Many retirees look forward to spending their golden years relaxing, socializing and improving their short game. For some, however, all of that R&R is overrated.
Working after retirement may be an oxymoron, but it’s a trend that continues to gain steam. A 2013 study found that 60 percent of workers age 60 and older plan to look for a new job after retiring. That’s up 3 percent from the previous year.
While financial concerns are often the motivator, for many retirees the decision to pursue an encore career is more about passion than paycheck.
Retirement can be an opportunity for people to finally pursue their dreams, said Kimberly Foss, a certified financial planner and founder of Empyrion Wealth Management.
It’s “a way for them to do the things they never had time to before,” she said.
“Many retirees will likely have already established a decent emergency fund and have settled their debts — kids’ college tuitions, mortgages — so a position’s salary may not be a driving factor,” Foss added. “They might choose to volunteer, consult, start their own business or pursue a brand-new career that fulfills a lifelong passion, skill or hobby.”
For example, when one of Foss’ clients was offered an early retirement package for the global IT company where she worked as a data analyst, she used the opportunity to begin a new endeavor: melting down glass and stones to create jewelry.
“We reviewed her financials, and she and her husband set off to travel across the country in an RV selling these goods and earning a decent income from it,” Foss said. “Best of all, she loved what she was doing and felt financially secure enough to pursue her passion.”
While encore careers can be highly satisfying for retirees, those who go down this path need to make sure they’re doing it for the right reasons and that they don’t make any major mistakes that could derail their happy ending.
Here’s a look at some dos and don’ts when it comes to late-in-life second careers:
Do find something that excites you. Bryan Franklin, an executive coach and co-author of the book “The Last Safe Investment: Spending Now to Increase Your True Wealth Forever,” said that perhaps you have a pursuit that you’ve always wanted to try but never thought you could.
“Maybe there was a childhood dream that you’ve long ago dismissed as not practical or nearly forgotten about,” he said. “Use these as inspiration to find a way to contribute that makes you feel great about yourself.”
Len Hayduchok, a CFP and president of Dedicated Senior Advisors, agreed that starting a new career in retirement is something you should do only for the love and passion of it.
“Retirement is a time you can pretty much do whatever you want to do,” said Hayduchok, adding that as you get older, “you realize life is shorter, and you value the time you have to a greater extent. It becomes more of a focus on how to spend your time in a way you enjoy.”
Don’t make it about money. “If your primary objective is income, it’s a mistake,” Hayduchok said. “You’re better off going back [to the job] where you were.”
When one of Hayduchok’s clients retired from an insurance company where he was a senior executive, he happily accepted a pay cut in order to follow his dream of writing a documentary script on one of his descendants who was a Founding Father and signer of the Declaration of Independence.
“He wasn’t doing it primarily for the income remuneration,” Hayduchok said. “He had to look at financial payback at some point, but he did it because it was a passion.”
Do focus on certain skill sets. Coach and author Franklin recommends that retirees focus on opportunities that trade on “interpersonal super skills,” which he said includes abilities such as leadership, selling, networking and community building.
These skills “don’t require any technical knowledge or even physical presence, allowing people well into their 80s and 90s to make a significant contribution,” he said. “They also involve high-quality social interaction with other people, the activity that numerous studies show is one of the biggest positive influences on happiness.”
Don’t be afraid to learn new things. “Some encore careers may require additional classes or training, so retirees looking to dive into new fields should invest in their education,” said Foss of Empyrion Wealth Management.
She added that if you have any money left over from a child’s 529 college savings account, you could modify it and name yourself as the new beneficiary so you can use those assets for your own continuing education.
Do crunch the numbers. While a paycheck shouldn’t be the driving force behind an encore career, it’s still crucial to consider the financial consequences.
“Do as much homework as possible, [as] there are always unexpected things that come up,” said Hayduchok of Dedicated Senior Advisors. “It’s very important that you don’t have any surprises. … If it’s a business that you haven’t thought through, it can turn out to be a very expensive hobby.
“You have to be careful of that financial outlay,” he added. “I’ve known folks who have taken their retirement savings to start a retail store and wound up losing a fair amount of money.”
Hayduchok’s clients thought they could just dabble in their new endeavor, but “it turned out to be a bigger venture than they thought they were getting into,” he said.
“The fact that someone was successful in a different career and has some money to start another business doesn’t come close to ensuring success of that business,” Hayduchok noted.