Plotting a new course in retirement

Editor's Note: This article was originally published in the May 2007 edition of the Fidelity Investor's Quarterly magazine.

A willingness to move in a new direction helped these three individuals adapt to change and make the most of their retirements.

Every retiree's situation is different, but many stories of successful retirement share a common theme: adapting to unexpected changes.

After years of planning and hard work, retirees often encounter different circumstances than they anticipated, ranging from new opportunities, to unforeseen challenges, to changing tastes and preferences. People who effectively navigate the shifting currents are those who began with a solid retirement plan but are also willing to be flexible and adapt to new situations.

"A lot of people expect that retirement is going to be perfect, but you have to expect the unexpected. It's not always going to be the way you think it's going to be," says David Corbett, founder and director of New Directions, a Boston-based career and retirement counseling firm, and author of Portfolio Life: The New Path to Work, Purpose and Passion After 50 (Jossey-Bass, 2006).

On average, people are living so much longer in retirement that they shouldn't consider what happens in the latter stage of life "retirement" at all Corbett says. Rather, he says, it's an ongoing series of lifestyle changes that should be evaluated and assembled in the same way a person builds a financial portfolio --with an emphasis on diversification and quality.

Heading back to work

Working into one's 60s and 70s is often an important part of the portfolio, Corbett notes, but everybody's situation is different, and everybody's reason for working is different, too.

Whether you work to stay active, because you need the money, or for some other reason, "the best-case scenario is to find something that satisfies your desires as well as your needs," says Tim Driver, founder and CEO of Retirement-Jobs.com, a Wellesley, Mass.-based firm that matches companies seeking job or project assistance with older workers.

"We're seeing lots of creative problem solving around that goal," Driver says. "Age discrimination can be an obstacle, but more employers are realizing that older workers are loyal, conscientious, and relate well to customers."

Driver says he's convinced there's a solution out there for everyone, and the numbers back him up. The success of older workers is evident in the fact that there were 4.2 million workers over age 65 in 2000, and the U.S. Department of Labor expects the number to grow 30% by 2010, to 5.4 million.

There's much more to the story than numbers, however. Behind every statistic, there are individuals who are writing second acts to their retirement dreams that aren't always what they had envisioned. Here are three such stories of people who, when confronted with new challenges and opportunities, found solutions that continued to make their lives fulfilling and financially secure.

Angelo Pescatore, Robert Cleaver, and Andrea Craig, all faced different challenges and opportunities, but they faced them with the same willingness to remain flexible. The retirement planning that they performed earlier in their lives provided them with more options and helped them seize new opportunities that arose. Since you can't really plan for everything that life may throw at you, an open mind and a willingness to move in new directions may be essential ingredients in a successful retirement.

No desire to slow down

Name: Angelo Pescatore
Age: 67
Hometown: Punta Gorda, Fla.
Second Acts: Real estate investor, volunteer, mentor

Growing up in a working-class family in Paterson, N.J., Angelo Pescatore received a piece of advice from his father that formed the foundation of his life. It wasn't about how to get rich, it was about how to be happy.

"My father always said that what's in your head, nobody can take away from you," recalls Pescatore, who has filled his head with knowledge in fields ranging from construction to art. As a young man, Pescatore became successful in the architectural field. When he noticed there seemed to be more money in construction, he switched from drawing structures to building them, eventually starting his own company.

He also continued learning by attending night school, eventually obtained professional licenses to sell real estate, insurance, and investment securities.

A short-lived retirement

So what does a person do with all that knowledge and experience? He retires at age 55 -- but not for long. "I had a summer home down in Atlantic City, and I thought it would be great to go down there and just relax," Pescatore says. "But there was nothing to do. I couldn't take it. I went back to work after nine months."

Finally, six years later, he was ready to retire for good. But this time he started with a plan for how he was going to spend his days --and his money. At the same time, he built flexibility into his plan by having a strong financial foundation that would allow him to take advantage of new opportunities that might arise, from the standpoint of both investments and personal pursuits.

"Planning combined with flexibility is the key," says escatore, who lives with his wife, Chris, in Punta Gorda on Florida's Gulf Coast. "I came down here with an idea of what I wanted to do, but I'm also involved in a lot of things now that I didn't really think about."

He developed a talent for making pottery after taking classes at the local visual arts center, and now he's a volunteer at the workshop. He also mentors high school students from low-income, high-risk families.

But Pescatore's passion remains business and finances, and that's what led to the major unexpected twist in his new retirement. Not long after buying the property where he built his waterfront retirement home, he realized that the area was a real estate boom in the making. So he invested in properties that continue to generate substantial capital gains.

Nurturing the nest egg

At the same time, he has relied on steady income from bonds and mutual fund investments to cover living expenses. "I probably spend about one day a week managing my finances," he says. "Not everybody wants to be that involved, but it's something I enjoy."

About every six months, he evaluates his investment performance and expenses, and then makes adjustments to ensure that his financial plan will continue to provide the income he needs to maintain his lifestyle. "I've had some ups and downs with the stock market and the real estate market," Pescatore says. "But I'm fortunate because I put myself in a position to take some investment risks and be ready for whatever comes along."

New guy on campus

Name: Robert Cleaver
Age: 73
Hometown: Chestertown, Md.
Second Act: Interim alumni director at Washington College

Robert Cleaver's biggest retirement ambition was to "master the art of golf." While that lofty goal continues to elude him (and countless other golfers), he is able to report with satisfaction that his greatest retirement success was one that took him totally by surprise.

Cleaver retired as the regional general manager of an insurance company in the mid-1990s and moved from Michigan to Chestertown, Md., a small, historic community on the Chesapeake Bay. He and his wife, Elizabeth Ann, chose Chestertown because it is home to Washington College, their alma mater, and they have friends and relatives in the area.

Back to school

After two years of getting acclimated to the new community, Cleaver got an unexpected offer: The alumni director at Washington College was taking a yearlong sabbatical, and the college wanted Cleaver to fill in as the interim director.

"I thought being interim director would be fun because I would get to see a lot of my contemporaries," he says. "But the fact that they would turn to me was really surprising. It was like somebody saying, 'Hey, our football coach is leaving -- would you like to coach the team for a while?'"

Cleaver jumped at the opportunity. He worked full days at the college and spent many weekends at alumni events around the country. "My wife told me it was only for a year, so I couldn't mess things up too badly," he jokes. Indeed, the year passed quickly, and Cleaver settled back into his quieter retirement lifestyle, only to be pressed back into service when the alumni director left again, this time for good.

He worked until a new director was found and again bowed out. But the new director resigned after a brief stay, prompting the college to -- you guessed it -- bring Cleaver back for yet another stint. "I was just happy that I was needed and could help out," he says. "I learned an incredible amount about how colleges operate."

The one aspect of the job that threatened to throw a wrench into his retirement income plan was the salary. He had prepared well for retirement and was receiving income from his pension and Social Security, while his 401(k) plan savings provided a comfortable nest egg.

The college salary would affect his tax situation and cause him to lose Social Security benefits, so he asked the college to defer his income over a period of years, and then he donated the money back to the college, keeping only enough to pay his higher tax bill.

The college's alumni office is now well settled with a new director, Cleaver reports, and he doesn't expect another call. In recent years, he's been devoting much of his time to volunteer activities (as former president of the local historical society and chairman of the local hospital foundation), visiting his children and grandchildren, and traveling.

"I expect to gradually slow down as I get older," he says. But you never know.

Creating a new menu

Name: Andrea Craig
Age: 64
Hometown: New York City
Second Act: Social service administrator

Andrea Craig was far from naive when she moved to New York City from the Midwest seven years ago, after her husband's early retirement due to health concerns. An experienced restaurateur and college instructor, Craig knew that working part time in the Big Apple would be significantly different than her professional experiences in Madison, Wis.

She was surprised nevertheless when she was turned away time and again in her search for a position as a dining room director or even as a server or kitchen worker in the right kind of establishment.

"I thought I could walk in and get 10 of those jobs," Craig says. "When I couldn't, I was stunned. I was told that restaurants were reluctant to hire somebody my age because the culture in the dining rooms in New York was young, and they were afraid I wouldn't fit in."

On top of the job difficulties, Craig and her husband, Bruce, discovered that their retirement investments had taken a substantial hit when the technology stock bubble burst in 2001. The part-time work that she once regarded as a good way to stay active suddenly became an important supplement to the couple's retirement income.

A frugal budget helped lower expenses, and a fortuitous phone call from a former restaurant partner back in Madison provided the answer.

Opportunity knocks

The partner proposed a project with a social service agency that provides services to the homeless. Originally conceived as a food processing business that would generate some income for the agency and jobs for the formerly homeless, the project shifted to one that provides food items for local restaurants using produce from local farms.

The project, Porchlight Products, works on many levels, Craig says. Homeless people gain job experience, farmers get a new outlet for their produce, and restaurants tap into the growing public appetite for supporting small farms and trying unique preparations of locally grown foods.

"It's different than what I've done in the past, but it's close enough that I'm comfortable with it, and it's been tremendously rewarding from the standpoint of being important and serious work," Craig says.

With the project ready to begin deliveries this year, Craig will soon be looking to transition to a new opportunity, but her experience with Porchlight Products has fulfilled many objectives. It provided timely income in addition to giving her personal satisfaction that aligned with her values. Above all, it taught her to be flexible in her approach to working in retirement.

The Craigs intend to stay in New York City, which they say has some financial advantages that offset its notoriously high prices. They don't need a car, for example, and the city offers senior citizens a partial income tax exemption.

"Our housing expenses are high, but we think of our Manhattan apartment as an investment that we can leave to our children and grandchildren," Craig says. Everything's working out well for the couple, although not exactly the way they had planned.

How Fidelity can help

To learn more about managing your income and finances in retirement in our Retirement Resource Center.

(Please e-mail any questions or comments to Fidelity Investor's Quarterly at Fidelitymag@fmr.com.)

The experience and opinions of these investors may not be representative of the experiences of all investors and are not indicative of future performance or success.

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