Rethinking Retirement and the Golden Years

Some may characterize the years following retirement as relaxing and blissfully uneventful. Author Chris Farrell challenges that interpretation with his book Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community and the Good Life. Farrell writes that aging workers have the opportunity to reinvent themselves, which is beneficial to the baby boomer population and society as a whole. He argues that “work is much more than an income,” and that the focus later in life should be on pursuing meaningful ventures, not preparing for the worst. He joins us. Farrell will be speaking at the Chicago History Museum at 6:00 pm Tuesday.

Read an interview with Chris Farrell.

Chris FarrellWhat was your motivation to write this book?

I’ve been doing a lot in economics and personal finance. The aging issue is one full of doom and gloom. People are rethinking this part of their life. When you look at the forecast, a lot of it surrounds an aging population. I thought this was an important issue to tackle.

How can aging Americans prepare for a fruitful and enjoyable life in their retirement years?

We’ve had this conversation for the past two decades. Retirement becomes synonymous with saving for retirement. What people should be thinking about instead is, ‘what can I do next?’ The most valuable assets that older workers have are their networking skills and work experience. The conversation should be about, ‘what do you want to do next?’

In addressing intergenerational tension, you draw parallels between 20-somethings and 60-somethings. Can you describe some of those similarities between age groups?

When you talk to someone who is newly graduated from college, they don’t want to be living in their parents’ basement. They also want to do something meaningful – they’re idealistic. When you talk to people in their 60s, what they talk about is very similar. They want to earn a living but they also want to leave a legacy. They want to make a difference. The only difference between the 60-somethings and the 20-somethings is how they view time. When you’re old, you know how precious time is. When you’re younger, you may think you have all the time in the world.

The book is a composition of scholarly analysis, personal experiences and pop culture references. How did you prepare for writing Unretirement?

What I wanted to do is deal with something that looks at the big picture. My background is in economics, but I wanted to include more than just data. The pop culture references were a fun part of the book. It was a reflection of me growing up. My goal was to make this a more readable book.

There are many stories within Unretirement about older people reinventing themselves later in life. Does any particularly inspiring story stand out to you?

One of the most inspiring stories was a woman that I interviewed in Detroit. She had worked for Eastern Michigan University for years and she really wanted to start her own business. She wanted to put it in downtown Detroit and be part of that city’s revival. She opened up a coffee shop that is still in operation today. It was a combination of her wanting to take a risk, her husband being comfortable with that, and the idea of fighting against the decay of Detroit. She wanted to be part of the city’s rebirth.

Your book challenges readers to reconsider frugality as a virtue. You write that baby boomers should be concerned with what matters to them. Can you make your case for why older people should embrace frugality?

So many older people have this experience of looking around their house and thinking, ‘why did I buy all this stuff?’ This is when you realize the things that really matter are the connections you make with family and friends. You can’t control the stock market, but you can control where you spend your money. It isn’t about denying yourself and becoming a miser. It’s about spending your money and asking yourself whether it reflects your values. It turns out that so many people that I’ve talked to feel like they’ve freed themselves by living frugally because they’re spending money on what’s important to them.

credit: 401kcalculator.orgUnretirement addresses a glaring concern in today’s society: that the large number of aging baby boomers will bankrupt Social Security and Medicare. Is this something that Americans should worry about?

Working longer has an enormous effect on the country’s economy. We need to change the nature of our conversation from ‘can we afford Social Security?’ to ‘how can we increase the incentives for more people to work?’ We are healthier and we are living longer. The effect on our economy would be enormous if more people worked longer. Our public policies should be focused on that concern for those who can continue to work. We need to create incentives for those people.

You’ve written that Social Security benefits should actually be increased instead of decreased. Can you make your case for that?

We’re an incredibly wealthy nation and Social Security has become a retirement savings plan. We can make it a more generous program by protecting the people that never had employer-sponsored health care or retirement savings. Those who still can work would benefit enormously from holding off on filing for Social Security.

We’re still reeling and recovering from the financial crisis of 2008. How has the Great Recession set baby boomers back?

During that time, there were a group of people who were probably thinking of retiring, but they held onto their job. If you weren’t laid off, you were afraid to leave. The real setback was the decline in housing values. That really hit a lot of aging boomers because the home ownership rate is very high. The housing market is coming back, but it’s a slow recovery. There was a period of a couple years where people were frozen and not comfortable with taking any risks. Employers didn’t do anything about retirement savings and benefits. We’re starting to see that change now.

Is unretirement particularly important for a cash-strapped state like Illinois?

I think it’s extremely important. Because of Illinois’ problems, a lot of people will have to embrace the unretirement movement. There will be a real drive and push for people to stay employed. And when I say ‘stay employed,’ I know that there are a lot of burnt out workers in their current careers. To remedy that, you go to a different sector of the economy and embark on an encore career.

You write at length about encore careers – professions taken on later in life in new industries. In fact, you state that there is a growing number of “elder entrepreneurs.” How feasible are encore careers? How does older age benefit those who embark on them?

Two years ago, 23 percent of new business formation was by the 55-64-year-old age group. That’s up from 14 percent in 1996. A lot of this is self-employment or small business employment. You’re taking your skills and knowledge and selling it to people you know. It’s about working from home. I’m not talking about generating millions and creating your own Facebook, but the job satisfaction allows you to work longer when you work from home. There is still a lot of risk. A lot of small businesses still fail. But if you keep your costs down, as small businesses do, and work out of your home, then it may work. A lot of people are finding they can make a living that way.

How can unretirement benefit folks who earn little income and may not possess the education, skills or experience to pursue encore careers?

These people are often forced to work. They’re working low-income jobs or in the underground economy to stay afloat. But skilled labor is finding that they can pursue encore careers as well. An electrician that has overworked his body can go into electrical consulting. The question is, ‘what do you want to do next?’ It’s liberating to think and talk about. Someone who works a lower income job can think about what sector of the economy they want to work in and still make money. For these workers, the most important decision you can make is when you file for Social Security. Filing at age 70 versus 62 can hike those benefits up more than 75 percent.

How does this generation of aging baby boomers differ from others?

One of the big differences, and millennials will experience an even bigger difference, is that baby boomers are educated and healthier than previous generations. Work is a big part of your identity – who you are and how you think about yourself. It’s not a sense of entitlement, but wanting to stay engaged and relevant. In the past, many were happy to head down to Florida, be relaxed, and stay isolated. But people are living longer now and want to continue working. It’s relevant to places like Chicago, where if you nurture these encore careers, it can be very good for your community.

Interview has been condensed and edited.

Read two excerpts from the book.

Preface
 
When I was in elementary school, three remarkable women hovered in the background of my family: Aunt Julia, Aunt Agnes, and Aunt Ella. They were nuns with the Sisters of Charity, New York, an order of educators dedicated to helping disadvantaged children, many of them abandoned. I vividly remember their voluminous black habits and black caps, Irish-tinged New York accents, and their eagerness to know what my brother and sisters and I were up to, even when we were very young. They always had a treat for us, a peppermint ball or some other hard candy. They were fun and a little mysterious. After all, they were nuns.
 
Aunt Ella—Sister Marie Lucille Farrell—stood out. She was kind, smart, and carried herself with authority. She had a remarkable career, including running an orphanage during the Second World War, working at New York Foundling for abandoned children, teaching at the College of Mount Saint Vincent, and establishing Catholic girls’ schools on Long Island.
 
The last time I saw Aunt Ella was at the Convent of Mary the Queen, a home for aging nuns in Yonkers. We covered many topics while we walked the corridors. Family. Current events. Education. Poverty. What has stayed with me from the visit is when she signaled it was time to leave. “I have to go now to take care of the elderly,” she said. “There’s work to be done.”
 
She was ninety-six years old.

 

     Several years ago I picked up a book published in 1920 by Simon Wilson Straus, president of the American Society for Thrift. His description of the popular image of thrift in History of the Thrift Movement in America still rings true nearly a century later. “Penny-counting, cheeseparing, money-hoarding practices were looked upon by the public as the ideals sought by those who tried to encourage thrift,” wrote Straus. “The man who practiced this virtue, it was felt, was he who hoarded his earnings to such an extent that he thrust aside every other consideration in order to keep from spending his pennies, his dimes, and his dollars.”

Who wants to live a “cheese-paring” life? Sounds bad, doesn’t it?

An emphasis on thrift doesn’t mean living cheaply—far from it. Thrift or frugality is really shorthand for an approach grounded in matching our money with our values. Straus defines thrift this way: “It is the thrift that recognizes that the finer things of life must be encouraged,” he writes. “The skilled workman, the artist, the musician, the landscape gardener, the designer of beautiful furniture, the members of the professions—all those, in fact, who, through the devotion of their abilities, contribute to the real betterment of mankind, must be given support through our judicious expenditures.”

David Starr Jordan, founding president of Stanford University, similarly defined thrift at the 1915 International Congress for Thrift in San Francisco. He told the assembled audience that thrift “does not involve stinginess, which is an abuse of thrift, nor does it require that each item of savings should be financial investments; the money that is spent on the education of one’s self or of one’s family, in travel, in music, in art, or in helpfulness to others, if it brings real returns in personal development or in a better understanding of the world we live in, is in accordance with the spirit of thrift.”

Who didn’t have a moment during the great recession of looking around their home or apartment, opening closets and drawers, gazing into a garage and storage bins, and wondered, “Why did I buy that? Is this how I want to live? I’m paying off credit card debt for that?” Modern marketers have done a bang-up job equating the good life with owning lots of stuff, much of it paid for on the installment plan. The financial services industry stokes the fear of not having enough by depicting the American Dream during the traditional retirement years as an expensive moment, time spent paying big bucks for homes, the golf course, cruises, and exotic travel. Didn’t we always know this image wasn’t quite right, at least in the back of our minds? Thrift is really a mindset for trying to match spending and values. “In some ways, that’s what financial independence is. You don’t have to answer to anyone because you have enough,” says certified financial planner Ross Levin. “When I am working with clients as they get older or near the end of life, they talk about the things they wish they had done. They talk about their regrets, and the regrets always focus on experiences. It’s always something like ‘I wish I had done more with the kids when they were younger.’ It’s never ‘I wish I had bought a Mercedes.’”

By thinking through “What do I value?” the unretired will come up with far more sensible and fiscally prudent answers to the question “How much do I really need?” Harry West, the former CEO of Continuum and current senior partner at Prophet, hit on the thrift mindset. In our conversation he remarked on the flexibility and options that come with minimal expenses and debts. “When you talk to boomers, what you find is that freedom is really, really important. And you think about that because they grew up in the sixties or were born in the sixties, which was a time of freedom,” says West. “Freedom is a low overhead.” That expression should be a mantra for young and old workers alike. (West’s wisdom reminds me of a joke a former colleague loved to tell. A fisherman lives on an island. He makes a living taking people out on his boat to fish. He loves the water, the rhythm of his days, the simplicity and beauty of everyday life. Life is good. One day he takes a multimillionaire out to fish. The multimillionaire chatters on about how beautiful is the sea. This is what life is all about, he pronounces. He proceeds to tell the fisherman that he should borrow lots of money and buy a fleet of fishing boats. “Why should I do that?” asks the fisherman. “Well, you would work hard but eventually you would make so much money that you could take a vacation and enjoy the water and fishing! Like me!” As a Shaker hymn beautifully says, “It’s a gift to be simple and a gift to be free.”) Read more here.

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