Rethinking Retirement

Next, the Retirement Bubble by Bob Adams published on Barron's offer an interesting introduction, "If you think you deserve a long, comfortable and leisurely retirement, think again. At best, you've earned a sabbatical."

The main point of his article is that many current retirees don't have sufficient funds to cover their lifespan. He says,"If you think you can retire and live for 30 or more years off the productivity of others, you are in for a terrible surprise and a great deal of pain. You haven't earned a nonproductive retirement, nor have you 'paid your dues.' When you wake up to this in two, five or 10 years and realize that you are in big trouble, you will not only be in pain, you will dump that pain on all the rest of us who aren't retired. Don't expect us to be sympathetic for long. There are simply too many of you, and your demands will far exceed our willingness to sacrifice. And, no, we won't want to hire you. You will have been out of touch for too long. The world moves on. Sorry. Lots of luck."

His point is probably relevant to a lot more people after the bear market of 2008, which reduced many stocks savings accounts by 35% or more. In addition, average annual stock market returns of 7-8% are looking unlikely for the next few years.

Instead of retirement, Mr. Adams proposes taking a sabbatical, where one becomes refreshed and prepared to return to a new line of productive work. He writes, "When you retire, consider it a three-year sabbatical. Do what you want to do, when you want to do it. But keep your eyes open for something that interests you, where you can earn some income. Look for something you enjoy, something that really pleases you. When your sabbatical is over, you should have found a new line of work that will help you enjoy the rest of your life and pay for whatever makes it comfortable. You may earn less income than before, but the purpose is to supplement your retirement funds, prevent total dependency on others for your income, and keep you growing. Then you can share your happiness with the rest of us, not your pain. Take full retirement only when you must, when you can no longer be productive."

Having taken early retirement in October, 2007, his comment resonates with me. After 21 months of retirement, I realize that I am happy and satisfied doing short term lower paying jobs that are of interest to me, to reduce the withdrawal rate from our savings. I am still testing options for a longer term dream job, but haven't identified the right one yet. Hopefully, I will find it before the end of my three year sabbatical :-)

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

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