Recent retirees and people about to wrap up their careers often find themselves asking: Now what? Fortunately, there are many options for retirees looking for their next challenge. You can continue to work, move into a new career, volunteer, or even go back to school.
Your decision might hinge on whether you can afford to fully retire, especially as home values continue to fall in many areas and a volatile stock market chips away at 401(k) balances. And, of course, there's the cost of health care to contend with. A study by the Employee Benefit Research Institute found that 65-year-old males generally will need to save $196,000 to cover their health-care premiums during retirement; for females, who live longer, it's $224,000.
For some, the solution is to keep working, either in the same job or in something completely different. And even if money isn't an issue, work can provide satisfaction and camaraderie.
"I had the resources to quit working years ago but I love going to work because of what I do," says Robert Chambers, 64. In 2001 Chambers started Bonnie CLAC, a New Hampshire nonprofit company that guarantees car loans for low-income people and provides them with financial education courses. "We have a wall of notes from people thanking us for helping them improve their lives," Chambers says. He plans to open Bonnie CLAC branches in Maine, Massachusetts, and Vermont and eventually to expand nationwide.
Finding something to do that's rewarding sounds great, but it might take time to decide exactly what that is. "If you want to start a new career, or if you don't need to work but want to volunteer or go back to school, it's not as easy as it should be," says Marc Freedman, CEO of Civic Ventures, a nonprofit that provides information on jobs and volunteer programs for people over age 55. "Pictures of retirees next to their B&B or vineyard having their dreams instantly fulfilled gives people an unrealistic idea of the difficulty that may be involved," Freedman says.
If retirement is on the horizon, here are some tips that can help you stay productive, no matter which path you choose.
If you stay in the workforce in your 60s and beyond, you might find lots of your peers in neighboring offices. Between 2006 and 2016, the number of workers 55 and over will have grown at more than five times the rate of the overall workforce, the Bureau of Labor Statistics projects. According to AARP, one in three U.S. workers will be 50 or over by 2016.
Those projections might seem high based on today's numbers. Only 7 percent of current retirees are still working, although 27 percent have worked at some point in retirement, according to the Employee Benefit Research Institute. How many jobs retirees will have to choose from is unpredictable. Unemployment climbed to 6.1 percent in August 2008, the highest rate since 2003. But as some baby boomers stop working, many jobs are expected to open up. Of more than 3,000 hiring managers who were surveyed in late 2007 by CareerBuilder.com, 22 percent said they planned to employ retirees from other companies in 2008 because of the shortage of qualified workers.
If you'd like to keep working, you might be able to continue with your present employer. "Many business owners realize that older workers have valuable experience, are often more reliable, and are more loyal to employers than younger workers," Freedman says.
And, naturally, continuing to work will have a positive effect on your bottom line. Say you've saved $250,000 for retirement and invest it so you earn 7 percent a year. If you continue to work for just five more years, you'll retire with $351,000 instead. And if you can wait until full retirement age to collect your Social Security, your payments will be 20 to 30 percent higher.
Here's how to start your job hunt:
"Decide what you'd really like to do, then think about what skills you have that are transferable," says Michael Watson, 49, who left a job as a human-resources partner for IBM Global Services to take a similar job in 1999 with the Girl Scouts of the U.S.A. Accounting, fundraising, marketing, computer, and communications skills are in high demand now.
Some Web sites list employment opportunities for older workers. For example, AARP's National Employer Team recently listed job openings at 39 major employers, including AT&T, Home Depot, the Internal Revenue Service, the Peace Corps, Scripps Health, Walgreens, and the Small Business Administration's Office of Disaster Assistance. For information, go to www.aarp.org and click on Money. Scroll down to National Employer Team.
With a new service called PrimeCB.com, retirees and other experienced workers can search for part-time, full-time, and contract positions in CareerBuilder.com's database of 1.6 million jobs. Retirees and others can also set up alerts to let them know when new jobs in their field open up. New Directions, a Boston career and life-transition firm, works with executives and professional ages 40 to 70 nationwide to help them find full-time positions, self-employment, or more flexible work/life schedules as alternatives to retirement. For information, go to www.newdirections.com, or call 617-523-7775.
If you're still working, let the boss know you'd like to stay on with the company and in what capacity. Be up front about your needs. If health-care coverage is more important than your salary, for example, negotiate hard for better benefits using a reduced salary as a bargaining chip. But be careful—if you have a pension that's based on your earnings over the last few years of employment, taking a lower salary can affect how much your payments will be. In that case, you might want to consider negotiating an arrangement as a self-employed contractor.
As the population of retirees grows, nonprofits might benefit. A 2007 study by the Urban Institute notes that 45 percent of retirees engage in formal volunteer activities, even though only 34 percent had volunteered when they were working.
Of course people might be more interested in volunteering for a cause they hold dear after they retire because they simply have the time. After Larry and Patty Riddick retired, they logged thousands of hours volunteering at the Virginia Living Museum, a wildlife park, aquarium, and planetarium in Newport News. Longtime nature lovers, they both work as "interpreters," helping visitors understand the exhibits. "It's especially neat to watch schoolchildren's faces light up when I do shows with reptiles, skunks, and opossums," says Larry, 70.
Volunteers have their pick of a growing number of innovative options. Some nonprofits try to meet volunteers halfway by giving them flexible schedules and, in some cases, a nominal paycheck. For example, the National Council on Aging's Web site, provides links to local offices where older workers can find out about jobs in those areas.
Ed Speedling, 65, who works for Project H.O.M.E., a Philadelphia group that helps homeless people, is on the payroll. "It's essentially a volunteer position. There's not much of a salary, but it makes me feel more committed to my work and bonded to the staff," he says.
If you'd like to find a volunteer job but don't know where to look, here's how to find a group that can use a hand:
Check out what's available through your church, community center, or town government. If you want to support groups with a national or international reach, go right to the source. The Web sites of Habitat for Humanity, the Sierra Club, and the United Way, for example, list phone numbers for volunteers. You can also search on VolunteerMatch, a national nonprofit with a network of more than 60,000 recruiting organizations. The federal government's Retired & Senior Volunteer Program has placed nearly 500,000 volunteers in communities across the country. For information, go to www.seniorcorps.gov and click on RSVP.
After you zero in on a group, see if you'll need any specialized training. Peter Pervi, 63, decided to volunteer at the Anne Arundel Conflict Resolution Center in Annapolis, Md., after retiring from Lockheed Martin three years ago. But first he had to complete a required 50-hour basic-mediator training course, a two-month apprenticeship, and 25 hours of additional training. Now he helps separating and divorcing couples make plans concerning their children. "The most satisfying part is knowing you help people solve a problem," he says.
You might need new skills to keep working in retirement, especially if you want to move into another field. Velma Simpson, now 60, and her husband, Steve, sold her Colorado insurance agency after 17 years to go back to school for graduate degrees in 2000. "We decided we had unrealized dreams," she says. "Why not go for them?"
After earning her masters in organizational studies in 18 months, Velma went to work for the Department of Housing and Urban Development, addressing the needs of the homeless first in Washington, D.C., then in Denver. Steve now teaches theater at a regional college. "Our friends thought we were nuts to go back to school to end up in lower-paying jobs, but we're really living our dream," Velma says.
You might just love to learn or want to go back to school to expand your social network. Don't worry about feeling out of place in the classroom—the Simpsons say their classes were full of "nontraditional students" as well as young folks.
If you expect to move when you retire, check out the offerings for older students at nearby colleges. For example, the College for Seniors at the University of North Carolina at Asheville offers courses that run from $55 to $115 a semester. Students of all ages can take classes on chemistry, computers, foreign affairs, and tap dancing. Added benefits include social events, travel programs, and library privileges. At the University of New Hampshire, anyone 65 or older who is not enrolled in a degree program can take two courses a semester for free.
Call the admissions office of nearby schools to find out about breaks on tuition. The Institutes for Learning in Retirement, a division of Elderhostel, runs classes in more than 375 communities across the U.S. Courses are held at a host college or university. To find out if there's an ILR group near you, contact the Elderhostel Institute Network (617-422-0784).
Nearly 45 percent of workers cash out their 401(k)s when they change jobs, according to the human resources consulting firm Hewitt Associates. Unless you absolutely need the money, don't cash out of your plan. If you do, you'll have to pay income taxes on the money you take, and the IRS might also impose a 10 percent early-withdrawal penalty. You'd also be draining your retirement savings.
This article was also published in Consumer Reports Money Adviser. Subscribe now to get more expert financial advice you can trust.