Why clients should ‘replant,’ not retire

When it comes to retirement, Scott Anderson, a planner and CPA in Newport Beach, Calif., has this to say to his clients: “Don’t.”
Not if by retirement they mean ceasing work altogether. That’s no longer practical, Anderson says, given that the average lifespan for a 65 year-old is now 82 years for men and 85 for women. Most people, he says, even those who are quite affluent, will run out of savings well beforehand.
Instead, Anderson tells his clients, “You don’t retire, you replant. Leave whatever stressful situation you’re in and do something else that you enjoy more.”
When people think of continuing or returning to work, he says, they think in terms of continuing to do whatever it was they were previously doing. But that, he says, is the wrong approach. Instead of remaining at a job that’s either high stress or now bores them to tears, he tells his clients to choose something else on a part-time basis that they might enjoy more and that keeps them in close contact with other people.
Clients frequently resist the idea, because “it’s always easier to do nothing instead of something,” he observes. So advisors need to ask them what it is they like to do and then help them think of potential jobs that relate to that. In some cases, he says, that might still mean returning to a former employer but in a different capacity. And the advisor needs to point out that part-time work won’t dominate their lives in the same way as it did when they were still working full-time.
For clients who are still paying off their homes, Anderson uses another argument. He explains that it’s extremely tax inefficient for them to take extra money out of their retirement fund to pay down the mortgage. In effect, he tells them they need to keep working in order to meet their mortgage payments.
Anderson points out that the 50 full-time employee threshold set by the new healthcare reform law encourages businesses to hire part-time workers, in order to avoid having to pay for their employees’ health insurance. Since people over 65 already have their medical needs covered through Medicare, this isn’t an issue for them, freeing them to return to work at the a lower level of intensity than before they retired.
“Their goal,” he says “should simply be to break even and not dip into their retirement funds.”