Will your retirement include a so-called “second act”? It’s a concept that gets a lot of attention these days (probably because most of today’s retirees are baby boomers who have never been content to be predictable). The idea of a second act simply refers to that stage of life when you can stop working merely because you have to and instead follow your passion. Your second act may be a job or it may be a part-time gig – or it might simply be something you love to do, whether it earns you any cash or not. 

We came across this recent article from CNBC in which reporter Andrew Osterland advises retirees on when and how to pursue their second act. He notes that many financially secure retirees will be likely to pursue second careers based primarily on personal interests. But Osterland also sounds a loud warning bell at the beginning of his article when he demonstrates how, for roughly half of retirees, any dreams of pursuing their passion in retirement are probably doomed to fail for the simple reason that they won’t be able to afford it. 

Our advice here at the start is simple: if you want to achieve the retirement you dream of, the time to start planning is now. Let’s take a closer look at the idea of the second act.

Half of Retirees Will Face Drop in Living Standard 

In his CNBC article, Osterland begins with the sobering thought that many Americans who are heading into retirement expecting a “second act” may be in for a rough financial surprise. 

“While the average amount of retirement savings for Americans between the ages of 55 and 64 was $408,000 in 2019, per the Federal Reserve Survey of Consumer Finances, the median savings was just $134,000 for that group,” Osterland writes. That means half of all people surveyed fall below that figure. According to Fidelity research, 25 percent of all U.S. households have no retirement savings at all. The same research showed the median 401(k) balance for respondents 65 and older at less than $83,000. 

This creates a potentially grim scenario, the article observes. “Between those savings and Social Security benefits, more than half of Americans in that pre-retirement age group will likely experience a major drop in their standard of living in full retirement. Although they may long to quit a job and pursue a passion — a ‘second act’ — their financial state will make that difficult.”

Tight Labor Market Creates Opportunities 

Ironically, after stating this tough truth, Osterland notes that the opposite is also true: there are millions of Americans heading into retirement “who are more secure financially and can consider taking advantage of the tightest labor market in a generation to change their lives.” 

Sheryl Garrett, a former financial advisor, says, “This environment may be the best we’ve ever seen for people in their 50s looking to do their next thing. I see lots of opportunities for second acts — maybe third and fourth acts, too.” In other words, for those who are prepared, opportunities abound for a highly satisfying “new you” in retirement.

Retirement “Not Natural,” Advisor Suggests 

Garrett told Osterland that she doesn’t believe retirement is a natural state for humans, and she would rather see a person’s latter years as an opportunity for what she calls “retreading”. As Osterland explains, “[Retreading] may involve finding work that is gentler on your body but perhaps even more important, will feed an interest or passion.” 

Moreover, as critical as finances are, Garrett definitely does not like the singular focus on financial preparedness that seems to be the norm when it comes to aging. “Preparing for retirement is about more than being financially prepared,” she says. “It’s about psychological and social preparedness. We need to have a second act. We may need it from a financial perspective, but over time I think it’s the psychological aspect that is more important.” 

Practicing what she preaches, Garrett herself has pivoted from one-on-one advising to working with other advisors in a role closer to consultancy. She also manages a four-cabin resort in her home state of Arkansas. “I outsource the maintenance, but I get the benefits of meeting guests and they pay for our expenses,” she says. “I’ve also become a gardening fanatic.” For her, the second act definitely resonates with things she is passionate about.

Start with a Realistic Self-Assessment 

The following are Garrett’s suggestions for the most vital questions you should be asking yourself when you consider the idea of a second act. 

• What is your passion? To embark on a second act, Garrett says passion is paramount. 

“You may need money to come from it, but you have to be driven by passion to keep it satisfying,” she says. “The stereotype of older people going to work at Walmart is often not about money but about socializing. They may need the money, too, but they’re happy to be greeters.” In other words, if your passion is people, that greeter gig might be a good fit. 

The options are endless, from taking on a new job to starting a new business. But if your passion is more of a hobby, like golfing, gardening, or reading, Garrett says “you may be better off sticking with your current job and working on a part-time basis, if possible.” 

• How important is the money? Depending on what income you may need, your second act may see you “unretiring,” a phenomenon that has become increasingly common these days. This is especially true if your passion is a costly one or financially risky. 

“I had a hospital administrator client once who wanted to open up a bait and tackle shop in his mid-50s,” Garrett recounts. “His wife thought it was idiotic. We did some analysis and I advised them that they needed a few more years of bigger incomes before he should consider it seriously.” Our translation: pursuing your passion also requires a healthy dose of common sense or else you could squander your resources and head off a financial cliff. Follow your dream but do your homework. 

• What are your skills and what opportunities are there in your community? If your passion requires additional training or education, you need to be realistic about whether you can afford that. And equally important: is there a market for the interests or business you’re planning to pursue? Better find out before spending money on training you can’t use. 

“If you’re in the community you want to be in, find out what peoples’ challenges are and if you could help provide solutions for them,” Garrett suggests. “Whatever it is, there are needs and opportunities out there. Loop back to your own passions and design your next chapter the way you want to.”

My Life, My Plan, My Way: Get Started on the Path to Retirement Success  

At AgingOptions we believe the key to a secure retirement is the right retirement plan – yet statistics show that 70 percent of retirement plans fail. That’s why for nearly two decades we’ve been dedicated to the proposition that a carefully-crafted, fully comprehensive retirement plan is the best answer to virtually any contingency life may throw your way as you age.  Our slogan says it all: My Life, My Plan, My Way. 

When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age? 

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

(originally reported at www.cnbc.com)