Not the retiring kind

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George Schmidbauer [left] photographed at his retirement party.

When George Schmidbauer retired after 35 years in information technology, he didn’t dream of long leisurely days on the golf course–he wanted to hit the road.

“All the years behind a desk and with my head in a computer, I needed a different view of the world,” says Schmidbauer, 64, who left his job as director of Development Support at the Public Service Commission of Wisconsin in Green Bay, Wis., four years ago. “I needed to be around different people.”

When Schmidbauer took early retirement at age 60, he went back to school to get his commercial driver’s license and started a new career as a tour bus driver. Now, instead of spending his days overseeing the conversion of the commission’s IT department to a networked system of 200 PCs, he’s driving busloads of tourists around Wisconsin on day trips. “I like driving,” Schmidbauer, who is still based in Green Bay, says. “Now I have someone that pays me for it.”

Schmidbauer’s new career may seem to have taken him down a totally different road, but in fact his post-career course is actually part of the normal pattern for retirees. The combination of a bull market, early retirement options, and the phenomenon of stock options means more IT professionals are getting a chance to take early retirement and start new careers at a time when they thought they would be settling down to a life of leisure. Because of careful planning early in their careers, many IT executives are looking at retirement as a chance to start a new phase in their careers, one that involves part-time work and more freedom.

“Retirement is best viewed as a process, not as a single event,” according to Joseph Quinn, dean of the College of Arts and Sciences and professor of Economics at Boston College, in Chestnut Hill, Mass., who has been researching retirement trends for many years. Quinn’s research shows that when workers retire from their careers, many often go to work in another job before they actually retire for good. These bridge jobs, either part-time jobs or self-employment, are often in a different field from their career job.

Gray hair continues to grow — Chart indicates growth in the number of persons 65+. (Source: U.S. Bureau of the Census)

Indeed, in one study conducted in 1997, Quinn found that about one-third of men and two-thirds of women who left their career jobs continued to work in a bridge job, half of which were part-time. For many, these bridge jobs meant a move from skilled to less skilled work, and almost one-quarter of the retirees who went to bridge jobs switched to self-employment, Quinn found.

Older IT professionals who want to continue working after retiring from their careers got a boost recently when President Clinton signed the Social Security Earnings Test Elimination Act. The law does away with the rule that meant people between 65 and 69 lost $1 in Social Security benefits for every $3 they earned in wages over $17,000 a year. With news like this, it is no wonder more and more IT professionals are looking at “retirement” in a whole new light.

The allure of consulting

As luck would have it, after a long career with the Social Security Administration and the Health Care Financing Administration, John H. Foertschbeck, of Baltimore, put his computer skills to work for himself as a consultant.

Foertschbeck, 60, took early retirement from the government four years ago after working as a computer operator, programmer, systems analyst, and project leader for 40 years.

Ever since Foertschbeck bought his first Apple II for his kids in the mid-’80s, he dreamed of using his PC skills to start a family business with his four children. A few years before he retired, he started his consulting business by selling PCs and helping small businesses with their PC purchases and computer training. He also did work in the local schools, including installing a Novell network at a local high school.

Older Americans at work:

About 3.7 million older Americans (age 65 and over) were in the labor force (working or actively seeking work) in 1998, including 2.2 million men and 1.6 million women. They constituted 2.8% of the U.S. labor force. About 3.2% were unemployed.
Just over half of the workers over 65 in 1998 were employed part-time: 48% of men and 62% of women.
About 23% of older workers in 1998 were self-employed, compared to 7% for younger workers.

Source: Administration on Aging (AOA) of the U.S. Department of Health and Human Services (HHS)

Once he retired in 1996, he dove into the business full time, doing PC training for small businesses, systems analysis for large corporations, and Y2K readiness assessment of data centers processing Medicare claims.

While his children did not join him in the business as he had hoped, his new career has been profitable and fulfilling. “For the four full years since I retired from Federal service, I have matched or exceeded my previous salary each year,” Foertschbeck says.

“I love being out of the middle of the bureaucracy,” he adds. “Now when someone gives me a task, I decide whether I want to do it. I do the work, and then go on my merry way.”

Foertschbeck, who is also at-large director of The Association of Information Technology Professionals Board of Directors, based in Park Ridge, Ill., started preparing for his post-retirement career 10 years ago. At that time he went to a financial counselor and an accountant to see how much money he would need to make to support himself and his wife, and to pay for his children’s school. He then had one child in college and one set to start four years later.

Foertschbeck advises that IT professionals determine whether they really want to retire before leaving their careers. “You have to look at the options,” he says. “What do you want to do when you’re not working anymore?”

Foertschbeck is planning on working for two more years before he quits work for good at age 62. Then he hopes to travel and spend more time on his hobbies, including genealogy.

“Barring any major catastrophes, I will be better off financially than I had ever hoped to be,” Foertschbeck says. “Our house is paid off, and we are debt free.”

Money matters

Ken Adams was 56 when he retired two years ago as assistant vice-president of systems development for Horace Mann Insurance Co. in Springfield, Ill. “After 36 years I was getting burnt out on systems development,” he says. “I spent the past few years doing Y2K fixes.”

Adams did not start another job, but spends his days making money, nonetheless. He has become involved in online trading in the equities market, and has been living off the profits of his investments.

Ed Gilbert, president of Computer Career Help, a professional computer placement consultancy in New York, says by far the highest number of retiring IT professionals he’s seen have left their career jobs to get into day trading on the Web. “Most of the people who I’ve seen leave the field go into investing,” Gilbert says. “It can be scary if they risk their retirement savings.”

Adams and his wife have been living off the money that he made from selling his company’s stock options while he invests the money he had saved in his IRA. Adams put his knowledge of information technology to use when making his investments. He has kept his subscriptions with the trade journals to keep up with what’s happening in the industry. By staying abreast of new technology and continuing to network with people in the industry, he has been able to invest in what he considers “the next hot technology.”

“Recently I bought some stock in companies that are big into wireless communications. I also bought some stock in companies big into DSL [digital subscriber line] technology,” Adams says. “I try to cover all the bases in the coming technologies.”

It is never too early to start thinking about your golden years. Make sure you’re ready to take full advantage of your retirement. Here’s how:

Make a plan. Decide what you want to do when you retire–do you want to travel? Move to Florida? Buy a second home? Estimate how much money you’ll need to live on based on your goals, and start saving to reach that goal. Make sure you make realistic goals, and use realistic assumptions. Then stick with your plan.

Get help. There are dozens of free software programs available on the Web that will help you calculate how much you need to save. Check Web sites at U.S. News and World Report (www.usnews.com/usnews/
nycu/money/moretcal.htm) and Women’s Wire (www.womenswire.com/
bloomberg/retire.html). It’s also a good idea to discuss your plans with a professional financial advisor to make sure you’re on the right track.

Start early. Begin saving now. Even if you only have four or five years until retirement, every little bit helps.

Invest wisely. Make investments that will help you reach your goals. People should be aggressive in their stock choices when they are young and move toward a more conservative strategy as they move closer to retirement. Once you retire, your investments should be more conservative.

Keep saving. If you continue to work after retirement, consider setting up an IRA and continue to build your assets (and lower your taxable income).

Source: Patrick Donnelly, CFP, vice-president and senior financial consultant, Merrill Lynch, Pierce, Fenner & Smith Inc.

Some of Adams’ better technology investments include his purchase of Cisco at $76.75, which split seven months later at $124.50. He has also done well on some technology mutual funds. Adams invested $48,000 in T. Rowe Price Science and Technology Fund in June of 1998, and invested another $50,000 into the fund a year later. That investment is currently worth $228,000.

“In the last two years I doubled my total portfolio, including my IRA money,” Adams says. “I made a whole lot more than when I was working.”

For others who want to quit working after retirement, Adams advises that they do some serious financial planning early and figure out how much they need to live on. He also suggests they get good investment advice. “You need your investments to grow if you want to stay retired,” he says.

Although Adams has been successful with investing his retirement savings, financial planners warn that this can be a risky way to earn money.

“A lot of people have just started trading in the past few years, and they may not be prepared when the market corrects itself,” says Patrick Donnelly, CFP (certified financial planner), a senior financial consultant at Merrill Lynch, Pierce, Fenner & Smith Inc., in Northampton, Mass. “There’s a saying that people should keep in mind–‘Don’t confuse brains with a bull market.'”

Donnelly says that people relatively new to the market may not be thinking of the money as investments, and could make some mistakes when the market does correct itself. “People have to remember that these are investments. They’re there for the long haul,” he says.

No regrets

With many information technology professionals taking advantage of their company’s early retirement options, and others making enough in the bull market to retire early, more and more professionals are spending an unprecedented amount of time in retirement. With careful planning earlier in their careers, many retirees are able to continue making comfortable livings in new jobs that offer personal satisfaction.

“It’s a great world for IT professionals who want to change their careers,” says Gilbert of Computer Career Help. “With the right skills there are a lot of opportunities out there.”

People with computer skills are in especially high demand, Gilbert adds, and can easily find work on a contract basis. This kind of work can be especially appealing to retirees because they can work their own hours, sometimes from home, and the jobs are short-term.

George Schmidbauer, who is a volunteer in a program for disabled veterans and in a program called Volunteers in Probate where he mentors first-time offenders, agrees that computer skills open a lot of doors to retirees. “There are lots of opportunities to get involved. If you have a background in PCs, you are in demand,” he says. “You can become a tutor or start a small business.

“I always assumed I would retire at 65,” says Schmidbauer. “But when I was in my late 50s I was beginning to feel a need to change my life. At 60 I knew I had an opportunity to do something different, and I took it. I’ve never regretted it, either.” //

Valle Dwight, based in Northampton, Mass., is a contributing editor to FamilyPC magazine.