Financial Planning

Semi-retirement is no life of leisure
Sacrifices part of the price to quit working

Jonathan Chevreau, Financial Post
Published: Saturday, September 06, 2008

Having spent the month of August on book leave, a self-published book sitting on my desk on my return got my attention. Are You Ready for Semi-Retirement? is by Ian Taylor, who semi-retired in 1988 at the age of 38, when he got a handsome double-severance package from the federal government and vowed never to return to fulltime employment. He had been the chief media spokesperson for Pearson International Airport in Toronto.

Taylor concedes such generous packages are rare today, but nonetheless believes Baby Boomers can embrace semiretirement with financial assets of as little as $500,000, provided they have mortgage-free homes.

Born in 1950, Taylor is at the vanguard of semi-retiring Baby Boomers. Indeed, Boomer trends and semi-retirement are the main topics for his public speaking career that complements his self-publishing ventures. The book, his fourth, bears the subtitle A Boomer’s Guide to Success, Freedom and Adventure. Practicing what he preaches, Taylor says he “accepts engagements when he’s not vacationing at a villa, undergoing an adventure or writing a new book.”

Currently, Taylor runs a media training business from his home in Hamilton, Ont. Revealing a knack for marketing, he inscribed my personal review copy with the words “Get ready. Be frugal. Have fun.”

I’m working on it! But like most North American Boomers, semi-retirement is going to require some serious advance planning. Citing a pivotal 2005 study by Merrill Lynch, Taylor says 69% of Canadian Baby Boomers and 75% of American Baby Boomers intend to keep working and earning in retirement, either because they can’t afford to stop altogether or don’t want to.

“The vast majority will move into some form of semiretirement,” Taylor said in an interview this week. “They will invent semi-retirement.”

The key word is “semi,” which means semi-retirement is one-half of a lifestyle that also includes “semi-work,” or what Taylor dubs the “semi-career.” Typically, this is a part-time business run out of one’s home with all the tax advantages that go with self-employment. Taylor identifies seven “hot” semi-careers including: consulting, creative communications, full-time investing, real estate management, home-care services, online niche businesses and a concept he terms the “gift-driven dream job.” He also describes some not-so-hot jobs such, as McJobs, franchising and various get-rich-quick schemes that are better avoided.

Merrill Lynch found Boomers reject either a life of fulltime leisure or one of full-time work. Taylor says: “It’s not all about money; it’s about happiness and freedom and independence, which money can’t buy.”

After talking to many middle managers about retirement at his seminars and training courses, Taylor says semi-retirement “is the realization of your success, the achievement of freedom and the opportunity for adventure.” He cites his older brother Don, who retired from teaching at 58, as now one of the “busiest and most successful semi-retired people I know,” with income generated from eight different sources.

But people like that are still rare. Taylor devotes an entire chapter to the fact that few are ready even to semi-retire, let alone fully retire. If you’re not prepared to rebalance your time, talents and treasures, “you’re not ready for semi-retirement,” Taylor writes. He estimates only 10% to 15% of Boomers are financially successful enough that they could easily semi-retire before age 65. The rest will have to be prepared to make big changes if they wish to change gears.

One of the qualities successful semi-retirees will have to cultivate is frugality. Boomers will have to realize that the short luxury vacations they took when they grabbed a week or two from full-time employment are out, while long-stay vacations with light housekeeping are in. They’ll have to avoid travelling at peak seasons like March Break, choosing the more affordable off-season. Shared cars are in and commuting is out. In the realm of personal finances, being in debt is out and being an investor is in.

Two years ago, Taylor and his same-sex partner sold their Toronto home to rent a penthouse apartment in Hamilton, Ont. They also maintain a summer house in Turkey Point, Ont., and are considering buying a condo in Hamilton and/or a home in Florida.

The book is a quick read, with a few leading questions to stimulate readers to start reinventing their own semiretirement.