Retirement Surprises: Most Good, Others Not So Much, Part III

Recently the Wall Street Journal polled their readers regarding their biggest retirement surprises. The responses were varied and expressed more joy than pain, and more satisfaction than frustration. In Parts I and II of this series I recounted a number of the good surprises. In the final post of the series I want to share some of the bad surprises.


Boomer Attitudes, top concerns as we approach our retirement
  • Most common among the bad surprises experienced by the retirees was that it was painful leaving work. And in fact, more so than expected. This idea was expressed by many and in many different ways. Several expressed missing being a part of a team at work. One expressed it this way. “It was very surprising to encounter the depth of the loss of not being part of a team doing important work.”
    Others expressed the fact that their self value and identity was entirely driven by their position. “I used to define myself by my title. I had flashy business cards, a company car, and a generous expense account. Without these, I didn’t know who I was. I felt naked.” I believe this woman from California describes beautifully what many of us felt upon leaving our careers behind.
  • One simply said that his biggest surprise was the challenge of figuring out “the Second Act.”
  • Some missed the pay aspect of work once they had retired. One in particular struck me. He filled his retired life with time with grandchildren, church activities, exercise, academic studies, reading, and walks on the beach. As perfect a picture as this is, he still really misses being paid for work.
    On this same subject, one indicated that finding a rewarding post-retirement occupation had been problematic. He expressed surprise that in spite of his very impressive resume and a somewhat aggressive search for an interesting position, there was no interest shown by the companies he approached. He assumed his age (70) was the main obstacle preventing at least some interviews.
  • Some responded that their biggest surprise in retirement was mortality. They went on to say that they had looked forward to many wonderful retirement years with their spouse. Unfortunately, however, one spouse or the other passed away far sooner than expected. One person’s advice as a result was: do not wait until retirement to enjoy life.  How sad and tragic that would be!
  • One person whose health surprisingly began to slip early in retirement advised as follows. Appreciate that every day you are probably as healthy as you will ever again be.
  • The bad surprise faced by many had to do with the cost of living. Many have been caught off guard and surprised. Different expense categories were cited. Some mentioned the cost of healthcare, more specifically the cost of medicare premiums for Part B, D, and F. Premiums in many cases are increasing by 20% or more annually. Some indicated that household expenses in general were quite a bit higher than expected.
    One respondent claimed that his living expenses in retirement were tracking at 100% of his pre-retirement expenses. For most this would be entirely unsustainable. He listed his expenses that were higher than expected: healthcare, travel, recreation, vehicle expenses, and fuel and energy. In this same vein, another individual suggested adding 10% to any expense budget you prepare because there will surely be expenses you underestimate.
  •  “Negative Dan” from Portland, Oregon reported that he has become a charter member of the over-the-hill club. He is now unattached to the business world, a retiree with a gold whatchamacallit signifying his long-term service. In his words, “sadly (he) spends his days striving to create the perception that he still has intrinsic value.” Hopefully there are only a scant few who share his view.

On a lighter note, Arthur believed that in retirement he would play golf all the time. But upon retirement he came to realize that he used to play golf to reduce the stress from work. But now in retirement he finds golf to be stressful in and of itself.

In conclusion, the content for these last three posts came from the Wall Street Journal of February 10, 2017 – “Readers’ Biggest Retirement Surprises.” Clearly for most the biggest surprises they experienced in retirement were positive ones. There are the wonderful gifts of friends and family, and better yet, the time to enjoy them. In addition there is time to focus on exercise and health, travel, and new activities or causes. For most, all of this make retirement a precious gift… even in trying times!


‘Phased Retirement’ Works For Employers Too

“It takes two, Baby!”

Last week we wrote about the growth of ‘phased retirements’. For many Baby Boomers they are becoming the “fourth leg” of their “retirement stools”. However, if  ‘phased retirements’ are to be embraced on a wide scale basis they must meet a significant need for employers as well.

As it turns out, employers are increasingly understanding that ‘phased retirements’ can be an effective tool to help them survive and/or grow. This is because these programs promote the retention and transfer of knowledge from experienced workers to younger workers. Depending on the demographics of their work forces, there are many companies which may soon be in dire straights without ‘phased retirement’ programs. This is because of the significant numbers of small and medium sized companies who will experience 50% or more of their workforce reaching retirement age in the next five to seven years.

In addition, industries and companies vary with regard to how many hard to replace employees they have. Some industries and companies are unique in that they have an acute need for employees with very industry-specific or even company-specific skills.

Employers are seeing many reasons for countering the ‘brain drain’ from Baby Boomers leaving the workforce in mass with ‘phased retirement’ programs.

  1. This is the most practical approach to retain experienced workers, especially those in critical and/or hard to replace positions.
  2. Such an approach will reduce the costs associated with hiring and training replacement employees.
  3. Increased organization flexibility occurs by tapping potential retirees as mentors or consultants.
  4. Allows organizations to experience smooth transitions rather than disruptive, costly ones.
  5. Enhances productivity by addressing the need for work/life balance for those approaching retirement age.

These programs may be formal or informal, although at this point they are much more likely to be informal. In many small to medium-sized companies the programs are often employee initiated and on a one to one basis. Informal arrangements today are often individually negotiated between the employee, their boss and the HR department.

As far as formal programs, currently only about 5% of mid- to large-size companies have such plans. But 60% say they expect to develop a formal plan, per WorldAtWork. 30% of medium to large companies do say they have some type of  ‘phased retirement’ program in place, although mostly on an informal basis.

Companies designing formal ‘phased retirement’ plans are considering the following issues in the design of their programs:

  1. At what age will the selected employees become eligible to participate in the plan?
  2. How will critical knowledge be transferred to other employees?
  3. Legal and compensation issues must be comprehensively identified, dealt with, and clearly communicated to employees.

These arrangements, particularly if developed on a one to one basis, will vary in design. But typically they might be for a period of one to three years with the employee working 20 to 24 hours per week. Compensation is likely to be proportional to hours worked, but he/she typically keeps full healthcare and retirement benefits.

As an example, Rice University recently formalized their ‘phased retirement’ program, primarily for their teaching faculty. The professor signs a contract for one, two or three years duration. They are given 50% of a full time work load. Compensation is at the rate of 80% in year one, 70% in year two, and 50% in year three. Once in the plan participants may retire sooner than the contract term. They cannot, however, extend the phase out period or enter into a new contract.

Often ‘phased retirement’ programs require the participants to take on new responsibilities. These responsibilities are usually focused on transferring skills to the next generation of workers.

Some ‘phased retirement’ programs are including interesting features such as ‘job sharing’ and/or a work at home option. Both of these ideas may become increasingly more popular going forward.

But there is a flip side to these ‘phased retirement’ programs. Of necessity, these programs can only be extended to employees who are hard to replace and/or are highly experienced. Having too many older workers hanging around is a huge negative from a cost standpoint and because it causes a bottleneck in the advancement pipeline. Companies need a mix of both experienced workers and young blood to sustain their growth into the future. But increasingly workers are reaching retirement age and are attempting to stay on the job and not move aside.

Nonetheless, well managed employers are instituting innovative policies and practices as a significant strategy to retain skilled workers for their work forces. It is a win-win, for sure!