The Retirement Trap!

I should have said something…

He began, 25 years ago, as an accounting executive with a German partner of ours. Bright and ambitious, he rose quickly through the ranks to head of marketing, head of operations, and then COO, working with the company’s founder to break through the $100 million barrier in less than 10 years. When the founder retired, he took over as CEO and steered the company profitably for another 12 or 13 years.

Then, two years ago, he told me he was going to retire. “Bad idea,” I thought. But I didn’t say anything. I didn’t want to rain on his parade.

So he retired. The company threw him a big “goodbye” party, and I was one of dozens of colleagues from all over the world who flew in to help him celebrate.

A few weeks ago, he emailed to let me know that he and his wife would be vacationing in South Florida. I was eager to catch up with him, so we made a date to meet at The Green Owl, my favorite breakfast spot in Delray Beach.

“How’s retirement going?” I asked, as the waitress plunked down two cups of coffee on the table.

He shook his head.

“What?”

His was a story I’d heard many times.

Before he retired, he was the man. He was not just the big boss. He was the guy you went to when you had a problem you couldn’t solve. The business thrived on his ideas and his energy.  So when he announced his retirement, the company’s top execs were in a panic. They tried to convince him to at least keep working with them as a consultant.

As a courtesy, he stayed an extra two months to make sure that everything was buttoned up. And he told them that after he’d had some time to enjoy retirement, he’d be happy to talk about that attractive consulting gig.

It wasn’t long before he realized that he missed the problem solving he had always been so good at. So he contacted his former fans at the company.

Much to his surprise, they weren’t so eager to talk to him. And when he managed to nail them down to a meet up, they politely hedged for an hour and wished him well, but he left without a consulting job.

He kept at them for a while, identifying a half-dozen specific ways he could help them cut expenses and increase profits. They demurred. Finally, he reached out to the founder, his longtime partner in building up the business. “Sorry. I don’t call the shots anymore,” the founder explained.

So here he was, 18 months into his glorious retirement, unable to get back to doing what he did best. And feeling that he had devoted his best years to building a successful business that was now scorning him.

I should have said something…

In fact, I should have sent him one of the essays I’ve written about this subject.

Retirement has indisputable attractions. But as I learned the three times I tried and failed to retire, it also has three unexpected consequences.

* When you retire, you give up your active income. Without an active income, you are dependent entirely on passive income. When you are dependent on passive income, you are more likely to make unwise, wealth-damaging investment decisions.

* Unless you have a fair amount of brain damage, spending four or five hours on the golf course is not a pleasant way to spend your day. Likewise for shuffleboard, board games, and other activities that seem like a lot of fun when you have a full-time job.

* If you do retire and decide you’ve made a mistake, it’s difficult to come back. For one thing, nobody really wants you back. (Although they may pretend otherwise.) The current management of the company you left will see you as an old timer with old ideas that will clog things up and get in the way. And they are probably right. Things change fast today. Six months of being away will put you one step behind. A year of being out of the trenches will set you back by a mile. And two years? Forget it. It will be obvious, even to you.

Is there a solution?

Yes. In fact, there are three.

1. If you own the business, don’t retire. Let other people run it. But don’t give up the captain’s wheel until you are on a walker.
2. If you don’t own the business but have serious skills, create a retirement job for yourself long before you retire. Figure out something useful you can do that you would now, as a senior executive, pay for. And enlist all your clients, including the business you work for, before you retire.
3. If you have a regular job with a regular business, start a side business now. Work it nights and weekends till it’s giving you whatever extra income you need for retirement. Then, when you want to, you can quit.