for families with long term care needs.