Encore Careers: Your ‘Second Act’ in Retirement

Many older Americans plan to keep working after retirement. If you follow this trend, here's how to make the transition.

man in a woodworking shop

If you can't quite imagine not working — even after you retire — you're in good company. And while some retirees may continue working for extra income or health insurance, a number of professionals tend to follow their passions into post-retirement encore careers. 

"Many of my clients say they want to give something back to their communities after they retire because they, themselves, have been financially fortunate," says Danielle Louton, Senior Wealth Planner at Wells Fargo Private Bank. "Others simply want to work in a field or job that always intrigued them, but they never had time to pursue." 

Even those who have put their heart and soul into their own company may want to try their hand at something new. "Retirees who owned businesses tend to come up with other interesting companies they want to create — either for themselves or for their adult kids and grandkids," says Wendy Brewer, a Wealth Advisor with The Private Bank. "Building companies is sort of in their blood. However, after retirement, they might take a supporting role in a new venture rather than run the whole operation."

"Today's retirees are living longer, are healthier, and have more work and volunteer options than previous generations." — Wendy Brewer, Wealth Advisor, Wells Fargo Private Bank

Explore your post-retirement options
If you already know what you want to do after you retire, you're fortunate. However, if you're still brainstorming options, Louton and Brewer have some suggestions on where to look:

  • Review your hobbies. Love classic cars? Buying and selling mint-condition, older vehicles could become a satisfying side business. Passionate about traveling and socializing? Your favorite bed and breakfast might welcome you as a part-time innkeeper, or your local national park may need summer camp hosts. Your favorite pastimes could be the keys to your second career.
  • Consider volunteering. If you've been donating regularly to your collegiate alma mater or your local food pantry, consider getting "hands on" with these nonprofits after you retire. Deepen your involvement by offering to interview prospective students or shelve food, for instance. Once you see how your favorite charity operates, you may be interested in going a step further: Offer to serve on the organization's board of trustees or help with fundraising efforts.
  • Create a family foundation. If you're passionate about your charitable work but also want some control over funding projects, consider starting a family foundation. "Not only might you qualify for some tax advantages, you can also bring your family together to work toward a single, positive purpose," says Louton. If you want help with some of the logistics of running a foundation, Wells Fargo Philanthropic Services can help. 
  • Tap your professional expertise. You may work in a specialized field, such as health care or the law, and still enjoy it, but know that working full time isn't for you anymore. If so, consider staying involved in a more flexible capacity after you retire. International nonprofits often need experienced professionals to do work (paid or volunteer) in underdeveloped countries. "Locum tenens" doctors can fill in for colleagues on an as-needed basis. Retired attorneys are often in demand as legal consultants, teachers, and writers. You may be able to choose to work as often, or as little, as you like.

"The greatest advantage to choosing another career after you retire is that you're totally in charge." — Danielle Louton, Senior Wealth Planner, Wells Fargo Private Bank

Plan well in advance
Whether you opt to volunteer, work for an established firm, or start a new company, Louton and Brewer suggest you think about your "encore career" plans a couple of years before you retire. "Sit down with your Wells Fargo relationship manager, your attorney, and your tax advisor," suggests Brewer. "Let them know what options you're considering. There may be some financial or tax issues you'll want to consider ahead of time."

For instance, if you plan to start a new business, you'll want to carefully examine your cash flow. Should you stay in the workforce longer than you had planned so you can build up capital for the new venture? How much of your portfolio can you afford to invest in the fledgling company? Your advisor at Wells Fargo Private Bank can help you with these questions. 

If you will continue to work professionally or serve on a board of directors, you may have new, ongoing costs such as professional liability insurance or director and officer (D&O) insurance to consider, says Louton. Your trusted Wells Fargo Private Bank advisors can also help you plan for any tax obligations you may not have anticipated.

You may also want to assess how your plans could impact your estate planning. If you start a successful side business, will you leave that to your heirs instead of more liquid assets?

Set your course for the road ahead
"An encore career can really be an exciting option to consider," says Brewer. "Today's retirees are living longer, are healthier, and have more work and volunteer options than previous generations."

Louton agrees. "The greatest advantage to choosing another career after you retire is that you're totally in charge: You likely don't have to work for the money or other obligations," she says. This time around, you can afford to follow your most deeply held values and interests.

Teri Cettina writes about personal finance and business from Portland, Oregon, and is a frequent contributor to Conversations.

Image by iStock

What can Wells Fargo do for you?

Whether you’re nearing retirement or have already reached retirement, Wells Fargo Conversations offers a diverse blend of content to help provide options for your life’s second act.

Wells Fargo Wealth Planning Center, part of Wells Fargo Private Bank, provides wealth and financial planning services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a legal or tax advisor. Please consult your tax or legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.

This information is provided for educational and illustrative purposes only.

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