The right way to unretire

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By Paul Keegan, Money Magazine contributing writer

Demonstrate your value

As you have heard ad nauseam, finding a job is all about networking, but that is a much misused and misunderstood word. Most people think networking involves calling your friends and former colleagues and asking whether they've heard of any jobs. In fact, it's actually about making yourself valuable by creating opportunities for yourself and others.

Take Dan Merchant, 63. In 2006 he retired from his job as chief marketing officer for an investment firm, where he earned a base salary of $300,000 and had set aside $2.5 million for retirement. But the following year a combination of stock market losses and some free spending (principally on his daughter's wedding, which cost $150,000) made him realize that he needed to return to work.

Merchant began the search indirectly by putting himself back in professional circulation in a way that demonstrated his value. He traveled to New York City from his home in Westmont, Pa., to lunch at the Yale Club with a friend who needed career advice. There, he ran into a former colleague who asked him for some advice about branding. After learning more about what the executive needed, he approached a strategic marketing consulting firm he'd done business with before and offered to work for free to help the company snag the client.

The plan went so well that the firm signed him up as a paid consultant; by January it had hired him full-time. The $120,000 annual salary is lower than he was used to -- understand up-front that you may have to accept a lower paycheck than you earned at the peak of your career -- but Merchant says it's plenty now that he's living in Scottsdale and his daughter is grown up. Plus, he gets full benefits, including a matching 401(k) that will help him rebuild his retirement portfolio, which has sunk to $1 million as a result of the market downturn and his divorce settlement (he and his wife recently split up).

At no point in the process did Merchant ever ask anybody for anything. Rather he made himself valuable -- to his lunch friend, his former colleague, and to the consulting firm that eventually hired him. "Most people make the mistake of trying to sell themselves based on what they've already done rather than what they can do for the company," says Kar tin. "Offer yourself as a solution to whatever issues the company is dealing with."

So don't wait to hear about a job opening. Target a company you want to work for, research its pressing needs, and develop proposals about ways you can help. Even if the company doesn't go for your ideas or offer you a job, you've succeeded in demonstrating you understand the business and could contribute when an opening develops. Your contacts at the firm may even recommend you for other jobs they hear about.

Get a foot in the door

Merchant's story also illustrates the value of putting yourself in a position to let prospective employers see you in action by taking on a freelance project or consulting gig, agreeing to work part-time or for a set period, or even volunteering for a spell.

"It's a great way to show people what you can do," says Trisha Griffin-Carty, a career coach in Dedham, Mass. "You can always renegotiate later." Once you're actually working, you get to drop the "retiree" label and become a marketable person proving what an asset you can be to the company.

In fact, you may find that temporary or part-time work provides enough income to stanch the flow of red ink, since you probably no longer have children living with you to support and a big mortgage to pay. You may also be drawing Social Security or be able to tap retirement funds to close the gap between your expenses and income. That gives you the flexibility to accept a position that isn't full-time but could lead to something bigger -- a job younger workers may have to pass up.

Some companies are more open than others to unconventional arrangements. Try looking at websites that specialize in firms that hire older workers. Check out workforce50.com, YourEncore.com, and simplyhired.com (which has a filtering option for "age 50+ friendly companies"). AARP (aarp.org) also publishes an annual list of companies with excellent records of hiring older workers.

Create your opportunity

If you continue to strike out in the job search, another option is to go into business for yourself. As appealing as the idea may be, however, you'll be taking a big risk sinking your dwindling retirement savings into an untested venture. So you need to do some serious legwork first to determine how viable your idea is and how soon the business could actually generate the income you need.

Try this exercise, devised by Kate Wendleton, president of the outplacement group the Five O'Clock Club and author of "Your Great Business Idea: The Truth About Making It Happen." At the top of a sheet of paper, write the business concept in a sentence or two, being as specific as possible. Then use the top third of the page to describe the market for your product or service: who will buy it, how you will market it, what price you will charge, and who your competitors will be. In the middle, describe how your offering will differ from the competition's. At the bottom, analyze the profit potential -- what you can realistically expect in revenue and expenses, and how many clients you'll need to make your operation work.

The results help you evaluate several options quickly and expose flaws. Pick the one or two ideas that seem most viable and begin researching answers to questions that came up as you tried to put the idea down on paper. To protect your nest egg, stay away from businesses that involve high fixed costs, such as maintaining a large inventory or leasing equipment. Instead, lean toward service operations that require low overhead -- say, running a small tax-prep firm or a catering outfit.

Then, once you've fleshed out the details, get some expert advice. Score (score.org), a nonprofit association affiliated with the Small Business Administration, offers free counseling for entrepreneurs at every stage of the process, from preparing a business plan to raising capital and managing operations. You can also check out "The Would-Be Entrepreneur's Handbook."

Another intriguing option for retirees is buying a franchise or other established business. That's what Carl and Shelia Baynes did recently. Shelia, 57, retired almost two years ago from her $100,000-a-year job running a nonprofit emergency family-services organization in Newark, and Carl, 59, took an early-retirement package from his $150,000 position selling software for IBM last November.

As their $560,000 in retirement savings dwindled to less than half that amount, courtesy of the market slide, Carl quickly realized he needed to go back to work and reached out for job leads to former colleagues, bosses, and friends. But he became discouraged by how many other qualified unemployed professionals of his age he encountered.

So Carl went to a seminar on franchising and was hooked. After exploring several options, the couple plunked down $70,000 of their retirement savings into a Mr. Handyman home-repair franchise in Sarasota, where they had long planned to move from Montclair, N.J., after their two children left home. The couple anticipate they'll need to invest another $50,000 of their retirement funds into the business over the next year.

The Bayneses have already unwittingly made a potentially damaging mistake, says Richard Solomon, a Houston franchise attorney. Solomon recommends that fledgling entrepreneurs buy an operation only if it's already running profitably in a particular location, rather than starting from scratch.

"Most franchisers require you to pay such high fees that it's hard to compete against similar businesses in the area," says Solomon. The Bayneses may lose business to local home-repair companies that can offer cheaper rates because they don't have to pay the Mr. Handyman franchising fees.

Before buying a franchise, Solomon suggests, hire an attorney who can help you analyze the terms of the deal and who may also be able to advise you about whether you can really turn a profit. That's especially important, he says, if you plan to invest a good chunk of your retirement savings in the business. (Ask your state bar association for a list of local lawyers who specialize in franchise law.)

Also be sure to talk with other franchise owners to get their take on the business. A smart approach: Say you may be interested in buying their franchise, and ask if they'd be willing to show documentation of expenses and profits (for instance, by showing you income and sales tax returns for the past couple of years). That way, you're sure to be getting the straight story. Alternatively, Solomon suggests, you can contact a business broker (find one at ibba.org) who can help you find businesses for sale that are already operating at a profit.

The Bayneses say they have done their research and have seen proof that Mr. Handyman franchises bring in more than $1 million in gross revenue in major cities. Carl thinks their smaller operation could eventually reach $300,000 to $400,000 in revenue. "I'm not looking for a home run," Carl says. "If we can earn $80,000 to $100,000 in profit, we'll be fine."

The Bayneses do have one quality that is crucial for the success of any post-retirement career, entrepreneurial or otherwise: a healthy sense of adventure. They're excited about living near the beach and working together for the first time in 34 years of marriage. Carl will be the owner, Shelia the first employee, and they are setting up shop in a rented office.

"Hopefully, he'll pay me well," Shelia says, talking on a cellphone during the drive to their new home in Sarasota. From the driver's seat, Carl already sounds comfortable in his new role as the boss. With a booming laugh, he shouts, "Minimum wage!"  To top of page

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