When Retirement fails

I opened up my Wall Street Journal a few years ago and was startled to see a friend of mine pictured sitting on a Harley Davidson. The story was on retirement. But my buddy had a different story from the others. Rather than tout his successful retirement, he said he had “tried three times to retire and failed each time.”

I was considering leaving my CEO position at the time, so I tracked him down and asked him about his experience. Sheepishly, he admitted that he had lost his passion for his work, but was bored not working. In order to keep from going crazy, he had to take new positions each time he quit a job.

Because 10,000 baby boomers are turning 65 every day and working through these issues, I will be periodically publishing interviews with successful retirees. Look for an email next week with the first inspiring story of a retiree who has navigated these waters. I think you’ll get a lot out of the wisdom he packed into the interview.

And let me know if you would be willing to share your story with the SMWP community. I’d love to interview you too!

But for today, as a primer, I wanted to share a few insights I’ve learned in my journey to this new season of life.

First, retirement is not necessary for some.  90-year-old Warren Buffett talks about “tap dancing to work every day.” When that joy of work is still present, why retire?

Buffett referenced in his annual letter this year one of his employees who retired at age 103. He quipped, “Mrs. B, it should be noted, worked daily until she was 103 – a ridiculously premature retirement age as judged by Charlie and me.”

For the rest of us, the retirement decision is more challenging. We sense we are no longer engaged in our work, but don’t know if we will enjoy a new season of life.

And uncertainty about retirement is more than anecdotal. The Employee Benefit Research Institute (EBRI) recently published results of their survey of 2,000 people between 62 and 75 of which 97% were retired.

One finding that stood out to me: “Fewer than 1 in 4 (24 percent) respondents scored their current life in retirement as highly aligned with how they expected or planned for their life in retirement to be.”

After years of saving and planning, it can be a shock to find yourself with an unexpected identity crisis, marital tension, deteriorating health, spending worries or even forced retirement before you’re ready. These are all issues retirees or near retirees may have to wrestle through.

But for many others the freedom brings new life and rejuvenation to pursue old interests and new adventures. What are some key considerations?

First, I suspect many readers of SMWP have a strong work ethic and the idea of “retirement” comes with moral questions. It’s important to think through the ethics of retirement.

Today, there is a movement called Financial Independence, Retire Early, or FIRE, which does not suffer from the same concerns. There are stories of those in the FIRE community “retiring” in their 40’s, 30’s and some even in their 20’s.

As I looked closely at this movement, I found I had a lot more in common with it than I suspected. FIRE is not about quitting work to pursue life on a beach. But the movement knows we’re also not made for a life of meaningless, soul crushing work. We’re made to flourish and stretch our creativity in innovative ways aimed at serving others. On this we can all agree.

One FIRE adherent told me his inspiration came from being called out for leaving his desk light on too often. This rebuke came right after he got a memo demanding an update on a two-cent entry he needed to make.

He “retired” shortly thereafter to form his own company where he exercises his creativity training others. He calls it retirement because he is doing what he loves now.

But for baby boomers like me, it’s more difficult to walk away. My North Star has always been the idea of stewardship. How do we justify walking away from the pinnacle of a career if we want to be good stewards of our life?

I found wisdom in the book of Ecclesiastes and the passage about a time for everything.

There was definitely a time for me to build banks and serve my community in that way. But this is a season that is no less driven by my North Star of stewardship with different opportunities.

Second, be smart about money if you want a successful retirement. Be especially cautious about entering this phase of life with debt. As the EBRI study points out the most unhappy retirees are those burdened with debt:

“Those with unmanageable debt scored poorly by almost every measure, including lower life expectancy, less ability to spend within their means, retirement being costlier than expected, finding themselves forced to dip into savings during poor market conditions, and lack of alignment between retirement expectations and reality.” 

In addition to thinking about working long enough to eliminate debt, many successful retirees also try to arrange their finances so they have fixed income each month that pays for their fixed expenses. Social security, annuities or pensions can lower the stress of having to depend on the volatile financial markets to pay the bills.

Third, find a new identity that allows you to answer the question, “What do you do?” with something besides, “I’m retired.” That answer implies that you were someone at one time, but today you aren’t. I sometimes say “I’m a thought leader in personal finance and retirement.” That tends to get a head scratching response.

Fourth, embrace your new freedom by planning to take up something new. Some retirement experts suggest the most successful retirees spend at least five hours a year planning their retirement. As a result of my plan, I just bought a musical instrument. I’m looking forward to my first lesson soon. If you have no ideas, I encourage people to read a quirky book called How to Retire Happy, Wild and Free.

Finally, expand your social network to replace the work relationships. I still keep a toe in my old world by sitting on a couple of bank boards. I love seeing everyone once a month or so, but it’s not the same.

As COVID starts easing, churches or nonprofit groups that you are passionate about will be great ways to create new relationships. Or check out Meetup.com as another resource.

Time to hit the send button, but it’s hard to do more than just scratch the surface in a four minute read. If you have other insights on this important subject, please add a post.

Joe Kesler

Smart Money with Purpose