Wednesday, 20 January 2010

Retirement: A Second Career, aka the Sisyphus Solution

One of the positive alternatives to living at a much reduced standard of living in retirement is to start a second career. Now that might sound a lot like not actually retiring at all, but maybe it is in the mindset.

In the CFA's The Future of Life Cycle Saving and Investing: the Retirement Phase, Anna Rappaport says people thinking of retirement "... want work to fit around their lifestyle rather than making their lifestyle fit around work." In the same report, Alicia Munnell gives us a clue why: "According to psychologists, as we age, we have a tendency to “positivize” or to divest ourselves of people and situations that we no longer enjoy. When I’ve asked retirees in the past “Why did you retire?” they gave what sounded like the most frivolous reasons: “I sat in the middle seat,” “I was on the tarmac for two hours,” “I’m just not doing this anymore,” “I’m sick of it,” or “I got a new, young boss, and I can’t stand the guy, and I’m out of here.”
The tendency to positivize also applies to the work environment. Our tolerance for putting up with things we don’t like diminishes as we age."

Along comes the solution of a second career, in which you do something you like. Novel idea! Munnell says that happens a lot with second careers: "The Urban Institute recently studied the nature of these new jobs, or second careers, held by older workers and found that, although they paid less and provided less in the way of fringe benefits, people generally liked these new jobs much better. They experienced less stress, and they were closer to their homes; the second career had a lot of positive attributes."

The big financial benefit is that every dollar earned in a second career is a dollar less required to live on from savings and investments.

Of course, there is a catch. Working, especially doing fulfilling work, is good for your health and you will probably live longer as a result. Oops, now your savings have to last even longer, so you will have to work even longer and put off entering the ideal(?) but fatal state of being a couch potato. We could borrow from Albert Camus and call this the Sisyphus Solution - endless work that makes people happy.

Some resources on second careers:

1 comment:

Doctor Stock said...

Gotta love that last disclaimer... enjoying work and living longer... Yep, quite the Catch 22.

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