PRN: Explore Retirement Options

In a recent column, we surveyed thelandscape of retirement—that often-murkyarea of our lives. Let's furtherexplore some of its ramifications. What ifwe don't want to stop working or can'tafford to stop working at some point?

While some of us look forward to thischance to reinvent ourselves in new rolesand activities, for many others, retirementimplies an uncomfortable, forcedchange in the identity and habits thathave taken us a lifetime to build. In short,the prospect of retirement can seemdaunting and downright foolish tovacate our professional peaks, or it canappear energizing, as a prospect ofacquiring new activities and skills.

We don't really have good role modelsto draw upon for our retirement planningas a society because it appears thatour generation will have a qualitativelyand quantitatively different set of expectationsthan our parents did. Longer life,better health, and more assets makes forgreater opportunities, but also moreresponsibility in wise planning. The pointto all of this is that we can relieve somestress and anxiety on ourselves and on thegeneration to follow by solid thinking.Life is just one darned thing after another,so let's be ready.

Late-Planner Options

For example, what if you're in yourmid- to late career and haven't yet preparedfor the alleged Golden Years?What can you do? For one thing, considerretiring later. There's a triplebonus to doing so. First, every year extrathat you let your nest egg grow couldmean on average as much as another 5-figure sum added to your retirementyears' annual available draw forincome. Secondly, you could be savingthat much more per extra working yearto add to the pot. And thirdly, there arethat many fewer years of retirementthat you don't have to pay for. Feweryears means more of your savings availableper year of spending.

You could also continue to work part-time—the time-honored "keeping myhand in." This means no abrupt changes,continuing cash flow, and possibly keepingthose all-important benefits for a fewyears longer. One doc I know under age65 can afford to retire and wants toretire, but due to a preexisting healthcondition, he is essentially uninsurableuntil he's eligible for Medicare. So hekeeps working.

Other choices for the late planners,and you know who you are, includeworking harder now to save more, tappingwhat is often a bulging home equityfor investments, enhanced cash flow,and, last and most dangerous, investingmore aggressively to catch up. We knowfrom recent market events how takingbig risks can blow up in your face, asmany would-be retirees have found outto their delayed-retirement chagrin. Thisis not recommended.

Retirement Adjustments

One last thought:

On the day youretire, your entire way of thinkingabout money has to do a 180. Investmentplanning, saving, and decades ofhabits will have to be chucked in favorof budget-based living. It's inherent inthe process, so when the realizationdawns, smile and wade in. You'll learn alot and, who knows, you might getgood enough to enjoy it.

A financially secure retirement essentiallydepends on three things: how muchyou will need when you get there, wherethe money will come from, and howmuch time you have to do it. If you'replanning to retire and all of this soundsfamiliar, good for you. If you don't wantto retire and think this is irrelevant; youstill have to plan for the unexpected. Ifyou're late to start planning either way,it's never too late to start. Set your goal,find the means, and do it.

Jeff Brown, MD, CPE, a practicingphysician who is a partner onthe Stanford University GraduateSchool of Business Alumni ConsultingTeam, teaches in the StanfordSchool of Medicine FamilyPractice Program. He welcomes questions orcomments at jeffebrownmd@aol.com.