Which retirement for you? Step-Down or Jump-Off-Cliff

Retirement is not a choice for about a third of the people in the U.S. They are forced into abrupt, overnight retirement by their companies’ policies or, unfortunately, by a company downsizing. This sudden, dramatic change in employment status is what I call “Jump-Off-a-Cliff” retirement. But there is an alternative now being chosen by many people: the “Step-Down” retirement.

The new reality:  too much time on your hands in retirement

The Jump-Off-the-Cliffers are, one day, working at their primary lifelong employment; the next they are not. Many are delighted to be liberated from a daily work obligation. They have looked forward to it for years. They have plans to travel, to visit old friends and family, and to focus on personal interests. And immediately they begin to do all these things. It is like being on permanent perpetual vacation. Yippee!

Then a new reality sets in. Often this happens in less than a year. The person who retired abruptly finds that he/she has done almost all of the big things on the “to-do-when-I-retire” list and still has seemingly endless hours and days to fill. (Keep in mind that there are 7300 days during a 20 year retirement! And if you retire at 62 the chances are excellent you will live to age 82 if you are a man; to age 84 for women!)

Many discover they miss the camaraderie and structure of the workplace. As a solution to this too-much-time issue, some try to find a way to involve themselves in their previous work, either as a part-time employee or as a consultant, even if they do not need the money.  Others take on part-time employment in an unrelated field to give their lives some structure. Still others start new small companies–some of them online businesses they can run from anywhere.

Other people take up new activities, such as volunteer work, but approach the activity as if it was “work”–without the requirement that it generate income.

Whether money-making work or a volunteer job, these are all very healthy ways to enjoy your retirement. Study after study has shown that having mental challenges and goals can actually add years to your life.

But, sadly, all too many retirees begin to spend more time in front of the TV to the detriment of their physical and mental health. So the smart thing to do is become more active and you will, most likely, live longer.

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Two Jump-Off-Cliff Retirements

Elise worked in the Capital as an environmental  lobbyist for decades, but her company’s policy was retirement at age 65. Her generous retirement benefits gave her the freedom to do what she wanted. She knew, however, she would not be content to sit at home. She was far too committed to protecting the environment, so even before she retired, she contacted her favorite environmental organization. They were thrilled to have someone with her contacts and knowledge on their team and offered her an unpaid part time management position. She accepted. For the first three months after her retirement she and her husband did their big bucket list trips. And now–six years later–she still has short, flexible hours and a satisfying professional life.  

Mary was the chief financial officer at a private college with a mandatory retirement age of 65. Her husband had retired several years earlier and simply wanted her to be with him and, in particular, spend time traveling. It turned out his idea of traveling was a long weekend here, a week there–most of it in the U.S. Months on the road or a long jaunt around Europe was not what he had in mind. Happily, she was invited to join the Board of Directors for a retirement facility where she now is an adviser and attends monthly meetings, but does not have to be involved in day-to-day stresses of management. She has plenty of time with her husband.

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Step-Down retirement may not be easy to do

Recent research has revealed that 4 out of 5 people over age 50 intend to keep on working after a traditional retirement age. Some will continue working for financial reasons; others because they enjoy their jobs. However, those who are not forced to retire at a specific age may discover as they grow older that they would like to spend fewer hours working and have more time for personal interests. They want to go the gradual route to retirement. This choice, however, has no fixed path to follow and may take some detailed planning and diplomacy to manage well.

Ask yourself these questions:

1. Would your company would be amenable to employing you part-time if you suggest it? Or would they show you the door as fast as they can if you mention working part time?

2.  Does your company already have a policy about partial or gradual retirement?

3. If they already have a policy, what impact would your semi-retirement and working part time have on your retirement income/plan and health care? Would you have to officially retire and come back as a part-timer? Or just work shorter hours?

4. Does your company already employ part-time workers frequently? If so, are they paid at the same time as other employees? Or do they have to invoice for their work and wait for the invoice to be paid?

5. Is it possible for you to launch a consulting service in your field and work for one or more companies if you wish?  This would allow you to still use your skills and knowledge, but–hopefully–control the hours you work. While it is now against the law, some companies have non-compete clauses in the retirement paperwork you may be asked to sign. You should consider this factor if you plan to become a consultant with firms that compete with your last employer.

Your answers to these questions will dictate how you should progress with your gradual retirement. It may take some skilled negotiating with your boss or with Human Resources. 

You might want to draw up a description of what kind of job your semi-retirement would involve as a kind of “cheat sheet” to clarify what your life will be like in retirement and help you when you discuss a gradual retirement with your current employer.

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Two Step-Down Gradual retirements

John worked as a truck driver for a city government in Southern California. He was eligible for retirement at age 60, but, because there was a hiring freeze, his boss asked him to stay on the job “for a while.” Realizing that full retirement would perhaps now come with almost no forewarning once the hiring freeze was lifted, he bought a show dog–something he had planned to do in retirement–and began breeding and selling them. He also took a part time job at a  weekend farmers’ market where his wife sold her crafts. These crafts, children’s hats, were her retirement business. Four years later he is still working almost full time for the city, while his pension has continue to grow. His dogs are now greatly in demand. He knows that the politics of city hall may lead to sudden retirement, but now he has taken some steps to prepare for it by starting his “retirement” while still working full time.

Dede worked as a freelance graphic designer and decided that she wanted to retire like almost all her friends were doing. The management changed at one major client, so she told them she would not continue doing work for them. It was a pleasant parting of ways. A year later she decided to say goodbye to her last remaining large client and gave them six months notice.  Ignoring her generous notification, they replaced her in three weeks–much to her dismay. Before long she began to have doubts about her decision to quit working and missed the professional contact. Within six months she had acquired three new small clients. AND, the client who had replaced her so quickly, came back and offered her even more money to work for them again. It turned out her replacement wasn’t meeting the client’s high standards–the standards Dede had established.

Whichever approach you take to retirement, just be aware that retirement is not simply “cruise control” for the rest of your life. You will have to make plans and make decisions about those twenty plus years you live after you retire. Yes–twenty years!  So start planning now.

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