Starting Over 10 Questions About Working After Retirement

(MONEY Magazine) – FACE IT. Chances are there's another job -- maybe even a whole new career -- in your future, even if you won't need the pay. What with longer, healthier lives and earlier, richer retirements, middle-aged Americans face a prospect that would have startled their parents and left their grandparents absolutely incredulous: a quarter of a century or so of active, useful living after they receive the golden handshake. What sensible person whose life has largely been defined by work would want to laze through so many potentially fruitful years? Here are answers to some of the first questions you are apt to ask about that next big step.

Why should I work now that I have finally retired? To begin with, you may have no choice. Inflation, poor planning and an inadequate pension may force the issue. And even if you don't need a job to make ends meet, you may decide you want one just to keep active and healthy -- benefits that become more crucial as you get older. ''Work reinforces people's sense of purpose and accomplishment,'' says Letitia Chamberlain, director of New York University's Center for Career and Life Planning. ''It also gets them out of the house and involved with others.''

Does it pay to keep on working? If you're well off, you could wind up losing money by working. Social Security and tax code provisions penalize people who earn too much in retirement. For example, if you go back to work between the ages of 62 and 64, you will lose one dollar of Social Security benefits for every two dollars you earn above $6,120 in l988. Between 65 and 69, the earnings limit is $8,400. Once you reach age 70 you can earn as much as you like without penalty. In addition, you will have to pay federal tax on up to 50% of your Social Security benefits if the total of your adjusted gross income, nontaxable interest, and half your Social Security benefits exceeds $25,000 ($32,000 if you are married). On top of all this, your paycheck may push you into a higher tax bracket and you'll also have to keep on paying FICA taxes. One happy note: by putting off collecting Social Security until you are 70, you'll receive an extra 3% in benefits when you do get around to retiring.

How do I decide what type of job is the right one for me? Like most retirees, you may want to stay with what you know, but on a part- time basis. If you have the zest for a change, do some homework at a library. Ask for The Occupational Outlook Handbook or The Encyclopedia of Careers and Vocational Guidance. Both provide detailed information on hundreds of careers. Some of the most successful second careers spring from a lifelong dream, a hobby, or an interest shared with a friend. Also talk with people who are working in occupations you think you might enjoy. Once you've made your choice, you can launch a job search.

When and how should I begin planning my retirement career? Start as soon as you can -- certainly well before you call it quits at your present job. If you want to change fields, begin planning at least five years before you retire. This will give you time to take classes and meet people in your field of interest. Even if you want to stay in the same field, it's a good idea to research potential employers a year or two before your planned retirement.

What is the best way to find a job? Most career counselors answer this question with a yuppieism: networking. Make a list of everyone you know -- friends, relatives, business relations, old | school chums, even distant acquaintances -- who may be able to help you find a job, whether it is in your old field or a new one. You can often make useful contacts at career seminars or by joining professional organizations. If you don't know anyone at a company you are interested in, try to find out the name of the person who has the power to hire you. Look in the Reference Book of Corporate Managements or Standard & Poor's Register, available at most libraries. Or phone the personnel department at the company. Then write a letter to that executive detailing your skills and interests. After a week or so, follow up with a phone call. Be cordial but persistent. Typically, you will have to be interviewed by 20 to 30 people, and it may take anywhere from three months to a year before a job offer materializes.

Will I be offered a lower salary because I am receiving a pension? The practice of paying older workers less because they are receiving pensions still exists at many companies, but habits are changing. Federal law protects older job seekers from arbitrary hiring and salary discrimination. And employers are coming to appreciate that older workers are usually well worth full pay. If you are asked your salary expectations, be assertive. To protect yourself from being shortchanged, find out what the average salary is for the position you want. Career counselors or library research can help. Should you meet all the job qualifications for a position in your old field, it's fair to request the middle to high end of the salary range. If you are changing fields and need additional training, you should expect your salary to be at the low end of the scale.

How can I prepare myself for conflicts with younger colleagues? The best preparation is the confidence of knowing that you're probably more experienced and more reliable than younger workers. If you feel someone is treating you unfairly because of your age, discuss the matter in a friendly, professional manner. If your troubles continue, you can complain to your superior. If you are at least 40 years old and the person causing your difficulties is in a higher position, you can complain to your local Equal Employment Opportunity Commission office. The commission will investigate the case to determine if your accusation has merit. If the EEOC probers find your grievance valid, they typically will try to resolve it by conciliation before going to court. You can also sue independently, but that can take months.

Should I consider starting my own business? Probably not. While independence sounds exhilarating, don't forget that 66% of small U.S. businesses fail within five years, usually for poor planning or lack of funds. Before you embark on what could be a financially and emotionally devastating experience, ask yourself the following questions (more than one or two no's should give you pause): Do I have a product or service that's really needed? Do I have financial backing or money of my own that I can afford to lose? Have I completed a thorough business plan? Am I happy working alone? Most telling, do I consider myself a risk taker? ''Someone who has been a middle manager at the same company for 30 years is probably not going to have what it takes to be an entrepreneur,'' says Letitia Chamberlain. If you are convinced that you are an entrepreneur, seek advice from people who have started their own businesses. The Service Corps of Retired Executives, sponsored by the Small Business Administration, holds seminars on starting your own business and provides free advice. Look for SCORE's address in your local telephone directory under ''U.S. Gov't./SBA/SCORE'' or call 800-368-5855 for the SCORE chapter nearest you.

Where can I go for job training and placement? Your first and best source is your present employer. More and more companies offer job planning and counseling. Another option is to call your state job training or employment service (look in the telephone book under ''State Government Offices''). Many have listings for older workers or can at least direct you to placement services in your area. Private career counselors provide occupational testing, one-on-one counseling and training in job-search skill techniques. But if your employer doesn't pay the fees for you, be prepared for charges that can run into the thousands.

Is there a way I can try out a new career? Another excellent source of help is the growing number of nonprofit organizations set up to assist older workers. The American Association of Retired Persons is launching AARP Works, an employment planning program available in 12 locations. For information write to Denise Loftus, Worker Equity Dept., AARP, 1909 K St. N.W., Washington, D.C. 20049. Operation Able offers help to seniors looking for employment in seven states (Arkansas, California, Massachusetts, Michigan, Nebraska, New York and Vermont.) Write to Dorothy Miaso, Operation Able, 36 S. Wabash St., Suite 1133, Chicago, Ill. 60603, to find the affiliate closest to you. You can also write for nonpaying consulting work to the National Executive Service Corps (257 Park Ave. South, New York, N.Y. 10010), a volunteer placement service for retired executives. Small and medium-size businesses often recruit through its job search division.