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JULY 28, 2003
Retired--To a New Job Working later in life yields rewards more valuable than money Forget leisure. Retirement is increasingly regarded as a transition to another work life, although at a more relaxed pace. In 2000, 37% of men and 31% of women age 55 to 64 were employed full- or part-time while receiving pension income, according to investment giant TIAA-CREF. Those proportions are likely to go higher. And 8 out of 10 baby boomers say they plan to work in retirement, according to the AARP, the lobbyist for the over-50 crowd. The movement toward embracing work during the last third of life calls for a much broader definition of investing for retirement. The typical retirement worksheet deals with financial assets such as equities, bonds, cash, and real estate. But investing for the long-term should also encompass education, training, and networking -- what economists call human capital. Economists estimate that human capital is the most important form of wealth in the U.S., worth three to four times as much as all other assets, including stocks, bonds, and real estate. "Investing in human capital is an investment like any other, and you can make it at any stage in life," says Zvi Bodie, professor of finance at Boston University. The return on investment? Working longer can make a huge difference in retirement living standards. Pocketing even a slim income often allows retirement portfolios to compound over a longer period of time. For example, a $400,000 portfolio at age 55 compounding annually at a 5% rate with a $1,000 contribution a month is worth around $579,000 at age 60. But if earning an income means the portfolio is left alone to compound at a 5% rate until age 65 -- even with no new contributions -- it will grow to around $738,000. More than making money, working is physically and mentally energizing. Carol Thompson was a licensed clinical social worker, working with private patients and for the courts in the San Francisco Bay area. Her work was rewarding, but draining, and after several decades she looked forward to leaving it behind. Then what? She took years to close down her practice, but wanted something else to do. One day, while strolling through the Botanical Garden of the University of California at Berkeley, she noticed a call for volunteers. She signed up -- and started taking horticulture courses at Oakland's Merritt Community College. Now, she's a knowledgeable, valued volunteer working with professional botanists on plant propagation. "There is something stimulating, but humbling, about starting something new," she says. "It's really an anti-Alzheimer's thing to do." Whether you work for pay or pleasure, plan for it. A common strategy for retirees is to consult part-time for their old company. And community colleges can be good places to acquire some new skills and training, as Thompson discovered. About 15% of community college students are 40 or over. Many retirees are eager to work by volunteering or taking a job at a local nonprofit. But good intentions and a willing spirit aren't enough to get a fulfilling job. A smart investment of your time is to network at the nonprofit long before you retire. Otherwise, you might get stuck with boring tasks that don't take advantage of your talents. In many cases, retirees build on their existing human capital. Henry Campbell, 59, labored for 23 years in the pharmaceutical industry, often managing research departments. Tired of the business, he thought about turning his passion for food and wine into a new career. Downsized out of a job in 1996, he enrolled in the Restaurant School in Philadelphia and studied restaurant management. He has run several restaurants since graduating in early 2000. "I'm still using my management skills," says Campbell. "I think that's one of the key strengths I am able to bring to a restaurant job." So, while struggling to put money aside for your later years, dream about what you would like to do in the next stage of life. Once you're drawn to an idea, invest in the skills and contacts you'll need to bring that dream to life.  By Christopher Farrell Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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