Planning For A New Type Of Client: The Non-Retiring Retiree

The baby boomer generation always has been one to buck tradition. So it’s no surprise the same holds true in its approach to retirement. Each day 10,000 boomers hit the traditional retirement threshold of a 65th birthday.1 But many, in fact, aren’t exiting the work force at that point. Instead they are creating a new class of client for financial representatives—the non-retiring retiree.

Pause That Retirement Party

Hitting age 65 once conjured images of gold watches, grandkids and golf carts. No longer. The non-retiring retirees profess no plans to slow down anytime soon.

According to an AARP report,2 70 percent of baby boomers intend to work past the traditional retirement age. Fully 40 percent say they plan to work “until they drop.” Amid such sea change, almost 25 percent of the U.S. work force will be seniors by 2016, according to the Population Reference Bureau.3 That trend already is well established, according to recent data.

“The Number of Those Working Past 65 Is at a Record High,” reported The New York Times (May 19, 2012): “More than a third of men ages 65 to 69 are working, as are more than a quarter of women…For the first time since the government began keeping track of the numbers in 1981—and probably the first time ever—one in nine American men over the age of 75 was working. And about one in 20 women over that age have jobs.”

The shift in mind set isn’t simply a matter of personal choice. During more than a decade of economic turbulence, non-retiring retirees witnessed their 401(k)s and home values dip. That alone prompted some to recalibrate their retirement date. But remember, these are baby boomers. Many non-retiring retirees simply desire to continue to manage their careers on their own terms. Two of the common ways they are choosing to do so are through phased retirements and encore careers.

 • Winding Work Down Slowly—Phased Retirement. Valuing the experience and expertise seasoned workers possess, a number of employers are starting to offer phased retirements. This means an employee can transition into retirement slowly. Gradually working fewer hours per week frees time to enjoy other activities away from the job. The employer preserves know-how and extends opportunities to pass on knowledge to others. And the employee gets to test retirement dreams while maintaining a financial cushion in the form of a salary and benefits.

 • Following Their Passion—Encore Career. While growing ranks of non-retiring retirees continue to work, that doesn’t mean they continue in the same trade or profession. Looking back over decades in the work force, they may elect to pursue a new career opportunity in a different field. Many non-retiring retirees undertake careers that do provide continued income, but more importantly offer a more meaningful work experience, such as social service and environmental stewardship. The point may not be to equal their previous income, but rather to give back to their communities and the causes most important to them.

New Retirement Approaches, New Planning Needs

The very existence of a non-retiring retiree poses a challenge for many a financial professional, particularly if they helped with a planned retirement income strategy that now is out of synch with new realities. But that’s why financial plans aren’t carved in stone. Even though a client may delay retirement or slowly transition from the work force, there will always remain financial decisions to consider. This is where a consultative financial professional continues to be of service.

Working longer offers more time to accumulate funds for less time in retirement, but a non-retiring retiree still must make decisions and take actions. One of those is planning for income draw-downs they must take, namely required minimum withdrawals from qualified vehicles such as traditional IRA, 401(k) and 403(b) plans. Another is re-evaluating some of the main ongoing risks to their financial well-being in the future.

Lifespan risk, the chance of depleting retirement funds, may be lessened by working longer, but it doesn’t diminish entirely. A financial professional still should counsel a non-retiring retiree to consider the likelihood that changes in health or other factors such as layoffs could impact their ability to work as long as they intend. That possibility calls for having a backup plan that re-evaluates the potential impact of lifespan risk.

Fluctuation risk, where market volatility negatively impacts retirement assets, is another concern the non-retiring retiree must consider. Regardless of what age is foreseen for retirement, discussion of exposure to market volatility remains a must. One danger is over-correction. Someone trying to salvage a delayed retirement may be overly aggressive in his decision making.

Yet another area for examination is in the financial products your client could or does own. Are actions required on products already in place? Are unused features available that could prove valuable in light of the client’s changed circumstances? Or could new products be put in place? For example, a portion of savings could be deployed into a longevity annuity, set to provide a relatively large income 20 years in the future, when a delayed retirement finally becomes a reality.

Recalibrating the Route to Retirement

The takeaway is this: Although non-retiring retirees may be stepping back from their current jobs, many may not be fully retiring in the traditional sense. And it is important for them not to fully retire their retirement planning efforts as well.

The new orientation represents a new challenge for financial professionals. This shift in plans for present and future by no means makes your services obsolete. Far from it. With the new approach to retirement, planning requirements extend out likewise. The needs simply change. For the financial professional who recognizes this evolving retirement reality, it represents an expanded opportunity to continue the consultative approach and keep working their client relationship in a new dynamic.


1. LIMRA news release, 4/24/12.

2. AARP, 12/10.

3. The Population Reference Bureau, 11/11/11.

Author’s Bio Mark E. Caner, MBA, AEP, ChFC, CLU, CFP MBA, AEP, ChFC, CLU, CFP, is president of W&S Financial Group Distributors, Inc., an operating unit of IFS Financial Services, Inc., and wholesale division of Western & Southern Financial Group (Western & Southern).


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