‘Retirement’ paychecks carry special risks

John W. Schoen Senior producer • Profile • E-mail

Our story last week on the “new retirement plan” — simply work til you drop —drew heavy mail from people trying to figure out how to keep a paycheck coming in when they had expected to be relying on their (now crushed) nest eggs. It turns out that doing so is not without risks.

When I retired at the age of 66, I felt I was pushed over the edge because I plan to carry on working. …. I am a qualified bookkeeper, and I really would like to even work from home. But it is not easy to do that. Well, I can’t see it. What do you think?
— RM, London

It is not easy to do. Embarking on a career as a solo practitioner after years of working for a company — especially in your 60s — can feel like “starting over.” Most people at the later stages of their careers didn’t expect to have to do that.

The good news is that bookkeeping is one of those professions for which your age is an asset not a liability. My Inbox is full of stories from readers who report that they were greeted enthusiastically by potential employers — only to be told after the interview that the hiring manager was looking for someone with “less experience” (read: "younger" and "cheaper"). As a bookkeeper, the fee you charge is going to be comparable to a recently-minted CPA; your customer gets the added bonus of your experience. And I don’t care how old you are as long as the books balance at the end of the month.

One place to start would be to contact clients from your former employer who liked your work and see if they have any assignments for you. You may be able to give them a better price than an “full-service” company that has a bigger overhead. Unless you signed an agreement with your former employer not to do so, you’re free to recruit new customers from your — likely extensive — list of former customers.

No matter how active you plan to be, you’re starting a new business — which means you may have to invest some money to get it off the ground. That’s risky at a time when you’re trying to conserve your next egg to pay the bills. But think of it as an investment in yourself.

You’ve gotten off to a good start with your Web site which is another great way to recruit new clients. Since you're competing with larger firms for customers, you may also want to invest in some professional Web design to present the best face possible to people looking for your services.

You may also need to find a partner who has sales and marketing skills that you didn’t have to develop when you were working for a larger company with its own sales and marketing staff. Bookkeeping and marketing are very different skills. Some people have both. Some people don’t.

Plan C: The new reality of retirement The new plan: Just keep working When the golden years include a commute As work force grays, employers lag behind Not retiring comes with a bonus: better health Vote and discuss: When will you retire? Slideshow: Famous workers who won't quit

As for working from home, you're also well-positioned to do so — with a good laptop computer and a decent Web connection, you could operate your new business from a beach in the Caribbean (with occasional visits to clients) if you so chose. But you’ll have to develop the trust of your new client list first.

When analysts recommend that an individual withdrawal no more than 3 to 4 percent of their retirement income annually, are they talking about the interest gain or direct from the principal? If the principal, is it assumed you take the gain off the top as part of your annual income?
— Jean S.

It could be either one, which is why “rules of thumb” like this one are often not very useful.

Financial planners have lead us all to believe that there is a magic algorithm to retirement planning: that if you pump a few numbers into a “retirement calculator" a Magic Number will pop out showing you how much you need to save by retirement age. Then you draw down a fixed amount every year and you’re set for life.

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