Personal Experience with Phased Retirement

Reboot, Rewire or Retire: Personal Experiences With Phased Retirement and Managing a ‘Life Portfolio’

This 78-year-old former actuary and retirement consultant shares her personal insights on the four key areas for success in retirement. Be prepared to help clients make more than just the financial transition.

Let me introduce myself. I am an actuary, and I am 78 years old. For many years, I have been passionate about improving the retirement system, helping late career individuals decide how to transition from full-time work to life paths that work well for them, and women’s issues. For many years, I have thought about the transition from full-time work to total exit from employment, the steps involved, and the interests of different stakeholders.

For 28 years before my retirement, I was a retirement consultant at Mercer, a major benefits consulting firm. As a retirement benefit consultant, I started focusing on phased retirement and business issues for plan sponsors, but I have now shifted to primarily focusing on the viewpoint of the individual.

I have been an active volunteer for the Society of Actuaries (SOA) for 50 years, served as SOA President 20 years ago, and have chaired its Committee on Post-Retirement Needs and Risks since its inception about 20 years ago. I currently also chair the SOA’s Aging and Retirement Research Program steering committee. In these 20 years, the SOA has sponsored numerous research projects and paper calls focused on understanding and improving the management of retirement. This article combines my personal thoughts, my perspectives on employers and their benefits, the results of SOA research, and the experiences of others with whom I have talked and spoken.

Beyond finances: planning the next phase

Since retiring from Mercer at the end of 2004, I have given significant thought to managing my own retirement while continuing to be an active phased retiree. I have also talked with many other people and conducted roundtables focused on the journey after full-time work.

Many advisors focus on helping clients manage their money. This article focuses on a different aspect of managing retirement: managing life beyond money (it assumes that financial management is under control and that there are adequate financial resources).

My personal path has included a combination of contract work, writing and speaking, not-for-profit Board service, research, and a lot of volunteer work, plus spending time building my art and painting skills. I have also talked to a number of others about their own paths and tried to help people think through their retirement journeys.

• Based on my experience, discussions with others, and Society of Actuaries’ research, some observations jump out at me:
• While there are well-established ideas about career planning, the ideas about next steps for people at this life stage are much less developed. People feel like they are writing their own scripts without guidance.
• Some people reach transition points unsure about when to make a move, what steps to take, and with no idea about what they will do when they reboot or retire.
• Some people decide to move to next steps without any well-thought-out financial analysis of the implications of beginning retirement or scaling down their income.
• One cannot be on vacation all of the time. Vacation is a break from what we normally do. People who retire with the idea of an endless vacation are likely to be disappointed or bored within a year or two, if not sooner.
• There is a huge variation in the financial situation of people at this life stage. Some have the resources to make choices without being concerned about how much money they will earn in the next few years, whereas others are concerned about continued income and need at least a defined level of earnings if they are to maintain their preferred lifestyle.

The life portfolio

From my perspective, each of us should have a life portfolio as well as a financial portfolio. Just as a financial portfolio requires focus, diversification, and management, so does a life portfolio. However, the strategies that make sense for the life portfolio are very individual, and there are few established tracks for defining and managing a life portfolio.

I have defined four components of the life portfolio, as shown in the figure below:

The Life Portfolio of a Successful Happy Retiree

The couple developing a life portfolio needs to think about which of their goals are shared and which are individual to each of them. Bringing the two sets of goals together, and deciding how to meet individual needs, is a part of the planning process. Many couples may each have a life portfolio, and they can have a joint life portfolio that overlaps the two.

Measuring life portfolio success

As a phased retiree, my life is very focused on meeting my personal goals². A simple way of deciding if things are working out is to periodically (at least once a year) think about what one has been doing. If you are doing things that you are happy about and proud of, then I would call that a success. On the other hand, if you do not have a story about accomplishments that you feel are worthwhile, then it may be time to rethink your goals and strategies.

Sometimes we get diverted from doing what we want to do because of the care and support needs of family members. From my perspective, that is also important. Part of choosing what to put in my life portfolio (or not) is the ability to change priorities when family and personal circumstances change. This can be a very important part of one’s life portfolio, and family issues can be the biggest commitment for a long or short period.

This material is created by Horsesmouth and provided by 360Blue Financial Strategies for educational purposes only.

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