Retiring Into a More Rewarding Career
by Aleksandra Todorova
Wednesday, October 10, 2007
provided by SmartMoney.com

Four years ago, after an almost three-decade-long career at the accounting firm McGladrey & Pullen, Ambrose Jones did some soul searching, crunched the numbers - generously padded by a buyout he received after H&R Block acquired part of the firm in 1999 - and decided, at the age of 55, to retire.

His next step? Go back to school to pursue his lifelong dream of getting a PhD in accounting and, ultimately, teach.

Now a professor at the University of North Carolina at Greensboro, Jones teaches several advanced auditing classes. His work has been published in academic journals and six new research projects are underway. To be sure, he brings home a fraction of what he earned as a partner at McGladrey, but he couldn't be happier. "There's a lot of enjoyment in teaching and research," he says. "It makes me feel like I'm 25 years younger."

If the retirement surveys that almost every financial company is conducting these days are to be believed, this is a scenario that millions of adults dream of. For instance, nearly three quarters - 71% - of those surveyed in a 2006 Merrill Lynch study said their ideal retirement is to continue working in some capacity.

Granted, many retirees do so for the extra cash or the employer-sponsored health insurance, says Marc Freedman, president of Civic Ventures, a San Francisco-based think tank devoted to issues affecting baby boomers' retirement. However, just as many of them want to focus on self-fulfillment. More than half of the boomers Civic Ventures recently surveyed said they intend to pursue new lines of work in fields that help improve their quality of life and their communities.

"They know they have another 20 to 25 good years in front of them and they want to make the most of that time. They want to do something they can feel proud of, work that gives them social reward," says Freedman, who is also the author of the recently-released book "Encore: Finding Work That Matters in the Second Half of Life."

Back to School at 50+

The quest for meaningful work during one's retirement years is welcome news for talent-starved sectors like nursing, teaching and social services. Organizations like Civic Ventures and the corporate sector are now finding ways to reach out to and even prepare baby boomers for their transition into these "encore careers."

At the end of this year, for example, the Owensboro Community and Technical College (OCTC) in Kentucky will start offering a several-day intensive training program for retired registered nurses who want to become clinical instructors. The program's goal is to address a severe shortage of direct-patient care professionals in the region, explains Cindy Fiorella, vice president of workforce and economic development at the OCTC. The Owensboro Medical Health System alone needs to add 530 employees to its staff of 3,000, but is unable to, largely because there aren't enough qualified educators to train potential staff members.

The Peace Corps, meanwhile, recently launched an initiative to attract more baby boomers as volunteers. The nonprofit is placing one over-50 person on the staff at each of its 11 regional offices who will exclusively focus on recruiting people age 50 and older. The goal is to increase the percentage of volunteers in that age group from 5% to 15% of its volunteer base, explains Josie Duckett, a spokeswoman for the organization.

Retirees living in California with a knack for science and math will have plenty of opportunities to choose from. In June, California Governor Arnold Schwarzenegger kicked off the EnCorps Teachers Program, aimed at recruiting and training retirees as math, science and career technical teachers. In the next 10 years, California's schools will need over 33,000 new science and math teachers, according to a release issued by the Governor's office.

Granted, not all boomers will be able to receive training or re-education free of charge, especially if they're aiming at more sought-after jobs, such as managerial positions in well-known non-profit organizations. And while many community colleges now offer free career counseling for boomers, enrolling in an actual class or earning a new degree is rarely pro bono. One way or the other, going back to school will be as much a part of boomers' golden years as it was in their teens and 20s, says Nancy Graham, deputy editor of AARP The Magazine.

Launching your encore career - from taking time off to go back to school to living the rest of your working years with lower pay - will take a lot of careful financial planning. "A life change such as this is a golden opportunity to review your financial picture," says Gary Schatsky, a fee-only certified financial planner in New York City. Here's a checklist of what you need to address.

Tackle debt first

Leaving a job for a lower-paid vocation is best done without the burden of debt. Tackling high-interest credit card debt should be your number one priority. At the very least, call your creditors to ask for a lower rate. At best, aim to have it all paid off before you retire.

One caveat: Don't rush to pay off the mortgage. "Certainly, it's something to consider, but there are numerous scenarios where it wouldn't make sense," Schatsky says. "If you had a mortgage at 5% and the after-tax cost is 3%, then why the hell would you pay it off?" If your mortgage carries such a low interest rate, your money may be better off earning tax-deferred gains in a retirement account such as an IRA.

Adjust your spending

If a lower-paying job means you'll have less to live on, make sure this is a lifestyle you're comfortable with, says Laura Gassner Otting, author of "Change Your Career: Transitioning to the Nonprofit Sector." Sure, a nonprofit job that supports a cause you're passionate about has numerous non-financial rewards. But if you're going to be miserable living by a lower standard then you're not going to be comfortable in your vocation no matter what mission it is that you're fulfilling, she says. Otting's advice: for several months, take a "test-drive" by living on a budget reduced to your expected salary.

Go over your retirement plans

Your final working years can have a serious impact on your retirement savings. It's not only the time when you're at your earnings peak and contribute the most, but it's also the time when your portfolio has the potential to earn - or lose - the most with market ups and downs. If you switch into a lower-paying career, your retirement savings could be hurt dramatically. With a lower paycheck, chances are you'd be saving less than you're used to, which means it will be more difficult to cover potential losses, Schatsky says. It's no surprise, then, that many folks in this situation become more risk averse. The best bet: Make sure your asset allocation is in line with your new investment horizon and risk tolerance. And keep saving. As self-fulfilling as it is to help your community, your financial security should always come first.

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