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Working into Retirement

Working into Retirement

March 15, 2012

What's your plan b?The key to retirement cash flow in the future could be your job. A lot has changed in the world and working past age 65 is going to be a significant shift for the aging baby boomer population.

Our current retirement logic is wrong. People used to plan to work until age 65; however, since life expectancy continues to increase then the retirement age should also increase.

The longer you live, the more money you will need. Add to that the poor performance of investments over the last several years plus overspending and debt accumulation requiring many to stay in the workforce longer.

So the question is: What will you do? If you can continue in your existing line of work then that’s perfect.

However, if your occupation is too physically demanding, you are forced to retire, lost your job or there is another reason for working, then you have to re-invent yourself.

Many people over age 50 should start to work on Plan B. What will your occupation be when you are 65?

You can speak to those who know your skills, personality and preferences. Begin brainstorming on the types of jobs you might like to have.

What skills are needed in the workplace and how do you acquire them? The question about skills came out in a recent survey.

Business leaders were complaining that insufficient job candidates had the required skills needed for their industries. They were lobbying that the pending federal budget allows for the investment in a skills training program.

Upgrading skills is exactly what many people around the age of 60 should be doing. Determine your desired future job and get the matching skills.

While not always an immediate possibility, a challenging part-time job may be ideal.

Your career planning should be done in the context of a financial plan. If you are working because of the need for income it makes perfect sense to know how much of an income you need.

It’s time to sit down with your financial planner. Here are some questions that will influence your career decisions.

How much cash flow are you likely to have during retirement?  Consider a reasonable amount of income from your capital and then all pensions and government sources of revenue.

Then work with your advisor on a reasonable retirement budget. How much income do you need during retirement?

If there is a cash flow deficit then that shortfall will come from earnings. Consider earnings to spend and earnings to save so when you eventually stop working you will have enough capital to live your desired lifestyle.

When you understand how much employment income is needed it gives you the flexibility to plan your career.

Perhaps the best solution is your dream job that you would love to do but does not pay that well.

The income itself is not the critical factor. It is how much income you need for your financial plan to be successful. Perhaps you can turn your hobby into a lower paying job if this achieves your financial objectives.

Our advice is to seriously consider what job you could do after you retire. Get financial advice on how much income you need to earn.

Then obtain the necessary skills and have the confidence and satisfaction of knowing that you can enjoy a happy and prosperous retirement.