Untitled photo

2016-04-16: Will you ever work again?

Good question, one that you will be thinking a lot about as you are preparing for retirement. Also, once you announce your intentions to retire, a question that many of your friends and relatives will be asking you. I may be getting this a bit more than others because I am retiring before I even turn 60, but I think it applies to many of you thinking of retiring.

The answer is quite short, for me...depends on cash flow! Let's face it...you really do not know how much money you are going to spend day-to-day until you are actually living it. Sure, you know how much your fixed expenses will be...gas, electric, water, sewer, etc, but do you know how much discretionary spending you will do to reach your retirement goals?

Sure, you have an idea of what you want to do, be it golfing, fishing, travel, or any number of other hobbies. But do you know how often you will be partaking in these "fulfilling" activities?

Also, all retirement planning is dependent on two key assumptions: How much your investments are going to make and how much will inflation eat at your purchasing power. You really do not have direct control over these, and all you can do is plan using historical data.

Given all these unknowns, you either have to have more money than you could ever use (not a usual situation for most of us), or have a backup plan if you are seeing that your cash flow is not sufficient.

Social Security will also be a factor in your decision to ever work again. For those that retire before age 62, you'll have to rely on your own finances until you reach that age. Once there, cash flow becomes a factor on whether you choose to take your early retirement benefits. If the almighty cash flow gives you confidence to wait until full retirement age, you can get an additional 25-30% (approximate) then you would if you took benefits at 62. If you can wait until 70, you would get an additional 25% to 30% on top of that.

I am not a financial adviser, and each person's Social Security information will be different, but the concept is the same. Waiting longer to claim your benefits, even if you may need to take a job-job, will be an excellent hedge against running out of cash in you 90's.

You may be one of those strange animals that retire on purpose so they can get another job in the same career (to collect a salary and pension). I assure you, that is not me...but if push comes to shove, I'll consider that, as well.

Finally, if cash flow is not your issue, but the need to be productive...you have the greatest opportunity to help make this world a little more civilized. You can use your hard-won, deep, and insightful experience to help with the many non-profits that are always looking for skilled craftsmen and managers. You can feed the hungry, help the disenfranchised, mentor the next generation. You can be the person to teach the world to sing in perfect harmony (OK, that might have gone a bit too far).

Hope I have communicated well, and I'll catch up with you next time.


Powered by SmugMug Owner Log In