‘Retirement is so traditional,’ try periodic retirement to figure out … – Morningstar

By Chris Farrell

Intentional breaks can lead to the next chapter of work

During the recovery from the pandemic several workplace catchphrases generated buzz, including quiet quitting, great resignation, and hybrid work. Expressions like these in the aggregate reflect a much larger conversation rethinking work, purpose, and the good life in the postpandemic economy.

I'd like to throw another term into the mix that I hope will gather momentum with the aging of the workforce: "Periodic retirement."

Many more people are working well into the traditional retirement years compared to the previous generation. For example, from 2000 to April 2023 the labor-force participation rate of the 60- to 64-year-old age group rose by 23% to 57%. The comparable figures for the 65- to 69-year-old cohort are 45% and 34%, respectively, according to calculations by Advisor Perspectives.

"For those who are able, working in retirement can have profound effects on financial security," notes the survey-based report by the demographic consulting firm Age Wave and the financial services company Edward Jones. "The nonfinancial benefits are just as profound. Working in retirement keeps people mentally active (a benefit both retirees and preretirees find more valuable than the paycheck), physically active, socially connected and feeling a stronger sense of purpose and accomplishment."

Read:I'm 54 and the primary earner but 'professionally, I am exhausted' -- we have $2.18 million but what about healthcare?

Odds are the labor-force participation rates of older workers will rise in coming years, thanks to the combination of increased life expectancy (especially for educated workers) and an aging population. College graduates who recently received their diplomas can reasonably expect to work for 50 years or more.

Longer work lives will push people away from landing on one career in favor of embracing multiple careers. The three-stage life plan we grew up with--attend school, find a career, and then retire--is being rewritten into a more complex multistage narrative.

"There are real opportunities to move away from the constraints of a three-stage life to a way of living that is more flexible, and more responsive--a multistage life with a variety of careers, with breaks and transitions," write Lynda Gratton and Andrew Scott in the "100-year Life: Living and Working in an Age of Longevity." "However, this restructuring of life is not trivial. It will involve major changes for you as an individual, for the firms and organizations that hire you, and indeed for government and society."

Read:Will you have enough money in retirement? New research could help investors find their number

Here's where the concept of "periodic retirements" comes in for individuals. (Comparable terms are sabbaticals and mini-retirements.) The motivating question behind the periodic retirement idea is to take time to figure out "what comes next." Intentional breaks from work can rejuvenate the mind and spirit. The respite may lead to the next work chapter that offers both meaning and money.

Just ask John Davis, age 61.

"Shift your paradigm," says Davis, the executive director of Warroad River Place, a 20,000-square-foot arts, culture, and events center in development in Warroad, a town of some 1,800 in northwest Minnesota. "Maybe 25 years ago I said, 'retirement is so traditional.' I believe in periodic retirement."

There is a sustained arc to his career. He has focused on how the arts and culture can contribute to the vitality and sustainability of rural communities. He's also a fan of periodic retirements. His retirement has led to new inspirations and eventual unretirements.

For example, he moved to New York Mills in 1987, a Minnesota town with a population of nearly 1,000 at the time. Like many rural towns, residents worried about their community's future vitality. Davis and the community together created the New York Mills Arts Retreat and Regional Cultural Center, a multidisciplinary arts organization.

Time for a break. He saw a 1966 Red Ford Galaxy for sale on the side of the road; he bought it; and "retired" to head out West.

Months later he returned to New York Mills with a new idea: The Great American Think-Off, a philosophy contest for the ordinary person that started in 1993. (The 30th Annual Great American Think-Off was held on June 10.)

He stayed several more years in New York Mills before retiring in 1996. This time he took off in an Airstream.

"Being intentional is important," he says. "Take the time to think about what comes next."

He unretired a year and a half later by taking an executive director position at an arts organization in Lanesboro, population 700-plus in southeastern Minnesota. He left after several years and retired to travel and pursue various projects like the Kids Philosophy Slam.

He returned after several years to Lanesboro and helped transform the town into a vibrant arts campus. He retired in 2018, and he unretired in 2023 for his current position in Warroad, a town better known as Hockeytown USA.

"What excited me about this opportunity was a vision for adding arts and creativity and innovation to a community that's already known for the outdoors for fishing and hockey," he says.

The concept of taking periodic retirements and unretirements throughout a long career makes sense, whether you return to your former employer or embark on a new endeavor. The career risks and traditional stigma associated with taking a break from work may well be declining in the postpandemic economy, too. LinkedIn has added Career Breaks to its Experience section on professional profiles. People can also add context to their leave if they want. In the heated competition for talent, many more employers seem willing to put former employees back on payroll (the so-called boomerang employee).

That said, there's nothing easy about retiring, unretiring, and repeating the process several times throughout a lifetime. The approach takes planning, especially with household finances. You'll want to build into your budgeting and savings strategies the option of having some financial resources available to tap for a limited period. There is little institutional support from established organizations. Companies don't offer employees a periodic retirement or unretirement benefit, for example (too bad, though). Neither does the government.

At the first White House Conference on Aging in 1961, President Kennedy remarked that while we have "added years to life," the challenge is how might we "add life to years."

The opportunities created by the prospect of longer work lives suggests a talent for managing transitions well will be critical in the future. Periodic retirement is a rich way to add life to years.

-Chris Farrell

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-29-23 2021ET

Read the original here:

'Retirement is so traditional,' try periodic retirement to figure out ... - Morningstar