I would like to work part time in retirement. But I want to try something that’s different from my primary career. Any good starting points? Any suggestions?
You certainly won’t be alone.
In the coming decade, the 65- to 74-year-old and 75-and-older age groups will be the fastest-growing segments in the labor force, according to the Bureau of Labor Statistics. Currently, among all workers age 65 and older, 40% work part time.
Yes, part-time work enables people to beef up their retirement savings. But other benefits are equally important: keeping your mind active; staying engaged with other people; easing the transition to (what could become) full-time retirement; and, ideally, finding satisfaction in a new career. In a survey published in March by the Employee Benefit Research Institute in Washington, 90% of retirees who work for pay said they do so because they “want to stay active and involved”; 82% said they simply enjoy working.
Also see: The key to a long, healthy retirement
As for good starting points, one of my favorite books about retirement is “Second-Act Careers,” by Nancy Collamer, a career coach in Old Greenwich, Conn. The book is divided into two parts. The first highlights different models for turning one’s interests and passions into income. Real-life examples (including food bloggers, pet photographers, nutrition coaches and tour guides) are plentiful and enlightening. The second part helps readers figure out what type of life and work they might want to pursue.
Don’t miss: Look to your childhood to find a new purpose in life
Equally valuable: Collamer maintains a list on her website, mylifestylecareer.com, of more than 100 “Second-Act Career Resources.” The focus here is on “flexible, part-time and entrepreneurial options.” Want to learn how to breed dogs? Write a novel? Work in a national park? Teach English overseas? There’s a resource for that.
Also, check out encore.org, a San Francisco-based nonprofit that promotes encore careers; and “The Encore Career Handbook,” by Marci Alboher, a guide to finding ways to “make a living and a difference in the second half of life.” Both are essential reading.
Transferring from an IRA to a trust
My wife and I (ages 81 and 85) each have a regular individual retirement account, primarily invested in stocks, and have made annual cash withdrawals every year since we became age-eligible. We also have a long-established charitable remainder unitrust at a state university, and have been making annual contributions to it by transferring appreciated stocks from our regular stock account for 20 years, receiving a computed deduction. This trust pays us 5% a year on the account value and is taxed as income.
Our question: Can we transfer stocks and/or cash from our IRAs directly to this trust without having it be considered taxable and at the same time meet the required-annual-withdrawal rule?
I’m sorry, but you can’t do this.
Some background: With a charitable remainder trust, a person places an appreciated asset (stocks, property) inside a trust. The trust typically pays income for life to the donor, and after the donor dies it gives the remaining assets to one or more charities. A charitable remainder unitrust, among other wrinkles, allows the donor to make additional contributions to the trust over time.
As you probably know, transfers directly from an IRA to a charity (known as “qualified charitable distributions”) are permitted for people over age 70½. But to get the tax break associated with such transfers, several requirements must be met.
One requirement, says Natalie Choate, a lawyer specializing in retirement benefits at Nutter McClennen & Fish in Boston, is that 100% of the gift must go immediately into the charity’s coffers, with the donor/IRA owner getting nothing back. But a gift to a charitable remainder trust (or unitrust) doesn’t meet that test, Choate notes, since the charity doesn’t get the money immediately and the donor is getting something in return.
So the route usually recommended for charitable giving for this situation would be, first, continue to fund the unitrust with transfers of appreciated stocks, and, second, make additional charitable gifts (if desired) by transferring cash or investments directly from the IRA to a public charity, Choate says. In this way, you fulfill the minimum-distribution requirement without increasing gross income.
An additional note: A charitable remainder unitrust, Choate says, can be a good choice as the death beneficiary of an IRA, where the IRA owner wants to benefit both a human beneficiary (such as a spouse or child) with a life income and a charity (with the remainder interest).
Evaluating continuing care retirement communities
In a recent column, you talked about the timing of moving into a continuing-care retirement community. But how do I evaluate such communities? In particular, how do I gauge their financial health?
Good question. A CCRC might have wonderful amenities: fashionable housing, fine dining, a high-tech fitness center. But if it can’t keep its promises—if it can’t provide a secure and comfortable place to live, whatever the changes to your health—those amenities won’t count for much.
Start with CARF International (carf.org), a nonprofit group that accredits health and human services, including CCRCs. On the home page, click on “Resources” and, then, “Retirement Living.” Here, you will find the aptly named “Consumer Guide to Understanding Financial Performance and Reporting in Continuing Care Retirement Communities.” It’s a valuable primer on the subject and contains a good list of questions to ask a community’s managers.
(The same page on the CARF website also links to earlier articles published in The Wall Street Journal about CCRCs and their finances.)
Also read: Should we move to a continuing care retirement community?
Next, check out the National Continuing Care Residents’ Association (naccra.com) and its Residents’ Learning Center (naccrau.com). With the latter, highlight “CCRC Living” and click on “Consumer Guides.” Among the resources: a detailed (92-page) and invaluable list of questions and answers for prospective CCRC residents.
You might need a financial planner or accountant to help make sense of some of the figures you get from a continuing-care community—assuming it’s willing to share those figures with you in the first place. If management is reluctant or unwilling to do so, then walk away.