Friday, August 13, 2010

Can I Work and Still be Retired?

In my post Over Delivered and Over Committed, I wrote about how I was feeling over committed by my five part time jobs, which were happening concurrently. Three of the jobs were 1- 5 hours per week and one job was 10-12 hours a week. The fifth job, which was a temporary job and has concluded, required 30 hours per week, but had a very flexible schedule and was projected to last 3-6 weeks. It seemed like an interesting proposition so I took the job, which led to some 40+ hour work weeks in the short term.

Since all of my jobs are part time, seasonal and temporary, I never considered working them would make me "not retired." However, a couple of readers commented that they don't consider working 40+ hours a week as being in retirement, no matter what type of job or the length of the job. One reader commented being "legitimately retired" is not having to work and that a person working only 20 hours was not retired if "THEY HAVE TO WORK (sic)to sustain themselves financially."

Although I had not previously thought about it, I think the readers asked a very good question, "Does working disqualify me as being retired?"

First, I'd like to start with a definition from the Merriam-Webster Dictionary for retired -"withdrawn from one's position or occupation : having concluded one's working or professional career." To this definition I would add, " living primarily on savings, retirement accounts, pension or other retirement benefits (e.g. social security, health insurance, etc.) and plan to do so for the rest of their lives." To me, meeting both parts of the definition would qualify a person as being in retirement.

Here's how our situation compares to the two parts:

  1. Concluded our professional careers. Both my wife and I have stopped working in our professions. My wife retired from her career after 15 years when we moved for an international assignment. She did not start working again when we returned. I retired after from my field after working 27 years for one company. Neither of us have worked or are working in the positions, occupations or professions from which we retired.

  2. Living primarily on saving, retirement accounts, pensions and other retirement benefits. Currently, we are living on our savings accounts and getting health insurance covergage from my company. When we turn 59 1/2, we'll be able to access our retirement accounts without penalty. At 62, we'll be able to apply for and receive social security payments. Theoretically, we have sufficient funds to last into our nineties.

  3. Working various part time jobs. Since retiring, I have been working at different seasonal part time jobs in the financial and education fields for my personal development and to earn some money. Due to the recession, I had a goal of earning 20% of our monthly expenses to reduce our withdrawal rate until the stock market recovered. In 2008 and 2009, I earned about 10-15% of our expenses. However, in 2010 it appears I will have a one year windfall of earning 40% of our expenses mainly because I received accepted a couple unexpected job offers, which caused the short term work overload. Next year, I expect to be back to earning about 20% of our living expenses, since one of the jobs no longer exists and I won't be reapplying to another.

For now, I believe we currently meet the definition of being in retirement. However, if I started a new career in a full time permanent job, I would consider myself out of retirement and back to working. Hopefully, a poor economy and falling stock market won't make that decision for us :-)

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2010 Achievement Catalyst, LLC


Anonymous said...

When you turn 62 and access both your retirement account and social security, what percentage of your expenses do you anticipate will be covered by the three sources of income?

Source %
Retirement account ?
Social security ?
Savings(stocks) ?

Job search freak said...

Productive & advisable to keep one engaged rather than getting bored after retirement,also will get chance for personal development.

Super Saver said...

@ Anonymous,

Sorry, the answer would contain more details than I am comfortable with sharing on this blog. Interesting question. I'm curious about your reason for asking it if you are willing to share. Thanks.

pfstock said...

I think that wrote the first comment that got this whole thing started. A lot of people would agree that if you are working more than 40 hours per week in any combination of jobs, you're not really retired. Just for the record, do your 5 part-time jobs include working on this blog?

I think that what the anonymous commenter is getting at is that the sum of these income sources at age 62 should cover at least 100% of your expenses. Otherwise, it would be difficult to continue being retired without reducing expenditures or working at least part-time.

If you have retiree health benefits and a pension under your belt, you should consider yourself fortunate. Many people, including myself, won't receive retiree health benefits and will not receive any significant pension. Many private sector companies have reduced or eliminated these benefits, especially for new employees.

There are a couple of items that stand out in your personal situation. First, your "savings to salary" ratio has dropped to 14.9, but your target remains above 20. Your ratio fluctuates a lot, and you should have shifted more of your assets out of stocks (esp. company stock) and into more stable assets before retiring.

The other thing that I would consider atypical for a retiree is that you have a young daughter. Most people would not consider retiring before their kids start college, much less before they start kindergarten. You might reassess this issue, especially since a lot of unforeseen changes can happen in the next 13 years.

BTW, thanks for including my post Random Thoughts on Early Retirement in the recent blog carnival. I picked this post because it has some insightful comments from a couple of the early retirees that I correspond with, Billy and Akaisha Kaderli. Also, I knew you would publish it because I put in a plug for My Wealth Builder in the comments.

Best of luck to you.

Super Saver said...

@ PFStock,

In answer to your question, I don't include working on this blog in my part time work. Boy, readers are a tough crowd on the topic of working in retirement :-) For reference, I also don't count the effort and time for managing my investments as part time work.

As for the percentage of expenses covered, I thought I answered that in the post - 100%. It was the breakout by category that I was not comfortable sharing in this forum.

On your point about company stock, you are correct that our choices do increase our risk and savings volatility. We've mitigated some of the savings volatility by putting 3-5 years expenses in cash/CDs.

As for having a child, it does make retirement finances a bit more challenging, but for now, still manageable. We are still able to contribute the maximum to her college accounts and provide for enrichment opportunities. Returning to work full time is an option if needed, for those that don't think I'm already full time :-)