After working for many years as a pension consultant, John E. Nelson quit. He realized that as companies moved away from pensions and toward 401(k) savings plans, employees were being forced to make more high-stakes decisions about their futures -- without much advice. Nelson saw an opportunity.
He decided to earn a Ph.D. in retirement education but then learned the degree didn't exist. He worked with the University of Wisconsin-Madison to create one. Now, he lectures at the university, and he also is working on a Ph.D. with a specialty in retirement planning education.
His focus? "How adults plan for their next stage of life -- whatever they call it," Nelson says.
Nelson's expertise caught the eye of Richard Nelson Bolles, the author of the long-running bestseller What Color Is Your Parachute? A Practical Manual for Job-Hunters and Career-Changers. Bolles, now in his mid-80s, tapped Nelson to write an updated version of the book, but with a twist for those entering a new stage in life: What Color Is Your Parachute? For Retirement.
In an interview with SecondAct, the 51-year-old author talks about how retirement has changed -- sometimes for the better -- and how midcareer workers can adapt for the future in a slower economy.
SA: You talk in the book about "retirement happiness" -- what does that mean today?
JN: Research suggests we can follow three different paths to happiness. The first path is based on simple fun and enjoyment, and looks a lot like the traditional leisure-based retirement. The second path is based on engagement and positive challenge, and looks a little bit like work -- but in a good way. The third path is based on being in service to something greater than ourselves. That provides us with a sense of meaning in life. Of course, retirement is our best opportunity to actually combine all three paths. Why settle for just one?
SA: If the boomer generation of pre-retirees is different from those of generations past, what does that tell us? What's different?
JN: For years, surveys have reported that boomers intend to remain more engaged -- somehow -- during retirement. Exactly how that plays out in the real world will be interesting to learn about, won't it?
SA: You say in the book that a slower economy is the new normal. If that's the case, how can pre-retirees adapt?
JN: Each of us will adapt in different ways. Some can buckle down and save more in order to retire on schedule. Some can't save more, so will need to work in the same career longer and give savings more time to grow. Some can't stay in the same job and will need to start a retirement career for extra income. But some of us can't do any of these things and instead will need to design a much simpler, less expensive lifestyle.
SA: You write about consumerism and how it will impact us as we try to plan for, and enter, retirement.
JN: Each of us has many social roles that help define who we are. For example, are we focused primarily on our role as a worker? Family member? Citizen? Consumer? Planning for retirement is the perfect opportunity to reflect on which roles are most important to us, and to put them in their proper place. When we do that, consumption usually becomes much less important.
SA: Some people still want what you call in the book "traditional retirement," but some are forced into "the new retirement." What is "the new retirement," and how is it changing planning strategies?
JN: Traditional retirement was designed for worn-out industrial-era workers. It begins on a single day, and is a life of leisure, supported by passive income. Many thought the new retirement would also be economically secure, but oriented more toward engagement instead of disengagement. But since the economic crisis, most think the new retirement will be about balancing a desire for engagement with the need to continue earning an income.
SA: Given that, why is it important for people to transition into retirement, and how can they do it?
JN: A more gradual retirement transition is important for economic reasons, as it helps you ramp back up into earning a living if you need to. The psycho-social reason is that we're happier when we have more control over life changes, and a gradual transition helps us feel more in control.
SA: Do you find many people have trouble -- or even get bored -- with sudden retirement, even if it's what they thought they wanted?
JN: Most people are initially happy to stop working, unless it's involuntary. But after a vacationlike "honeymoon" period, many yearn for more challenge, or social interaction, or a sense of purpose. They recognize that they really can design a more fulfilling life for themselves.
SA: What about those forced into an early retirement because of a job loss?
JN: Having a sense of control is key, and if finances are important, finding paid full- or part-time employment is the answer. It's a tough kind of job hunt, to be sure. On the other hand, if finances aren't crucial, an unpaid "career" can ease the transition.
SA: You write about "retirement autopilot." What is it?
JN: Research from behavioral economics shows that most of us aren't good at following through on all the little financial tasks that get us where we want to go. The more of our saving, investing and retirement income tasks we can automate, the better. That makes it easier to do the right thing instead of the wrong thing. Putting automatic systems in place keeps us moving toward our destination, like the autopilot in an airplane.
SA: What's your opinion of online retirement calculators?
JN: Online calculators aren't perfect, but they're fantastic for getting an idea of how much to save, or how much retirement income you'll have. But many of us don't use them because entering all the financial data is time-consuming or even painful. So if your retirement account provider has a calculator that will import much of your data, that's the easiest way to get started. The best calculator is the one that we actually use!
SA: What have you changed in your personal life to better prepare for your retirement?
JN: A few years ago, I set out to find something I love doing so much that I could do it for as long as I live. I discovered that I most love being in an ongoing cycle of learning and teaching. That led to my work as a speaker and writer -- including What Color Is Your Parachute? For Retirement. So now, I may never retire.
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