According to a recent Federal Reserve Board study, a full 1/3 of those who retire eventually reverse retirement and return to work on either a full or part-time basis. With the recent market volatility and increased inflation, I believe for most women 60+, the new retirement solution will be a combination of working, learning, and sharing with a lot of fun included.
Women I work with are incorporating their passion projects to produce extra income to supplement their savings, Social Security, and pensions. This could include writing a book or book series, coaching, consulting, speaking, or teaching something.
If this sounds interesting to you, the secret is doing something that will allow you to explore your passions, leverage your talents as well as give you the freedom and flexibility to travel, practice self-care, and give back.
In addition, there are four steps I recommend you take before making any major life changes, launching a business or taking the leap into retirement:
Step #1: Create a financial plan.
Yes, this means meeting with a Certified Financial Planner who can advise and keep you from making mistakes. A financial planner can help you look at your future income and expenses to examine things like debt, analyze investments, taxes, and things like potential long-term care expenses. You will also be able to see the best time to take Social Security or to trigger pensions.
You can also see alternate scenarios before you take that leap. Examples of these might include downsizing, working part-time or entrepreneurship, as well as examining how working longer affects pensions, taxes, and Social Security.
Some people are even choosing to move overseas where costs are much lower. Kathleen Peddicord of Live and Invest Overseas, blogs for us on retiring overseas. Check out her article, 9 Critical Issues to Consider Before Deciding to Live Overseas.
Reducing your expenses by just $10,000 per year during retirement can have the net effect of $250,000. This is because it takes $250,000 to generate $10,000 over a 30-year period. So, reducing your expenses by $200/week means you need $250,000 less invested to generate that income. It’s really little tweaks here and there that can make all the difference.
Doing a financial plan can also tell you how much income you need to generate from your passion project, encore career, or part-time work in order to cover your income shortage. Another way to look at this is by generating just $200/week, is equivalent to having another $250,000 invested paying you a 4% withdrawal rate of $10,000/year.
You can examine all of this in a financial plan. I use software that allows my clients and me to select how much risk they are willing to take with their investments. We are then able to compare this to what their actual investments would do in another 2008 Great Recession. My clients are almost always shocked to see just how much risk they are taking. You see, most of those I meet with are heavily weighted in stocks and stock mutual funds and don’t even realize it. With this added knowledge, they can rebalance their portfolios with confidence.
Step #2: Create a business plan.
One common mistake I see people make is to retire with the idea they can launch their passion project that will give them more freedom and income, only to find themselves overwhelmed, losing money, and wondering what they got themselves into.
This is why it is important to work with a business coach or your CPA to create a business plan that will not only supplement your income, but give you some added tax benefits, and add more joy and interest to this next chapter in your life.
A business plan will also help you identify the key players you need in the business, your branding, marketing, and outsourcing. The most important thing is to plan before you leap. You can keep your business model very simple by doing the planning before you put your shingle out.
Step #3: Focus on what you do best — Period!
I have come across too many novice business owners who thought they would achieve freedom from responsibility only to wind up being the chief cook and bottle washer. Why? Instead of focusing on their unique abilities, they attempt to do it all!
A successful business begins with a team of talented individuals who all bring specific skills to the table. For example, when I created Smart Women’s Empowerment, I knew that handling details such databases and monitoring social media were not areas I excelled at.
The key is to identify what you do best along with what you need to outsource and delegate. You do this by understanding the concept of Front Stage – Back Stage.
- Front Stage people flourish by growing the firm, developing relationships with new clients and strategic partners, and problem solving, closing the deal, but they would want to hand-off the details to their team of Back Stage folks.
- Back Stage people enjoy making things happen with great project management skills, organizing, prioritizing, and follow through.
Here is a perfect example to sum this idea up:
A young lady who worked for me a few years ago had an engineering degree from the University of Michigan with a specialization in accounting. She immediately got a job as a financial planner after graduating. She passed all her exams and loved doing financial analyses. She thought she had found a career she loved until she was told that it was now time to get on the phone and find clients. She ended up leaving the field feeling like a failure. This is sad, yet it happens so often.
I immediately saw she was a Back Stage person and helped her get a job doing administrative work for a local CPA firm. She is now thriving and managing the details for the lead CPAs in the firm.
Step #4: Create your team.
Once you know what you should be focusing on, the next step is to delegate and outsource everything that you should not be doing.
Your team can even be virtual. My virtual team is scattered across the country. We all have specific skills and work well together even though none of us live in the same city. Without my team, I would be overwhelmed. My virtual team keeps everything running smoothly. The podcast, ezine, and the academy run totally without me. This way, I can travel, create, connect, teach, and lead – which is what I love and do best.
Online assessment and consultation:
Would you like to know what you should be focusing on and what you do best? I suggest you start with an assessment. One of my favorite assessments for identifying your key strengths or roles you should focus on in business as well as who you will need on your team is called Wealth Dynamics. The assessment is not free — it runs $97, but I believe it’s worth every penny.
You can visit the Wealth Dynamics website to learn more. They even have a nine-minute video that describes the process. When you take the assessment, you receive a very detailed 36-page assessment. Here is the link to take the Wealth Dynamics assessment.
Want to review your assessment with me? For a limited time, I’m offering our Smart Women Community a 30-minute complimentary Breakthrough Coaching Session (a $200 value). During this call, we will review your Wealth Dynamics Profile, talk about your business idea, what role you should play, and who you need on your team to thrive. Just visit www.talkwithkatana.com to be taken to my online calendar where you can pick a time to chat! Once you are booked, you are welcome to send your Wealth Dynamics assessment to me, so I can review it prior to our meeting!
Katana Abbott, CFP®, is a Midlife Millionaire® Coach, founder of the Smart Women Companies, and the host Smart Women Talk with over a million subscribers. For over 30 years, Katana has shown women how to take charge of their life and finances and believes it’s never too early to plan for expected and unexpected events like retirement, encore careers, moving abroad, or preparing for long-term care. She has written several books, created a financial literacy course, and is a popular speaker. Katana has been honored by NAWBO as one of Detroit’s Top 10 Business Women, receiving the Breakthrough Award. To download her new retirement guide, Three Smart Strategies to Maximize Your Retirement Income visit www.katanaabbott.com