By Roger Nusbaum, AdvisorShares ETF Strategist
The Street.com had an article that covered a lot of ground about working longer or working part-time one way or another in retirement. I've written a ton of posts on this and generally believe in the concept as a way to relieve some of the burden from an investment portfolio as well has being a way to remain engaged for longer, which can promote more successful aging. Obviously some form of income may be more of a necessity for people who are under-saved.
The article brought up a huge threat to planning to work longer, which is being physically unable to do so. Included was a quote from Teresa Ghilarducci, who said "being able to work longer is not a plan. It's a hope."
I disagree up to a point. Planning to do some sort of work after "retirement" is a valid strategy or plan just like other life plans. Not everything that people plan to do will work out. What do people do when something they plan on doing does not work out? Hopefully they adapt.
I've written a lot of posts about self-sufficiency and solving problems for at least two reasons. One is that stuff happens to everyone and they need to adapt to what comes along. Second, there is tremendous psychic value in confronting some sort of problem and overcoming it.
This is part of the equation for writing about tiny houses; these are a potential solution for people. A week or two ago, we looked at the scenario of a couple about 60 years old and under-saved with $200,000-$250,000 put away for retirement. By age 60 these folks might have paid their house off and it might be worth $205,000 (median home sale in the US in Q1 2015). These folks could downsize into a small house (so not a 120 square foot trailer on wheels) from Wheelhaus that is more like a palace for $89,000 plus the cost of an acre of land, which depending where you look, can be very cheap.
In this scenario, their nest egg increases significantly and their monthly expense goes down a fair bit, and keep in mind Wheelhaus is very expensive in this realm. There is a resort in Wilson, WY that has a bunch of these from Wheelhaus; we've seen them first hand, which is how I know about it at all and they are stunning so this sort of downsizing does not have to mean a double wide trailer at ground zero for some future tornado.
As far as working one way or another, we've explored countless ideas here, the most prevalent one being to monetize a hobby. Not every hobby can generate an income, of course, but someone who really puts a lot of time into some sort of activity like a hobby is in a very good position to know whether an income, even if it is small, can be derived.
We also looked at various forms of seasonal work, some of it difficult and so may be limiting, but there are season positions at State and National Parks. For as long as I have lived in Walker, I've known plenty people who take on all sorts of short-term projects for income. The big takeaway for this part of it is to plan early; not decide at 62 you want to start something from scratch today.
The investing component is of course also crucial and the primary point of this site. I think tweaking a "normal" allocation makes sense for someone who is under-saved but not too far from "normal," especially where equities are concerned. At some point there will be another bear market and then after that the market will double or triple off the low. A decent upcapture on the next bull market potentially changes the dynamic of being under-saved in the context we are talking about.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
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