Old Dog, New Tricks: 5 Steps to a Great Retirement Job

Business.com / Careers / Last Modified: February 22, 2017

It’s easier than you may think to find the perfect paying pastime even after retirement, and chances are you're going to want to.

It’s easier than you may think to find the perfect paying pastime even after retirement, and chances are you're going to want to.

Nearly 4.5 million Americans between the ages of 50 and 70 are working in encore careers that reward their passions with a paycheck.

And more than 25 million Americans want to, according to 2014 research by California-based Encore.org and market research firm Penn Schoen Berland.

Examples of encore careers can be anything from teaching part time, to supporting entrepreneurship as an angel investor, to becoming a travel writer.

Related Article: Baby Boomer Retirement: Avoid a "Senior Moment" In Your Business

The paycheck may not be your main priority, but working past the traditional retirement age will help make you more financially secure.

The longer you delay taking Social Security and tapping into your retirement funds, the better off you'll be.

Delaying Social Security from 62 to 70, when you have to start drawing on the government or lose the benefit, results in a 76 percent higher payout.

And given that your assets are probably sizeable by the time you've reached the age that you're reading this article, leaving them intact means another year of large compounding growth.

A reasonable expectation for a portfolio that holds stocks, bonds and a few other asset classes is three to four percent a year.

So how do you go about making that second act actually work?

There are a few simple steps you’ll need to take, and plenty of resources to help you along the way. 

1. Take Stock of Your Income Needs

It sounds simple, but the best way to do this is to actually look at what you've spent. Most banks or credit cards will provide you with an estimate of your spending for the year.

Many people go through a retirement planning exercise by thinking about what they spend, and they tend to be too optimistic.

They forget to take the daily latte into account, neglect the monthly visit for hair highlights, and think they'll cut the grass themselves instead of hiring help.

But spending habits are hard to break, and it's best to plan to spend as much in retirement as you did during your working years.

This retirement planning tool from Boston College's Center for Retirement Research can help. 

2. Retirement Savings to Meet Your Income Needs

Is your goal to avoid taking Social Security and leave your entire portfolio intact? If so, you'll need an encore career that replaces your pre-retirement income.

Work your way down from that goal to come up with the amount you need to make in your encore career.

The Encore website, which includes a handbook on encore careers, can help make the numbers match up.

Related Article: A Good Investment: How Keeping Employees Happy Benefits a Business

3. Consider What Your Passions Are

One of the best things about an encore career is that you can have more than one of them. You just need to decide what to try first. This article includes some great advice on finding your passion: 5 Creativity Exercises

4. Look Around at the Jobs Available

They could use the skills from your former profession, but they don't need to.

Here's a list of nine fun retirement jobs, as a start, and 10 more part-time jobs.

If your career plans land on consulting, freelancing or some other form of self-employment, you may want to experiment with job-searching sites, like Freelance.com or Handy.

Related Article: To File or Not to File: A Business Insurance Claim

5. Consider the Tax Implications of What You're Doing

Remember that whatever income you earn in your encore career will be taxable.

If you earn enough income to put you over the threshold, you could also owe taxes on your Social Security payments you're taking, and of course any withdrawals from your tax-deferred accounts, like traditional IRAs and 401(k) plans, are taxable. Withdrawals from Roth IRAs are not taxable.

You might find that you love the service you're doing so much in your encore career that it's easier and more satisfying to give some or all of it away, as the modern philosopher Will MacAskill suggests.

The whole point of an encore is that the money matters less. In retirement, it's about how to make the most of your time.

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