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First steps for planning a second-act career

While the traditional view of retirement may have once been spending the later years of life relaxing on a golf course or gardening, today’s executives and business owners (especially those who are baby boomers) are increasingly less content with the prospect of days filled with leisure activities alone.

Rather, they often envision a second career. This second career is typically less demanding than their earlier career, but provides an avenue to leverage their knowledge and energy by, for example, consulting or freelancing in their area of expertise, working for a new business or nonprofit, teaching or opening a franchise.

But before jumping into a second career, careful financial planning is critical.

The first thing all older professionals, especially former business owners, should consider before making a job transition is whether they can make the move without negatively impacting their nest egg.

Those who plan to consult or freelance should be especially careful to budget realistically, ideally saving at least six months of expenses (without tapping into retirement savings) before going off on their own. And since most people vastly underestimate the cost of health insurance at a later age, and the cost varies significantly depending upon one’s taxable income, it is advisable to research insurance costs carefully to determine if making a move is affordable. Once these boxes are checked, one can take advantage of free business mentorship programs often offered through chambers of commerce or other nonprofits to increase the odds of success for a consulting or freelance venture.

For those who choose to begin their second career before the age of 65 at an established business or nonprofit, one very practical upside of taking that new job (in addition to additional income and personal satisfaction) may be access to a benefits package – participation in a 401(k) and that all-important health insurance coverage.

In fact, many individuals choose to delay their “final” retirement until age 65 or later to retain those employer-sponsored benefits. Remember, some businesses offer full benefits packages for those who work 30 hours per week (or less) – so an older employee may be able to enjoy some of the advantages of retirement, pursuing hobbies and other interests during those extra hours.

Of course, another perk of choosing to work for those who have not yet reached their “full retirement age” as set by the federal government (between 65 and 67, depending on birth year) is that the additional income may make it possible to delay claiming Social Security benefits – which will result in greater benefits later. But since Social Security benefits “max out” at age 70, it does not make sense to delay claiming benefits beyond that age.

An option many former executives and business owners consider is becoming a franchisee. Buying a franchise can be a risky proposition at a later age – since they can be hard to sell when one is ready to fully retire. One positive is that franchisees can establish their own benefits package or 401(k). And bigger franchises often offer a benefits package through their corporate arm, so if that’s appealing, be sure to shop around before selecting a franchise.

For those retirees who want to teach after leaving their original career, sharing the knowledge and skills they’ve acquired while working, the cost and time required to obtain a teaching certificate from a traditional certification program may be off-putting. Luckily, there are alternative teaching certification programs for college graduates that take past work experience into consideration and enable older students to become certified elementary, middle and high school teachers more efficiently, often in urban or rural areas of need.

Of course, while pursuing any of these second-career scenarios, retirees can continue to contribute to an IRA as long as they have taxable income. Individuals age 50 and over have a total contribution limit of $7,000 per year to traditional and Roth IRAs as long as they make that much in taxable income.

With all of this in mind, and as long as retirement savings do not need to be tapped in order to pursue an exciting second career, go ahead and start that consulting gig, work for that animal shelter or share your wisdom with those middle schoolers! They’ll be lucky to have you.

Cynthia Joyce is the COO at Agili, a financial planning firm with offices in Bethlehem and Richmond, Virginia. She can be reached at Jennifer Pieson is a financial planning analyst in Agili’s Bethlehem office. She can be reached at

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