Even though we generally think of retirement as the leisure time we’ve earned after a lifetime of work, not everyone fits neatly into the “receive a gold watch and then take up golfing” retirement paradigm. For many retirees, retirement is the perfect time to launch an encore career instead.
Whether you shelved a career dream years ago in order to support your family, or you need to eke out your retirement nest egg, or you’re just not prepared to live the typical retiree lifestyle, creating an encore career for yourself can be a fantastic way to revitalize your retirement.
Here is what you need to know about encore careers and how you can make the most of your post-retirement career options.
Why Start an Encore Career?
For anyone who is counting down the days until they can officially retire and run screaming from the career that is driving them crazy, the idea of starting a new career in retirement might sound ridiculous. But there are plenty of good reasons why retirees are refusing to completely hang up their hats.
Greater financial stability. There are very few retirees who feel completely comfortable with the size of their nest eggs. Starting an encore career and continuing to work keeps money flowing in so that you can avoid dipping into your retirement accounts. In addition, it potentially allows you to build up your savings and postpone taking Social Security benefits, which means they will be larger when you do take them.
Personal fulfillment. Traditional retirement can have a major psychological impact on the retiree. It can be very difficult to move from defining yourself by your career—as many Americans tend to—to living a less-structured life in retirement. According to a 2012 study published in the Journal of Happiness Studies, retirees experience a rush of life satisfaction and well-being immediately after they retire, but a few years into retirement, there is a sharp decline in their happiness levels. Encore careers offer retirees the opportunity to enjoy fulfilling work on their own terms.
Social impact. Part of the reason why retirees experience a decrease in contentment is because of an increase in isolation. Working an encore career ensures that you continue to feel like a vital part of your social network. Your encore career can help you remember what an important difference you make.
How to Plan Your Encore Career
The more carefully you plan your second career, the better your chances for success will be. It’s important that you think through all of your expectations and requirements for your next chapter, since there is less leeway for a do-over when you start a new career in your 50s, 60s, or later. Before you leap into your dream encore career, make sure you know the answers to the following questions.
What are the three most important things you hope to get from your encore career? You might be tempted to search for “Job Charming”—the encore career that will fulfill all your needs and make your life a fairy tale. But a job can’t give you overall life fulfillment, and narrowing down your work must-haves to three items is a reasonable way to manage your expectations for your new career.
Will you need any kind of preparation for your new career? If your encore career requires education, licensing, or start-up capital or other financing, you will need to plan on how and when to get that lined up. Career and retirement expert Kerry Hannon suggests taking about three years to see to this sort of preparation so you have time to recover from setbacks.
Can you gain experience in your new field before making the transition? Not only will volunteering, moonlighting, or job shadowing provide you with valuable experience that will make you more attractive to potential employers or investors, but it will also give you an important insider’s look into your chosen career.
What kind of financial cushion do you have? It’s likely that your income will be a little lower than you are used to for the first few years after you make the transition to your new career. Will you be able to live on that reduced paycheck, or might you have to dip into your retirement accounts to make ends meet? Make sure you know exactly how you will pay for your living expenses before you make the leap.
What is your exit strategy? You probably don’t see yourself continuing in your encore career indefinitely. It’s important for you to figure out how you might eventually bow out from this career under both ideal and less-than-ideal circumstances.
Types of Encore Careers
It’s a good idea to know what to expect from the type of career you might choose for your second act, especially if you are going to be doing something very different from your first career. Here are some of the most common types of encore career and what you can expect from each of them.
Working part-time post-retirement offers the best of both worlds. You can enjoy more leisure time than you did during your first career, while earning a regular paycheck.
In general, there are three options for part-time retirement work.
Continue to work for your current employer, but with part-time hours. Your employer will be able to continue benefiting from your experience and knowledge at a lower rate, which can make for an easy sell.
Freelance or consult in your same field. Staying within the same field, but as your own boss, can be a great way to keep income flowing in without over scheduling yourself. If you’re not sure how to find clients, there are a number of resources that connect retirees to freelance or project work, including Retirement Jobs and Retired Brains.
Look for job opportunities in the places you frequent. If you want a complete change of pace, try to find part-time positions that relate to your hobbies. For instance, an avid golfer might take on a part-time position at his golf course, or a lifelong reader might look for a job at bookstore or library.
Becoming an Entrepreneur
Launching a business in retirement can be an exciting way to build your encore career on your own terms. Whether you are building a brand new business from scratch or buying into a well-established franchise, becoming an entrepreneur will give you an opportunity to be your own boss and create something that is yours.
Entrepreneurship, however, does come with certain risks. In particular, you need to be prepared for the possibility that your new venture might not immediately make money. Decide ahead of time whether you will be able to use any of your own funds to keep your business afloat, and determine exactly how much you can afford to put into the business.
According to Nellie Akalp, you will need to protect your personal assets by forming an LLC or corporation for the business. These legal entities separate your personal assets from your business assets. This is important for any entrepreneur, but it is especially vital for retirees who have nest eggs to protect.
Working for a Charity or Non-Profit
If there is a cause that is dear to your heart, you might want to consider going to work for a related charity or non-profit in retirement. This is an excellent way to advance a cause you care about while earning an income. Keep in mind that charities and non-profits are often unable to pay competitive salaries compared to the private sector. Hiring a retiree with many years of experience but lower salary needs often ends up being a win-win for everyone.
If working for such an organization appeals to you, it’s a good idea to prepare for your encore career by volunteering with your preferred charity or non-profit as soon as you can. Not only will that help you with networking, but it will also help you to better understand what needs the organization has and what skills you specifically can offer.
Bring On the Encore
Today’s retirees are energetic, knowledgeable, and hungry for more challenges. We have opportunities that our parents and grandparents never dreamed of, including the option to make our second act more financially stable and more fulfilling through encore careers. There is no time like the present to do the work you were meant to do.