Christine Benz calls semi-retirement a “phenomenon”

This could very well become a win-win trend: Following the pandemic, some older Americans who were planning to retire are choosing to stay in the workforce because they can now easily work from home, if the employer does. allow.

Financial gain and the elimination of an often arduous commute are key focal points, Christine Benz, director of personal finance at Morningstar, told ThinkAdvisor in an interview. She is watching to see if a growing number of pre-retirees are jumping on this now widely available alternative.

Retirement has undergone great changes over the past two decades. Basically it was: stop working, get a company pension, start collecting social security, follow the links.

Now, semi-retirement has become a popular variant. Benz calls this “a phenomenon”. And, as she notes in the interview, people choose to define it in various ways.

Others try “fake retirement,” an essay to see how the life they envision in retirement might actually feel like.

A disappointing turn of events for most retirees, however, is the persistently low interest rates. But people “have to make peace with the fact that the safest assets in their portfolios will have very low returns,” argues Benz.

They must recognize that “the point of these safer investment assets is not the return on capital; it’s the return of Capital city.”

Benz began her career at Morningstar as an editor over 15 years ago, becoming a mutual fund analyst and then head of the mutual fund analyst team.

ThinkAdvisor recently had a telephone interview with Benz, who spoke of the Chicago suburbs.

Focused on retirement planning, the conversation ultimately turned to how to plan and pay for long-term care. It was then that the co-host of the podcast interview “The long view“referred to what she dubbed a” come what may “bucket.

For wealthy clients, this additional set of assets can come in handy for a dip in life.

Here are the highlights of our interview:

THINKADVISOR: Have you noticed any potential new retirement trends?

CHRISTINE BENZ: The pandemic has changed the nature of work for many people, who can now work from home, at least part of the time.

This is only in its early stages, but I’m keeping an eye out for people who would otherwise have been inclined to retire soon, but who plan to hang in there and work longer.

Especially from a financial point of view, they decided that it made sense to continue working because it could be easier for them: they don’t have to travel, and also, they can [relocate] where they want to live.

It could be people in their early 60s who wanted to retire at around 65, and also people who are over 65 and have decided “I think I can hang on until 70” and potentially wait. [claiming] Social Security.

Is the idea of ​​semi-retirement gaining ground?

It is a phenomenon. People deal with it in different ways. There are financial reasons why they might have a hybrid semi-retirement.

Additionally, many may derive a purpose from their work: continuing to help them gives them that sense of vitality and personal connection that they may find it difficult to replicate without work.

Will these people stay in the field in which they built their careers?

They could go on like this, but now they are working in a reduced way.

Or maybe you step out of that field and get a job that doesn’t impose on you the same way, like working at Trader Joe’s, where at the end of your shift you can go out and not think about it. work.

You spent part of your last sabbatical taking a “fake retirement”. Tell me about this concept.

It’s a test, an experience, to see what retirement looks like. It can help to think things through by living your days the way you expect when you retire.

Then you can figure out what you liked and what you didn’t like.

But it feels like going on vacation, rather than experiencing a real daily lifestyle. Thoughts?

It is certainly a risk that must be guarded against: you must recognize that retirement [likely] it won’t just be golfing and going out for lunch.

It is important to think about what your goal will be in retirement. You have to create a plan. I don’t think you would want to wake up on the first day of your retirement without really thinking about what your days might be like.

On the retirement financial front, to what extent will current low interest rates impact retirees?

Retirees need to make peace with the fact that the safest assets in their portfolios will have very low returns.

They must recognize that the point of these safer investment assets is not the return on capital; it’s the return of Capital city. It’s the ability to spend those assets if you need them or if your equity is down.