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Finding Work in the 'New Retirement'

Christine Benz

Christine Benz: Hi, I am Christine Benz for Morningstar.com. The Retirement Income Industry Association is holding a conference this week at Morningstar.

Here today is Art Koff. He is one of the speakers at the conference. He is the founder of RetiredBrains.com. He is also the author of a book, Invent Your Retirement.

Art, thanks so much for being here.

Art Koff: Thanks for inviting me.

Benz: So, Art, your website has a lot of information about employment for folks who are in retirement or getting close to retirement. I want to talk about what's driving this trend, because you shared some really interesting statistics this morning, I think, pointing to some 80% of folks, aged 65, are expected to continue working well into retirement. What's driving that, what's causing people to realize that they need to work longer or to want to work longer?

Koff: Well, the new retirement is such that most people find that they cannot live the lifestyle they had hoped to live during their retirement years with what they have saved and with the value of their homes and condos, etc.

Benz: ...And portfolios.

Koff: ...and portfolios, 401(k)s, everything.

So, they're finding that they have to work in some capacity to make some amount of money, and most of the jobs that are available to older workers now are either part-time, or temporary, or project assignments, and even in those areas, they are often difficult to get in this economy. So, we've found a lot of people now are looking for ways to work out of their own homes and create some additional revenue or start a small business.

Most of the people who come to the site are looking to start little businesses where they don't have a big investment of dollars. They're trying to start a business where there's virtually no investment other than time, and a lot of those don't generate a tremendous amount of money, but they generate enough money in most cases to be able to live their "new retirement years" where they are continuing to work, but they are like semi-retired.

Benz: So, Art, how do benefits fit in, because I know some of these part-time or temporary jobs would not come with benefits?

Koff: What's important to understand is that if you are working on a part-time project basis or temporary basis, in most cases, you won't get any benefits at all, and that's a big benefit frankly to the employer. They're more likely to hire somebody who they don't have to pay benefits.

The employer also is interested in hiring somebody that if there's a turnaround, they can let you go without any off-boarding costs. That's a huge benefit that most people don't realize are important to employers.

So, it's a win-win situation for an older worker to work on this basis and for the employer to hire an older worker on this basis. It's got to be both sides, or there are no jobs available.

Benz: So if you are retiree or a pre-retiree, and you are thinking that working longer, working into retirement, will be part of your plan, what are some of the key steps you should take?

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Koff: Well, I certainly would go to a site like RetiredBrains, go to the search engine, put in the geographic area in which you want to work, and then put down the type of a job that you're looking for, and see who is advertising on the site for that kind of a position. It will give you some insights as to whether they are in fact possible or not. We also suggest that in our keyword box that you put in temporary or project basis or part-time to see whether, in fact, some of those employers are looking for you on that basis as opposed to full-time jobs.

Benz: So, your site helps match retirees with prospective career paths?

Koff: And in most cases, the positions that are up on the site are placed there by employers who are considering hiring an older worker.

Benz: Right. So are there any big drawbacks in your view to this trend toward retirees working longer or is it all pretty much a positive picture?

Koff: I think it's a win-win situation. The only drawback is that many people assume that they can get work when they are in fact 65 or 70 or even younger, and there just aren't that many jobs in this particular environment that are available to younger people, nevertheless older people. So, that's why a great deal of our traffic is now coming to the areas of work-from-home or start a small business.

Benz: So, you ran through in your presentation some of the key pitfalls or mistakes that retirees can avoid, not just related to working, but also some other areas of retirement planning.

Can you share a few of those? I know you talked about underestimating longevity is being a big one?

Koff: I think that's an absolute key. Most people just do not realize that one should get to be 65. If you are a couple, one of you is likely to live--more likely than 50%--to live to be 90. So, you need to look at your expenses over a period of years. Even the cost of health care from a point of view of just Medicare premiums and supplemental health-care premiums, forget any cost over and above the premiums, when you multiple that out times 20 or 25 years, you are talking about a great deal of money.

Benz: So, people aren't realistic about some of those health-care costs that they will have to pay?

Koff: Well, it's not just a question of realistic. It's a question of not having the knowledge.

Benz: You mentioned people think Medicare will cover everything, but of course it doesn't.

Koff: Yes. We have done surveys and people assume--I talk to individuals who assume that once you are 65 and you are on Medicare that your out-of-pocket expenses may be $25,000 and where in fact they're more likely to be $200,000, so you are underestimating not just by a small amount but by a huge amount.

Benz: Right. Well, Art thanks for sharing your insights. We appreciate you being here.

Koff: My great pleasure.

Benz: Thanks for watching. I'm Christine Benz for Morningstar.com.