Retirement doesn’t have to be permanent, but it sure feels like it for the people who retire and attempt to get their old jobs or similar ones back.
Blame it on ageism, a perceived lack of tech know-how, or some other reason, but either way, companies aren’t too keen to rehire their retirees.
A Transamerica Institute survey from last year, which polled nearly 2,000 employers nationwide, found that the median age considered too old to hire was 58. The age considered too old to work? 62.
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“A lot of people, once they retire, they don’t come back,” says Geoffrey Sanzenbacher, a research fellow at the Center for Retirement Research at Boston College.
If you’re thinking about retirement, you’d better think long and hard. You may find it’s not that easy to undo.
But the good news is that if retirement is on your mind, you can test the waters before you plunge in. Here’s how.
Test out your retirement financial preparedness
When it comes to retirement, two overriding themes will determine your success and happiness: your finances and how you spend your time.
Testing how financially prepared you are is easy while you’re still working. You can live with a reduced income for a few months and see if you can still afford your lifestyle.
To do that, determine how much you’ll draw down from your retirement savings monthly when you retire and how much you’ll receive from Social Security.
Once you have that figure, set a timeline, such as six months to a year, and live off that portion of your income only, to make it as realistic as possible. You may need to factor in commuting costs.
If you find during the experiment you have no problem paying your bills, haven't had to downgrade your lifestyle or touch any more of your income than what was budgeted, then it's a good sign you're ready, at least on the financial side.
However, if it's really tight, you find yourself cutting more corners than you'd like, struggling to pay bills, or facing shortfalls, you may want to consider pushing your retirement date out a bit further or adjusting your lifestyle.
While this isn't exactly what it will be like when you retire, it can give you a reality check on your spending habits and an opportunity to cut expenses. Plus, in some cases, it gives you confidence knowing you’ll be ok.
Test out your retirement purpose
The second piece of retirement is the harder one to test out — how you’ll spend your time. For many people, work is a big part of their identity. After all, it's where they spend most of their time. It's where many of their social connections come from. It's where their routine and structure are derived from, and what their lives typically center around.
Giving that up can be a hard transition and a big reason why people choose to return to work. It's also why testing out what life without work looks like before retiring is both important and difficult to do.
While you won’t get a complete picture without quitting, there are ways to get a sense of what it will look like.
Work fewer hours
If you are one of those sixty plus hour a week employees and are thinking of retiring, a good way to test the waters is to reduce the hours you work. You won’t get a true sense of what it would be like, but you will see what it means to have more time on your hands.
Even cutting back to 35 hours a week can be telling. If it feels like too much and that you have more spare time than you're comfortable with, that might be a sign you need to come up with a plan for how you’ll spend your time in retirement before you quit your job. If it feels like too little free time away from work and that you'd really like more, the signs are pointing toward retirement.
If you can swing it with your employer, working part-time is even better. The more you can reduce the hours you work, the more you can dedicate to testing your retirement.
“I have clients who negotiated reduced work hours, which is the ideal way to do it,” says Morgan Veth, a financial advisor at Bogart Wealth.
Consider consulting
If your employer isn’t receptive, another option is to consider consulting instead of retiring outright. Start consulting on the side while you’re still employed, and once you have enough work to keep you busy, retire and focus on that.
You have more time to test what retirement is like, but still have the structure and purpose that work gives you. If you find you enjoy the retirement part more, you can gradually reduce the time you spend consulting until you are fully retired.
Work part-time to pursue hobbies and interests
If your employer won’t accommodate reduced hours, you can find a part-time job outside of work that aligns with the hobby or interest you want to pursue instead.
It allows you to see if you really like that hobby and are capable of doing it full-time in retirement before you invest time and money. The last thing you want to do is retire, vow to play pickleball every day, and find out you hate it. The idea is to find fulfillment outside of your job and determine if you want to do that all the time.
“It's a wonderful opportunity to start fresh to leverage either a new hobby or a new field because you want to fill time as opposed to chasing a paycheck,” says Thomas Racca, manager of the personal finance team at Navy Federal Credit Union.
“You're not tethered to a job or work you’ve been doing for several decades. You're trying something you always wanted to develop to benefit your emotional needs instead of your financial ones.”
Use all your PTO for a trial run
If you have a lot of paid time off saved up and your employer will allow you to take an extended period off, you can test the retirement waters by using time off all at once. Let's say it amounts to a month. You can pretend you no longer work and see what your day-to-day life will be like.
To make this test a success, start on day one as if you are retired. During this period, wake up at the time you would if retired, avoid all work-related activities, and find daily activities, let alone purpose, that is unrelated to your job.
While it's only a short period to test the waters, it could be enough to leave you wanting more. Alternately, you may be besieged with boredom and find yourself eager to go back to work.
“A lot of people love retirement and a lot of people reenter the workforce six months later,” says Racca. Trying it out for a short, defined period will give you a little glimpse into what life might be like for you.
Nothing is a guarantee
Retirement can feel like a great unknown, even if you try it out first. But the more you prepare and plan, the better equipped you are to handle whatever comes your way.
Before you take the plunge into this next phase, test the waters to ensure you have the money and sense of purpose to get you through the next twenty or thirty years.
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