Retirement decisions are more than just retirement or employment

A few years ago, I remember hearing a fictional story about a businessman who tried to convince an islander of reasons to go to work as an ordinary worker. The islander, who was very happy resting in the sun and living simply on land, did not understand the reason for this. The entrepreneur explained that after many years of work and savings, the islander, who is currently working, can finally retire. The islander asked what it was. The businessman went on to explain that this was when he could finally stop working and live off the land and rest in the sun. The humorous narrative made sense. Decisions about what to do with one’s life are very personal and very individual. What works for one does not necessarily work for another.

So the question today for many in the boomer age group, as well as for some younger and older, is whether to continue working in the jobs they are used to, retire, or perhaps something in between. The pandemic has closed off some options, but it’s also made it easier for those planning to retire to decide whether to start now, later, or somewhere in between. Aviva Wittenberg-Cox’s Forbes article – Is the Great ‘Retrenchment’ Really a Mass Retirement? — suggested that the trend being called “The Great Retirement” may actually have been mass retirements. One question might be: Is it really necessary to choose “all or nothing?” Alternatively, can you keep one metaphorical “foot” in the world of the businessman and the other in the world of the islanders?” At a time when almost everything seems to be reinventing itself, why not?

Wittenberg-Cox noted that “traditional retirement is the transition from 100% employed to 100% retired. Overnight.” She suggested that as an alternative, employers could “change the model and offer employees a range of flexible employment options that may diminish over time…” The benefit to employers of retaining experienced workers in one capacity or another is clear. Losing an entire workforce and training new employees takes time and effort. As for employees with knowledge and experience, I’ve seen many come back as consultants or take control in a related area, which keeps them engaged and stimulated, but not overwhelmed. Another advantage of having one leg is to combat financial uncertainty that the “100% retired” model may not address. Obviously, there are huge differences in retirement for individuals and couples: some retirees are comfortably off and others are not.

• Financial Considerations in Retirement — When Do You Take Social Security?

An article in the Washington Post, among others, looked at Social Security as a way to cope with financial uncertainty during retirement or semi-retirement. The author, Andrew Van Dam, of “The Last Twist in the ‘Great Retirement’: Retirement But Delaying Social Security,” concluded: “For better-off Americans, the pandemic economy has created some of the strongest retirement incentives in modern history, with generous federal stimulus, incredible market growth, skyrocketing home prices, and health issues that are drawing many Americans into early retirement… A surprising twist? Many of these retirees also chose to delay claiming Social Security benefits…”

The general impression these days is to delay taking Social Security unless it causes a great hardship. You can take Social Security as early as age 62, but you can increase your benefit by 76% if you wait until age 70. The difference between getting it at your current full retirement age (66+) and getting it at age 70 is 32%, a pretty generous safe rate of return. It may also be relevant to your spouse’s financial survival if your spouse earns less than you, because if your Social Security death benefit is higher than your spouse’s, she (or he) may require more of your assistance.

• How much do you think you need to live comfortably?

If you have a trusted financial advisor, you may be able to predict your future, however, certain assumptions are made. Two of the most important are how long you are likely to live and how likely it is that you or your spouse will need major long-term medical intervention before you die. You also need to set reasonable goals and expectations. Do you want to travel or mostly stay at home? Do you plan to make gifts to family members or charity and amounts.

So what do you do? You make reasonable assumptions and build them into your plan. As conditions change, you change assumptions. We are working on this with customers. This is a new way.

Janet Colliton, Colliton Elder Law Associates, PC, is a board certified elder law attorney and limits her practice to elder law, retirement, end of life care and special needs planning, Medicaid, estate planning, and estate and guardianship administration. It is located at 790 East Market St. ., Ste. 250, West Chester, 610-436-6674, colliton@collitonlaw.com. She also co-founded Life Transition Services LLC, a service for families with long-term care needs, along with Jeffrey Jones CSA.