It’s never too late or too soon to plan for your “golden years.”
This is the third in this important series on nonprofit retirement. The first answers How Much Will I Need?, and the second discussed How and Where to Save. In this issue we speak directly to people considering retirement in the near future: What if You Don’t Have Time to Save?
Retire from work, but not from life.
— M.K. Soni
In the past two weeks, we have seen financial giants fold and the stock market collapse, taking with them the jobs and retirement savings of hard working individuals. For workers who were close to retirement at Lehman Brothers or AIG are today looking at a very different picture with their nest eggs wiped out. Their situations are similar to many people in the nonprofit sector who are close to retirement without enough savings.
What should you do if retirement is near and you don’t have time to save money?
Blue Avocado reader Dorene Werner will be 65 next year and plans on retiring from the nonprofit where she has worked for many years. She has been thinking and worrying about her retirement for a long time. Her organization offers a 403(b) retirement savings account which she takes advantage of, but it does not contribute any matching amount. Like many of us, she knows she will have to look at other ways of making ends meet during retirement. Dorene has taken several steps including selling her house, living frugally and considering part-time employment during the next phase of her life. With Doreen as a example, let’s consider these and other ideas.
Your House Can Help You
Dorene Werner had owned her house in Oregon for 28 years. She realized that she didn’t need that much space for retirement, sold it, and bought a condo in town. By doing so she got rid of her mortgage and reduced her monthly expenses — even with the monthly condo association fee — and put more savings in the bank. The money that you have in your house, assuming you own it, is most likely your largest asset — even if home prices have fallen from five years ago. Selling your house and moving to a smaller space is one way to infuse your cash retirement savings.
In addition to downsizing your home, at retirement many people consider relocating to a more affordable city. Some people will mention weather, but many cities offer a more relaxed lifestyle and easier transportation options for retirees (Doreen can now walk to many places). Many cities are also less expensive than the big metropolitan areas. Exploring alternative hometowns (including Mexico or the Philippines) that have a lower cost of living may be one way to make your savings last longer.
Speaking of saving money, many of us in the nonprofit sector are already adept at living frugally, but a good examination of your living expenses could help you out. Perhaps you already forgo the cup of coffee in the morning or bring your lunch to work. Reader Heather Finke told us, “I don’t go out quite as much as I used to, choosing instead to save the money. But, when I do, I have a great time.”
As baby boomers turn 65, many are redefining retirement by continuing to work, often in different roles. Dorene Werner is planning on continuing to work as a part-time grant writer.
“I have the skills and experience, and this will allow me to supplement my retirement income,” she says. Others we spoke with are considering direct service work, part-time positions in administration and fundraising, and some are considering starting their own consulting practices. There are many opportunities available for experienced nonprofit professionals that will allow them to contribute their skills to our communities and earn extra income without the long-hours and stressful responsibilities of full-time work.
Invest to Build Savings
What about investing? In our last column we talked about various investment options for retirement planning and even if you haven’t started yet, the old adage, “better late than never” applies here. People over age 50 can contribute higher amounts to Individual Retirement Accounts (IRAs) and other retirement vehicles to “catch up.” According to the Motley Fool investment website, 90% of older Americans plan on relying on Social Security for their income in retirement, yet we know that it isn’t enough to live on alone, especially when you consider the rising cost of healthcare. You will need some of your own savings.
Where do you invest your money? In today’s environment that is a key question. Many people are looking at the safety of bonds or money market accounts as a way to know their money will be there when they need it. Historically financial professionals would encourage you to invest in stocks to maximize your return in a short period of time. Today, that may not be such good advice. While certificates of deposit, treasury bills and money market accounts offer lower rates, your money will be more secure while the financial markets stabilize. Over the long term, however, the stock market is still a good place to invest.
Plan Your Life, Not Just Your Finances
Lastly, while planning the financial side of retirement is crucial, many Blue Avocado readers we spoke with also mentioned the emotional side of retiring. We work in the nonprofit sector because we believe in our communities and enjoy contributing to our organizations’ missions. One reader said that leaving her organization behind created “separation anxiety” for her. In addition to planning your finances, be sure to consider what you will do when you retire. One reader suggestion was to take a trip on a last minute, inexpensive deal as a way to break up your routine.
There are a lot of options to consider when thinking about your retirement. We’ve touched on only a few of them. The important thing to remember is to do something! Sure, the earlier you start the better, but it is never too late. Don’t let the vast amount of information overwhelm you. Perhaps find someone you trust such as a friend, colleague or your banker to talk through your options and thinking. By starting to plan today and facing the challenge, you can begin to think about how you want to spend your “golden years.”
All posts in this series:
- Nonprofit Retirement Part 1: How Much Will I Need?
- Nonprofit Retirement Part 2: Where and How to Save?
- Nonprofit Retirement Part 3: If You Don’t Have Time to Save
For future part-time work in grantwriting:
- Unicorns Found: Meet Two Grantwriters
- In Search of Unicorns: Finding & Hiring Grantwriters, Part 1
- In Search of Unicorns: Finding & Hiring Grantwriters, Part 2
About the Author
Steve Zimmerman, CPA, MBA, is principal at Spectrum Nonprofit Services, a finance and strategy consulting firm based in Milwaukee. With Jeanne Bell and Jan Masaoka, he co-authored Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, published by Jossey-Bass in 2011. In addition to writing the Finance & Strategy column for Blue Avocado and consulting to nonprofits across the country, Steve conducts train-the-consultant sessions how to use the book’s framework with nonprofits in strategic and/or business planning. His site includes templates and other materials based on the book.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.