Mark Miller: I'm Morningstar csoolumnist, Mark Miller. Joining me today is Marci Alboher, who is the author of the Encore Career Handbook: How to Make a Living and a Difference in the Second Half of Life. Marci is the vice president of Encore.org, which is the non-profit group that's working to ignite a national movement around this idea of people moving into second, or encore careers.
Marci Alboher: Hi, Mark. Good to be here.
Miller: Good to have you. So, for those who might not know this idea or this concept, what is an encore career and who should be interested in one?
Alboher: So, an encore career is late career work, usually after your primary career is winding down, that combines continued income with personal meaning and most importantly social impact. So something that's bigger than you, that has some kind of impact in the community or in the world.
Miller: So the income part of this is really timely, since we're seeing an endless stream of headlines about how poorly prepared for retirement most Americans are.
Just this week, in fact, the latest Retirement Confidence Survey, which is done annually by the Employee Benefit Research Institute, shows that Americans’ confidence in their ability to retire continues to be at a historic low point. They've been doing the survey for 23 years, and a real stunning statistic is that about half of Americans have saved $25,000 or less for retirement. So the economic imperative is a really big part of the story, right?
Alboher: Yes. Some of this is making lemons out of lemonade, or virtue out of necessity, in that I think we all realize we're going to be working a lot longer than we ever thought, and boomers are coming right up against that. Their kids probably are looking at their parents and saying, well, retirement, that's going to be a very quaint notion by the time I get to that age.
But the boomers who are turning 60 at 10,000 a day, are really reckoning with the fact that they will probably be working quite a lot longer than they originally thought. But so many people are thinking, if I am going to be continuing to work, whether by choice or by necessity, how can I make sure that that work matters, both to me and in a way that's bigger than myself, while continuing to generate the income that I need at this life stage.
Miller: So it's two things; it's the income, and in some ways a reboot or hitting the reset button on the kind of work you do. Is that the way you think about it?
Alboher: Yes. So the way this is different than career change at other parts of your life is, you hit a point--usually in that loosely defined mid-life period, whenever that word resonates for you--where you think I want to keep engaged, I want to keep working, but I want to make sure that the time I have left matters, and that's what this book and the movement is all about. How do you make sure that your work matters? How do you make sure that you're continuing to work in a way that you think will have some significance?
Miller: So these two tracks involved here seem really big, and I think for a lot of people probably fairly daunting. One is the income question, which is, as we just discussed, it's urgent and it's a tough challenge, right?
Then you have this values discussion that people need to be having with themselves and with the people around them. One of the things that’s intriguing about your book is that it's very much nuts and bolts and hands-on. Encore has been involved in other projects and books that are, kind of at the higher or loftier level of thought leadership on this, but your book is really nuts and bolts. It's how to get it done. So how do you get started on something like this?
Alboher: It's a highly personal question, so the "how you get started" depends on where you're staring. So if you're really still working and thinking of the way we would plan for retirement: what should I be thinking of five years out, 10 years out? Well, then you're in a planning mindset, and you could be thinking both about your financial planning, but also about how to think about yourself as that asset you should be investing in.
So there are a few pieces to it. So, what kind of exploration can you be doing in advance of the encore shift? What kind of things can you be doing to try stuff out, to test out your areas of interest, to throw yourself into a new world here and there, to do things in your volunteering, philanthropic, weekend life that let you experiment, visit new lands of opportunity, as I call it. Go take up residence, in a part time way, in the world you might be moving into full time.
Miller: So taking something out of the theoretical, in your mind, I think I'd like to do this, and now go out and give it a little bit of a try.
Alboher: Right. So, let's say, you're really interested in working with education and youth. What can you do in your own community in a volunteer way? Is there a local board that you should get involved in of an organization you care about?
If you've got professional skills, what can you be doing as a pro bono consultant to help some organization you care about? Is there a project you can do that would let you dip into that world, learn more, see what the issues are, see where you might fit, and also make some context that could help you make a shift when you're ready to make that shift.
Miller: Right. Now, I think a lot of older workers are skeptical about their ability to find new work because of the whole issue of age discrimination and openness in the labor market to older workers. What's your take on that? Do you think the labor market is really receptive to somebody in their late 50s or early 60s coming along and saying, hey folks, I want to start something new?
Alboher: So, first of all, I think this is a real issue. Age discrimination is real. I have interviewed hundreds of people in their 50s, 60s, 70s, who tell me they had a certain experience online in a conversation with somebody, and suddenly they walk in the door and everything shifts when they see the white hair or the bald head or whatever is the indicia of age that's apparent.
That said, I have also talked to hundreds of people on the other end of it, who've managed to accomplish things in spheres that you wouldn't think of as necessarily age friendly.
So, the first thing I would say is, control the things you can control. So, what can you control in your own mindset, because it's really as much what's inside your head as what's on top of your head. So, are you prepared for the work you want to do? Do you have the right skills? Do you have the right network in place? Have you learned what you need to know to make the shift you want to make? How is your attitude also? Are you portraying curiosity and humility and passion? Or are you conveying that you feel a little insecure about what you are doing?
So, I think those things are things to really work on and practice with people you feel comfortable with, and the best way to get comfortable is to make sure that you have the skills and the training you need. So it's why we see a whole wave of people getting new education and training for this next stage of a career.
And if you’re going to be doing your encore work for another 10 to 20 years, why not invest in yourself and get the training you need? And sometimes it could be as small as going to an important conference and taking a class that fills in some gap you have. Other times it can mean going back for a certificate program or a full-on degree in something once you realize that that's the credential you need to stay in the game or get back in the game in the way that you want to.
Miller: So, let's explore that just a little further, the retraining question. How do you think about that? When is it worthwhile to think about a major reinvestment versus going to a conference?
Alboher: We are on a financial news site here, so I think we should talk about the real financial equation that you should do. There is a little formula really you should look at, which is what are the potential earnings you can look at in the work that you want to be doing, and then what does it pay to invest in the training it needs based on how many years you think you are going to be doing that work.
So, I remember when I was mid-career and I was switching from law, a very high-paying field, to journalism, a very low-paying field, one of the questions I thought of was, should I go back and get a masters in journalism? And at that time, I think it was going to cost me about $50,000 to do that in a period in which I probably wouldn't earn any money while I was working on that for two years to go out and get work that may not generate $50,000 in the first few years of even doing that work. And it just seemed like it was going to be a tough financial hurdle to do that when there was an alternate route. And the alternate route was to take a bunch of good freelance journalism classes and learn on the job and go to the right conferences and find a few good mentors. I don't think I ended up spending more than $10,000 on my transition over the course of two or three years, and then I was working all that time also and starting to earn income and using my old career to make extra income, because it was paying at a higher rate. So, there is quite a lot of ways to think about that equation.
Miller: Right. This discussion in some ways reminds me of the conversation out there about the number that you need to retire. You could talk about this almost as an encore number. So we just talked about the investment side of that, but the other side of this is, a lot of listeners are probably thinking, well, gee, if we’re talking about making a move from, let's say, working in the business world to a non-profit that probably calls for a big reduction in the amount of money I could expect to make.
How do you think about this issue of recalibrating your lifestyle to accommodate that? I often talk about that it's not just a matter of the income or the savings, but you've got to look at the expense side and how you're structuring your life. What are the implications there for going into encore work?
Alboher: The most creative solutions that I have seen for people who want a lot more freedom of choice in the work they want to do is to figure out, is there something in your overhead, in your monthly nut, that can dramatically change and free you up to have less pressure. And, of course, housing, which we just had breakfast and we spent half our time talking about housing decisions that we've heard people make that are really creative.
So, one interesting thing about the encore shift is that it often happens at a time in people lives where they are making some other shifts. So, maybe they are empty nesters, you've finally paid off the mortgage, maybe you are ready to downsize from a house in the suburbs to a condo in a university town, or a place sthat's closer to where you want to work. So, I have seen people who have made a downsizing move that suddenly frees up lots of money that can be the replacement income for the money they want to do work that they feel much more committed to.
Miller: The big dramatic example of that would be selling a house in a high-cost city like New York or San Francisco, pocketing the difference, and moving to a low-cost area where you literally could bank, maybe depending on the situation of your mortgage indebtedness when you're selling, hundreds of thousands of dollars that could start tossing off some income.
Alboher: Right. And then the reverse of that is that there are people all over the country now who are saddled with a house that they cannot sell. So they are kind of house-rich and cash-poor. And what I see happening creatively there is to use the home in some way that's creative. So, the way one person I interviewed [expressed] it, she had her house go out and get a job, and I love that way of thinking about it. It goes back to my grandmother's depression era: she had boarders in those days. So, there is obviously the renting out parts of your house for different usage.
But there is also using your home. I did an interview a few weeks ago in a little bungalow on the property of the house that was being rented out to a television studio to do interviews like the ones we're doing right now, which generates a wonderful monthly nut for this person who runs a wellness practice out of her own home.
So, there are a lot of creative ways to be thinking about this. If you want travel in your life, is there a way to do housing swaps so that you go stay at someone's house and they stay at yours where you live, rather than thinking about hotels and those kinds of expenses.
So, there are so many creative ways to get the things we want in our life if you spend some time on that, and not just think that this is all a trade-off or one salary versus another salary. There are a lot of other moving parts you should be looking at.
Miller: Let's circle back around to this question that we touched on a minute ago of skills and how you present yourself to the folks you might want to be working for.
One of the things that strikes me about this in my own work, when I talk to people who are trying to bring a mindset to the new work that is still tied to the old work. And it's like, let me tell you, the interviewer, all the lessons I know from my old work, and that can come off in the wrong way.
Are there rules of the road as to how you go about everything from reshaping your resume, you touched on networking, people who maybe don't know how to use Twitter or Facebook? I mean, is there sort of a makeover that's required here before people head off into this new land?
Alboher: What struck me about what you just said is how we talk about what we want to do and how we think of our skills as transferable. There is almost always a way you could connect the dots between what you did before and what you want to do now if you give it enough thought, and you think about where you want to be and how to talk about that.
Here is an example where you would have seen no connections: I talked to a guy who was in software sales who wanted to become a math teacher. And when he became a teacher, and he realized how to connect with the students, he explained it to me as, I finally got it when I realized I was now selling math to these students. I had to make them passionate about the product I was selling.
If you can see that kind of shift happening, you can see that if you understand what you need to do to succeed in the work, and that's going to come from talking to a lot of people who do that kind of work. So, using your network... One of the benefits of hitting mid-age is that you probably know lots of people, can tap your network to help you meet the people who know what are the values that matter in this new work.
When we see people who are moving from the for-profit to the non-profit world, for example, and they may have very strong skills in sales, in financial management, in marketing or communications, but they're used to being in an environment where the bottom line is all about profits. Well, if the bottom line is different in a non-profit, where it's all about changing hearts and minds, or feeding the homeless, or educating a certain number of kids, how do you talk about those same skills in a way that's going to drive the mission of that organization you care about.
So, start understanding what's the language that's spoken in the world you want to live in, and the only way to know that is to get to know the people that work in those spheres, which is why I always come back to, what can you do to volunteer? What can you do to give your skills, and start hanging out in that world you want to live in.
Mark, this brings me back to something we didn't get to, which is a big issue in the age, age-ism, age mindset, which is, are you also looking at fields where age and experience are valued?
Miller: So, which are those?
Alboher: So, big ones are the gray fields, fields that serve the aging population. So, we live in an aging society. The number of people over 65 is increasingly growing, and the needs of that population are staring us in the face. We have a generation of our elders that are going to want to stay in their homes rather than move into nursing homes, and they have a lot of needs to do that. They need people to rehab their homes, they need wellness services, and all kinds of mobile access to products. So, anything that has to do with taking care of the aging population and marketing services that the aging population needs to age in place ...
Miller: This is the demographics are destiny argument. It’s not really tough to figure this out. You've got an aging population that needs things.
Alboher: So, in the book--there are so many examples in the book--but I keep talking about this guy, Gary Bates, who is a retired airline pilot who was forced to retire at 65. He started a caregiving business with his wife, who had done a lot of caregiving in her personal life. Their model, though, is they do domestic home health-care aids and homecare. But they have this branch of their business called Care-To-Go that provides traveling companions, because what he saw as a pilot is that there were a lot of elderly or disabled people who could not travel and get to a family event, because they couldn't manage the airport. He always said, their motto is, we get grandma to the wedding. They live in Phoenix, Ariz., where there is a very big aging population. It was a problem he saw under his nose.
That said, this couple had never been entrepreneurial, and they had to learn what they needed to learn. They did a couple of different things. They used a business coach and learned some skills around entrepreneurship, and they went to the local community college and they took a class in caregiving to get certified in what they needed to do for the state [in order to] to start employing caregivers. [It was a] very low-cost way to get the training they needed, but very specific to the idea they wanted to do.
Miller: They started with an observation in the world they knew, and made a leap to something different.
Alboher: Right, and also it's kind of a low-overhead business, right? As you market to clients and see what the need is. They brought in contractors, not employees. They don't have an office space; they run out of their home. So, there are a lot of ways you can think about these transitions that don't require you to commit a lot of capital to an idea.
Miller: So, last question for you. You talk a lot in the book about encore planning as a new type of financial planning. So here we are at Morningstar.com, what does that mean? What is the encore financial plan?
Alboher: It used to be that your financial planning model was how do I rack up enough money in all these financial products so that one day I never have to work, and I can just be taken care of by these various streams of income ... that I have created.
But imagine if you, yourself, were one of the assets you are investing in. What would that look like? So that the salary you can generate, the income you can generate, in your encore [career] is one piece of that financial pie.
I think, first of all, that gives the financial planners a lot more to play with, because if they look at you as one of the pieces of the pie, your financial planner is going to be thrilled when you announce this. It doesn't all have to come from investment vehicles, but it can come from your home, it can come from your pension, your Social Security, and your own labor. I think that's very big.
But the other piece of it, always, Mark, is what we talked about, which is, don't forget the expense side. Don't forget to think about what kind of life do you want to live, what are the most important things to you, and what can you do to set up the way you live to put you living in the community where you want to be most engaged? And that may not be where you are living right now.
Miller: Marci, it's really great to hear all these fresh new ideas. I think they're much needed as we try to rethink and re-engineer this whole world of what it’s like to live at 50 and beyond.
Alboher: Such a great discussion to be having, Mark. Thanks for having me.
Miller: Thank you for joining us. For Morningstar, I'm Mark Miller.