Five retired business officers advise on how to rehearse for your next act so that life after 9-to-5 is everything you’re hoping for.
By John S. Ostrom
Some say that old age is the time when you've finally figured out all the answers, but nobody asks you any questions. To that witticism I'd add this definition of retirement: It's when all your friends still in the workforce assume you have nothing to do, but you can't figure out why you never have any free time!
No matter. Even if you've decided to delay retirement until your pension funds recover from their recent skids, the day will eventually arrive when you say goodbye to full-time employment. Having recently “retired” as EACUBO's news editor—17 years after I officially retired from Cornell University as a business officer—I realized that issues relating to retirement are timeless. So I'd like to share what I've learned in my years of retirement, aided by comments from Len Wesolowski, who retired more than a decade ago as associate vice president and comptroller at Yale, New Haven, Connecticut, and three relatively new retirees: Tom Kingston, former vice president for finance and administration at Franklin & Marshall College (F&M), Lancaster, Pennsylvania; Larry Broomall, former vice president for finance and treasurer at Washington and Lee University (W&L), Lexington, Virginia; and Richard Norman, former senior vice president for finance and business services and treasurer at Miami University, Oxford, Ohio.
Interestingly, most of us chose to retire in our early 60s, rather than waiting for the customary age of 65. My family's poor medical history suggested I had a limited life span—although the wonders of modern medicine have kept me going years beyond retirement. Similarly, Broomall wanted to enjoy a life after his working years ended, aware that his dad had died at 62. All of us wanted more time—to spend with family, to travel, to play golf, and to engage in a wide variety of outside interests.
In addition, we all believe in community involvement, such as serving on boards and chairing civic organizations. None of us misses going to the office every day, yet no one wants to give up the friends and relationships developed over long careers in higher education. So one significant difference has been the extent to which each of us has continued paid employment, ranging from “not at all” to “almost full time, for a while.”
If you want to stay active in the profession as a consultant, be sure to plan for it before retiring.
In my case, I served 13 years as news editor of EACUBO, a position that included attending the annual meeting and six board or executive meetings each year. Kingston has remained on F&M's board investment committee and also continues to serve as faculty liaison to the men's basketball team. More recently, he accepted a consulting job with two colleges considering collaborative or combined projects and operations.
If you want to stay active in the profession as a consultant, be sure to plan for it before retiring. “Unless a person has a clear marketing plan, supported by continuing education, it might be best not to expect a second career as a consultant, even on a part-time basis,” observes Wesolowski. He suggests carving out an area of expertise for attracting post-retirement consulting work.
“It is unrealistic to try to maintain the skills of our former positions unless we plan to devote the required 40 or 50 hours per week,” Wesolowski continues. “As a result, we must decide what we enjoy doing, or what we perceive to be our strong points, and sell that skill set.”
To Norman, the time commitment required of consulting seemed too much like the work he retired from. Instead, he draws on the many contacts he made during 40 years in the profession by serving as a liaison to potential customers of a firm in the higher education business.
Broomall eased into retirement by taking advantage of W&L's phased retirement program, which enabled him to work half time for two years. During the second year, he took on another half-time position as interim CFO at Sweet Briar College, Sweet Briar, Virginia. He later spent several months at another college while its leadership searched for a full-time CFO. (For more on serving as an interim administrator, see sidebar “Playing Another Role—For the Time Being.”)
As for Broomall, he is currently a senior adviser to Emeriti Retirement Health Solutions and serves on Sweet Briar's board, chairing its finance committee.
What Really Matters
If you're seriously thinking about joining the ranks of retirees in the near future, you would have Norman's full support. “None of us will live forever,” he says. “If you aren't convinced, read the daily obituaries and just look at the ages of those who died. Then, using a little subtraction, think about what your prospects are for a few more years and how you might want to use that time to enjoy family and friends—and maybe even accomplish some things on the 'bucket list' of places to go and things to do.”
“I ultimately concluded that you cannot buy time,” Kingston adds. “Although I knew I'd never have enough money to be totally comfortable, money and lifestyle are simply not as important as family and time to enjoy life fully.”
In my case, for example, I read more, exercise more (of course, it's necessary just to keep the parts moving), sleep better, and spend more time with my family—including traveling to my children's homes because I have more flexibility than they do. I spend less time going to meetings and initially quit reading the student newspaper, which not only saved time but also vastly improved the state of my mental health. (Now I'm reading it again, primarily for sports coverage.) I used to worry about the technical obsolescence of my home computer, but I have now replaced it twice—and added a laptop for traveling. Also, I used to spend a lot of time worrying about my health, including how to pay for health care; moving to a continuing care retirement community helped alleviate those concerns.
Here are some general suggestions for thriving in “leisure world”:
Control your own calendar. Years of relying on competent assistants can spoil a person, leading you to fritter away hours, days, and even weeks. Keep a calendar handy at all times so you can track and realistically schedule many different activities—including recreation, such as tennis or golf, which you should schedule just like a meeting.
Volunteer your time and talents. To feel useful, make yourself available and get involved in the community and with the many organizations that can benefit from your financial expertise. Many nonprofits, for example, struggle or even cease to exist due to a lack of sound financial planning. They may have problems as simple as offering goods and services at too low a price, or as profound as grossly miscalculating revenues or costs.
As treasurer of several organizations and member of the finance committee of others, I've designed financial reports, helped change auditors, taught staff how to keep books, done Forms 990, and provided fiscally related advice. It's nice to feel wanted and even nicer to realize you have provided meaningful input.
Just be sure not to become overcommitted once the word gets out that you're willing and able to help. Decide in advance how much of your retirement time you're willing to devote to volunteer work; pick the projects and organizations you really enjoy; and do the job well.
Engage in old hobbies and develop new ones. With more time available to them, many retirees satisfy their desire to travel, visiting family around the country and even taking overseas trips. One of Wesolowski's retired friends plays golf three days a week and makes or repairs golf clubs on the other days. Another retiree has taken up serious writing; even though he hasn't had anything published, he so enjoys writing that he treats the hobby as a full-time job.
Wesolowski himself began exploring genealogy, a whole new field for him, after retirement. He has enjoyed making new acquaintances and renewing his interest in history, and he wonders why he didn't delve into genealogy earlier.
Not surprisingly, all of the retirees I contacted had done a considerable amount of advance financial planning, which included eliminating any major debt. For example, we all owned our homes free of mortgages, and we all continue to enjoy adequate medical insurance coverage provided by our past employers. But the big question remains: How much money will you need to live well in retirement?
Most often, you'll hear that your retirement income should equal at least 75 percent of preretirement income, assuming you expect to maintain the same standard of living. In reality, that percentage could range anywhere from 50 percent to more than 100 percent. The key variables are how you used your resources before retirement, how you expect to spend your time in retirement, and the level of income itself.
While I was working, for example, I determined that we spent about 60 percent of our income for operating expenses. I calculated this by doing a relatively simple summary of our checkbook plus tracking cash expenditures for a couple of months. The remaining 40 percent we either saved or used to pay taxes.
Like most people, we haven't made any radical changes in our lifestyle or spending levels since retirement. I spend less on clothes and lunches but more on travel. Mortgage payments may disappear, but property taxes go steadily upward. Premiums for life insurance may stop, but the premiums for health insurance certainly don't. I no longer contribute to my retirement fund or pay Social Security taxes, and we pay lower income taxes because of our lower income.
We still save some money, recognizing that my income isn't going to increase and that inflation, no matter what the rate, will slowly eat away the ability to save. In the second and third years of my retirement, for example, my pension decreased, reflecting TIAA-CREF's lower earnings rate. While the rate for the early years may be locked in, remember your accumulated funds continue to earn as you draw them down, so changes in interest rates will affect your annuity level. On balance, my preretirement estimates of financial need versus available resources have proven to be accurate, perhaps even a little conservative.
Broomall estimates that he can live on about 50 percent of his preretirement income. Kingston suggests 80 percent, and Norman declares he needs more than 100 percent (no doubt reflecting his decision to buy two new cars during his first year of retirement). More realistically, he estimates that 70 percent of preretirement income adequately provides for the Normans' lifestyle.
A financial adviser once told me to convert all my securities to tax-exempt funds when I retired—not a bad idea if both my wife and I planned to die in a short period of time. But the chances were that one or both of us would be around for 20-plus years (it's already been 17) and we needed some protection against inflation over that time period.
Many people ignore the fact that inflation is not generic—it's specific to you. In other words, the factors that influence the national rate may affect you in very different ways. Now, while you're still employed, you need to look at where your dollars go and determine how that changes from one year to the next. What's happening to your income? Is it going up, going down, or (more likely) not changing very much? What will happen to your expenditures in the future? Your retirement years may not be comfortable if you don't make financial planning part of your preparation now (for advice on details, see the companion article “Years in the Planning”).
Many years ago, Kingman Brewster, then president of Yale University, was quoted as saying; “The fullness or emptiness of life will be measured by the extent to which a man feels that he has an impact on the lives of others. To be a man is to matter to someone outside yourself or to some calling or cause bigger than yourself.”
All the people I talked to for this article found that calling to be in fulfilling our responsibilities as college and university business officers. When retirement became a possibility, we were ready to turn to other things. And retirement has proven to be all that we had expected—more quality time to relax and smell the roses, more energy to devote to outside interests, and fewer time pressures overall.
Is our experience typical? Let's just say I haven't met any fellow retirees who have wanted to return to full-time employment. As Wesolowski says, “I have been very fortunate because I spent my life doing what I truly enjoyed. My working career has been very satisfactory to me, and I expect to say the same about my retirement years.”
So, we've all concluded that retirement is well worth the 40-plus years of working and planning to get there. If you've done that planning well, you'll be in a better position to know what's next on your program and enjoy all that you've earned.
JOHN S. OSTROM is university controller emeritus, Cornell University, Ithaca, New York.
Companion pieces for this article include: