Coping with Retirement

Are you prepared to take the big step?

  • MANY WHO ARE CLOSE TO RETIREMENT HAVE NOT considered the emotional, psychological and financial aspects of this major milestone. The adjustment can mean a search for a new identity as retirees fill the time previously spent working with hobbies, volunteer work or time with their families.
  • SOME EARLY RETIREES USE THE OPPORTUNITY to start their own business. Jody Grant retired at age 59 and founded a bank, which now has six branches and $140 million in deposits. He calls the bank his ranch, his beach, his fun thing to do.
  • FINDING ACTIVITIES TO FILL IDLE HOURS is difficult for some retirees. Murray Sennet finds he tires of the same hobby and has to keep developing new ones. Psychotherapist Janell Myers says retirees have earned the right to choose not to do anything if they wish.
  • FOR SOME, RETIREMENT MEANS TRANSFERRING a business to the next generation. Although family businesses often do not survive the transition to the next generation, CPA Adolph Teitelbaum was able to transfer his vending machine business successfully to his son, also a CPA.
  • VOLUNTEER WORK FILLS THE TIME OF MANY retirees. For those like Willem Willemstyn who have financial and business skills, SCORE, the Service Corps of Retired Executives, provides an opportunity to “keep my brain working” while helping start-up companies and established business owners with operating and cash flow forecasts and budgeting.
BARBARA KEVLES, a Texas-based business writer, is a past contributing editor to Working Woman and Global Custodian. Her articles have appeared in the Dallas Business Journal, Esquire, the New York Times and The Atlantic. She is a lecturer in the executive MBA program at the University of Texas at Dallas.

tatistics don’t begin to describe what it’s like emotionally or psychologically to stop working full-time as a CFO, give up a partnership in an accounting firm, transfer a family business to the next generation or be forced into early retirement after a merger. Still, time marches on, and every year since 1980 an average of 1.6 million more Americans have begun to receive Social Security retirement benefits. As of 1998, according to the Social Security Administration, more than 27 million people—one-tenth of the U.S. population—had retired from the workforce.

“Retirement is a major milestone, like marriage or a divorce,” says Janell Myers, psychotherapist at MenningerCare Systems, which helps employees of downsizing corporations. Myers explains: “In America, unfortunately, who we are is defined by what we do.” Consequently, adjusting to a post-work life means a search for a new identity. When a retiree replaces a 50- or 60-hour workweek with outside interests, investments, volunteer work, time with the grandkids or a new professional opportunity, the transition becomes a personal journey. Here are stories of some people making that journey successfully despite roadblocks they have encountered along the way.

Facts and Figures

  • In 1965, 57% of the U.S. population over age 55 was in the workforce. Today the number is only 38%.
  • Americans 30 to 49 have accumulated only one-third of what they will need to retire.
  • Today’s retirees must prepare for a retirement that could last much longer than their parents’. Life expectancy for women will rise to 81.2 years in 2020 from 65.7 years in 1940. For men, it will increase to 75.3 from 61.4.
  • Social Security is the major source of retirement income for 66% of recipients. It is the only source for 16%.
  • Only 21% of workers participating in 401(k), 403(b) and 457 retirement plans contribute the maximum amount their employers will match.
  • One of every four 401(k) plan participants expects to use the savings for something other than to fund his or her retirement, such as the purchase of a home or to fund a child’s education.
  • Approximately 90% of people who leave a job don’t roll over their 401(k) distribution into another retirement account.
  • Only half of American workers are covered by a pension plan.


For Jody Grant, 61, retirement was a stepping stone to another career. As CFO of $6 billion EDS, Grant was in charge of 3,000 employees and EDS real estate and equipment around the world from 1990 to 1998. Yet he says, “I didn’t want that to be the last thing I did in my career. I wanted to do something more creative that I could truly call my own.”

Grant’s entrepreneurial drive was quickened by several disappointments. “I had planned and canceled two trips to Africa and two trips to Australia. When you work for a large corporation, you’re not master of your own destiny. I wanted more control over my life.” His desire to leave EDS intensified after the company split from General Motors. “I helped consummate that transaction. Once it was done, I couldn’t see anything else would be as challenging.”

So in October 1997, just after turning 59, Grant began circulating a proposal to found an urban bank catering to high-net-worth individuals and middle-market Texas businesses seeking up to $10 million to $15 million loans. His bank would actively market products and solicit business over the Internet. “It was now or never,” says Grant. “People counseled that I would have more success raising money before I turned 60, because after that—with the magical six in front of the zero—people think about you differently.”

Grant retired from EDS in March 1998 to actively solicit funds with the aid of the new venture’s cofounders. However, that summer’s steep market downturn severely undermined his efforts. “We lost about $20 million, or a third of our funds,” Grant says. Yet he never lost his resolve to find funding.

His luck improved when a financier committed $10 million that fall. By December the new bank had raised $80 million. That same month it acquired a smaller bank, which enabled it to open for business. Today Grant is chairman and CEO of Texas Capital Bancshares, Inc., with $140 million in deposits and six branches in Dallas, Fort Worth and San Antonio. As Grant puts it, “In some sense, founding a bank is my retirement. It’s my ranch, my beach, my fun thing to do.”


At 68 Edward Wolff, CPA and partner of Travis, Wolff & Co., LLP, Dallas, set his retirement date for January 1998. He wanted, first, more time to spend with his three grandchildren, ages seven, four and two, and to travel with his wife. Second, he says, “I’m a big outdoorsman, and I wanted to do more hunting and fishing.”

Outdoor sports are a “reason to stop working,” says Wolff. In September he hunts dove on 1,700 leased acres in south Texas; from October through February, quail; in November, deer, duck and goose; in January, the smart west-Texas sandhill crane; and in April and May he indulges in his favorite sport—hunting wild turkey. Every August Wolff flies to Mexico for bass fishing. A recent trip to the Alaskan tundra more than satisfied his appetite for adventure: He was snowbound for three days in a two-man tent with a guide, a two-way radio, their weapons and food rations—supplemented by a mountain sheep he’d shot.

Wolff’s retirement arrangement with his firm amply supports his outdoor lifestyle. Interest from his equity account, a percentage from his $1-million client base and hourly compensation allow him to come into the office as much or as little as he wants. He still enjoys dispensing tax advice (which in one case saved a client $500,000 in an IRS audit.)

“It was difficult disassociating from the firm,” says Wolff, “to go from 50 hours a week to 30.” Wolff, who has been a CPA since 1954, says, “If you’ve always done something a certain way, it’s very hard to change that pattern.”

At first Wolff tried to take Fridays off and work fewer hours Monday through Thursday. But he found he needed to spend too much time shifting clients to others in the firm. And “when I’m there, my colleagues bombard me for advice,” Wolff says. So he instituted a supplemental plan: “I don’t come into the office unless I feel like it.”

More than a year later, Wolff has finally adjusted to the fact that he doesn’t have to get up to go to work. “I’m getting good at that now,” he says.


For many reasons, CPA Murray Sennet retired at 63 to relocate to the South, where his son and family lived. After a serious heart attack in his 50s, Sennet says, “I wanted to give up my high-pressure New York City life.” Five days a week for 40 years, Sennet rode the Long Island Railroad to work. Periodic LIRR breakdowns stranded him for hours on stalled trains. His job as treasurer of a growing electronics manufacturer dependent on military subcontracts and at the mercy of swings in defense spending compounded his stress.

After moving, Sennet thought he would relish the slower pace. However, he reports his major problem in retirement is fending off boredom and “finding things to do. I tire of the same hobby, so I have to keep developing new ones to hold my interest.” Currently, Sennet does dry brush ceramics, aerobics and a lot of reading and crossword puzzles.

Psychotherapist Myers says, “It’s really OK for retirees not to do anything if they don’t want to—they’ve earned the right to make that choice—but most can’t because in America there’s a thesis that we’re not valuable unless we’re doing something.”

So that he could continue to make a contribution, Sennet joined SCORE, the Service Corps of Retired Executives (see box). Organized by the U.S. Small Business Administration, SCORE volunteers help people in business or starting one solve problems. Sennet offers advice on business plans—a basic requirement for a bank loan—in weekly one-to-one counseling sessions and at monthly community college workshops. “I get a lot of satisfaction from lecturing,” says Sennet. “I feel I’m contributing to their future.” There is a personal payoff, too, Sennet confesses. “The only course I flunked in college was public speaking. Lecturing for SCORE is compensation for the years I couldn’t speak before audiences because I was such a shy guy,” he says.


“I wanted to do something else,” says Jerry McMahan, who retired a week before his 51st birthday, after 33 years with Alcatel and Rockwell International, manufacturers of telephone equipment. “What enabled me to retire early was both my pension plan and the performance of my personal portfolio.” McMahan, who served as a division comptroller and as director of financial planning at Rockwell for 20 years, says, “In those jobs I did a lot of financial analysis,” The experience helped him structure his own portfolio.

At 37 McMahan applied his financial planning skills to his personal retirement goals, devising an investment strategy to acquire a certain sum of money in 20 years to fund his retirement. “I made it five years early,” he says.

McMahan’s first major activity when he retired was to study and pass the exams to get the certified financial planner designation. While doing that, he joined SCORE where he spends one to three afternoons a week offering his expertise to people starting businesses or those having problems with existing businesses. He also gives seminars at downsizing corporations where employees may be interested in starting a business.

These days, when he’s not on a trip to a national park, touring Europe with his wife or volunteering with SCORE, McMahan spends most mornings managing his investment portfolio. To accomplish this, he reads business magazines, annual reports and prospectuses and tracks the 50 stocks he follows closely. McMahan makes several hundred trades a year. “It’s the thrill of the hunt,” he admits, “trying to figure out where companies and the economy are heading, trying to find the next Microsoft. Unfortunately, I haven’t yet.” His portfolio income tops what he earned at Rockwell, however.


As McMahan’s experience shows, it’s important to plan ahead to ensure a financially secure retirement. One of the first things someone approaching retirement should do is “take a long, hard look at future retirement expenses,” according to Christopher Johnston, vice-president and branch manager for Fidelity Investments. When doing so, Johnston says, “don’t forget to deduct parking, tolls, gas, [business] clothing and similar costs of your former work life.”

The next step according to Johnston is to determine what your sources of income will be once you are no longer earning a salary. Total them to see if you will be able to meet projected expenses. Income sources include company pension plans, Social Security, annuities and the proceeds from the sale of a business or rental properties. Other income sources on Johnston’s list include 401(k) or 403(b) plans, IRAs, profit sharing plans, employee stock ownership plans, Keoghs, investments and the cash value of life insurance policies. Funds from these sources may need to be invested, Johnston says, to provide additional income to meet your projected lifestyle because inflation can erode your purchasing power.

After estimating expenses and identifying sources of retirement income, most people will know whether they have a retirement-income surplus or deficit. In cases of a shortfall, Johnston suggests delaying retirement or pursuing other alternatives such as part-time work, relocating to a less expensive part of the country or cutting back on your proposed retirement lifestyle.

Top Retirement Tips

For retirees navigating their own turbulent start-up companies, Jody Grant advises, “Persevere and remain optimistic. No matter how difficult the circumstances, have confidence that the basic values you stand for will sustain you. Above all, don’t give up on yourself.”

Edward Wolff’s advice is to “make sure you have a reason to retire, a list of things you want to do other than work. Then inform your employer of your intentions, come to an agreement on your retirement package and set a date.”

Before retiring, Murray Sennet says, “Decide how you’re going to spend the eight hours—or more—you used to devote to work. Retirement is another vocation you have to prepare for.”

When investing for retirement, Jerry McMahan cautions, “Don’t be afraid of the stock market. You should have at least some of your retirement funds in the market because it’s the only way to combat inflation. CDs or bonds won’t do the job.”

Psychotherapist Janell Myers advises that while forced retirement can be a blow for some people, “it doesn’t have to be devastating. You still have control over what comes next. It may not be what you originally envisioned, but you can still decide what makes you happy in life and pursue it.”

Adolph Teitelbaum offers retirees some common sense advice. “Social Security benefits are inadequate for most retirement lifestyles. You may have to supplement your income by working. If so, try to find something that you truly enjoy doing. The culture tells you to stop working at 65. But there is no stigma about working after 65—why should there be?”

“If you want to do volunteer work to fill your time, Willem Willemstyn advises, “Find an activity you enjoy. If you don’t, it will become drudgery. If you like it, you’ll be good at it, stay with it and be able to make a positive contribution.”

If a retiree intends to live away from other family members, Joan Gruber says “Be sure the medical services and support systems you may need, such as geriatric care managers, home care professionals and elder law attorneys are available in the vicinity of your retirement residence.”


Not everyone has the luxury of retiring according to a long-term plan. Many accountants, controllers or financial managers are forced to take early retirement due to corporate downsizing or a merger. When that happens, Myers says they behave like most other employees in the same position. “They are angry that [the transition is] not happening at the time they chose and spent years anticipating. They resent being terminated—often with a much lower benefits package” than they would have gotten had they retired at normal retirement age.

When someone 45 or older has been with a company for many years and is forced into early retirement, he or she may suffer a loss of self-esteem and subsequent depression. Myers says, “It’s a grieving process. With the anger and denial comes a lot of sadness. Not only do people lose part of their retirement dream, they also lose day-to-day contact with their colleagues,” she says.

With encouragement from family and friends, early retirees can take courses at a local college or university to broaden their skills. “It’s important to realize that dreams and goals can be changed. They are not finite. Those who aren’t able to retire when they planned can still choose what their career is going to be in the second half of their life.”

By networking, a retiree can develop a niche that will lead to a job in the same or an allied field, although perhaps not at the same economic level. Myers says, “It’s important to allow yourself to grieve the lost job. It’s equally essential not to feel hopeless because you believe your earning capacity is diminished.” Myers says retirees should take comfort in the fact that there are many different jobs they can undertake with the skills and talents they have accumulated over time. “You just have to find a new company to appreciate them or be brave enough to make your own place in the work world as a self-employed entrepreneur.”


As vice-president of marketing services for Citicorp, Mary Lysaught ran the program that encouraged new merchants to accept the bank’s credit cards and to retain merchants already accepting the card. “I spent 80 hours a week at work and often brought work home,” Lysaught says, recalling her single life in Chicago. Soon after she married, her husband, the CEO of the subsidiary of a NYSE company, decided to move the company’s headquarters—along with 600 families—to a city in the Southwest. Lysaught thought of trying a commuter marriage but decided against it. Instead she resigned and cashed in her Citicorp stock and vested retirement balances.

But Lysaught didn’t view her departure from Citicorp as the end of her career. In her new city she cofounded a marketing consulting firm using funds accumulated during nearly 40 years in business. Her client roster included companies such as Blockbuster Entertainment, Pearl Vision and Apple Computer. At the same time, she taught in a university graduate program. “I wanted the flexibility to set my own assignments and be available as a spouse. We did a lot of corporate entertaining all over the world.”

When her work life became too stressful as Blockbuster grew from 5 local stores to a 3,500-store global chain, Lysaught engineered a buyout and increased her volunteer activity. Four years later, she stopped teaching to go to Africa on safari. “At that point I considered myself retired,” says Lysaught. Subsequent trips took her to Ireland, Eastern Europe and Israel. Her next stop: China.

In retrospect, Lysaught thinks the voluntary move to a new city made it easier to leave the corporate world and make the transition into her own business. That gave her greater flexibility and more control over her life. Her transition to retirement was complete when she stopped teaching so she would have complete freedom to travel and do volunteer work. “Basically I gave up the status that comes with a large salary, a corporate jet and all of the perks for the community recognition of being an unpaid volunteer,” Lysaught says. These groups are, however, “benefiting from the skills I developed in the corporate world.”

Does Lysaught, now 55, miss the excitement of introducing new products for former employers such as Thomas J. Lipton, Frito Lay or Citicorp, where an advertising campaign could begin with $100 million? “I’ve written a couple of million-dollar checks now that I’m out of the business world,” she says. “But mostly the numbers have gotten a lot smaller. What I risk now in buying 1,000 shares of stock is admittedly far less than when I bought several million dollars’ worth of TV time. But the adrenaline runs just as high. It’s no less a thrill, no matter what the figures are.”


Closely held business owners approaching retirement generally face three options: liquidate the business; sell the business to outsiders, who will continue to operate it; or allow key employees or family members to assume ownership and operate the business. Proper succession planning is essential to adequately support the owner’s retirement lifestyle. Funds from the business are an important supplement to the proceeds of qualified and non-qualified retirement plans, ongoing consulting agreements with the company after retirement and personal investments.

When CPA Adolph Teitelbaum first thought about retirement, he invited his son, Jay, to join his midsize vending machine business. At the time Jay Teitelbaum, also a CPA, was working for the same accounting firm where his father had worked. Rather than let his father sell the company, Jay accepted the offer. Although some family businesses often do not survive the transition to the next generation, this succession plan worked.

On his son’s first day, Teitelbaum instructed Jay to address him as Adolph, rather than Dad, Teitelbaum says. “I wanted him to regard me as his employer rather than as a parent.” Teitelbaum inaugurated other practices to reinforce the employeremployee relationship. If his son disagreed with something he did, such as firing an employee, he was to wait until the next morning to voice his views. “I didn’t want him giving a fast retort.”

At first Teitelbaum’s son sold vending-machine locations. Teitelbaum then promoted him to assistant manager. Finally, Teitelbaum decided it was time. “If he was going to run the business, I had to let him have his way.” So he began to accept his son’s financial decisions about the type of machines to buy and whom to hire.

Although Teitelbaum had intended to retire at 65, he delayed it until age 70. “I wasn’t ready,” he admits. When he was, his son gave him a 10-year employment contract as an incentive for his continued participation in the business. Today Teitelbaum is making a gradual transition to retirement. He spends about two and a half days a week in the office looking after the company’s profit-sharing plan, answering mail and helping with orders. He’s also willing to give advice, if asked. “But I don’t get upset if the advice isn’t heeded. If he loses money or makes it, it’s still his dollar.” This succession plan worked, Teitelbaum believes, because he didn’t try to hold his son back from assuming greater responsibilities and because of the patience and tolerance displayed by both generations.

Checklist of Early Retirement Issues

A survey of workers age 30 to 50 shows that more than half plan to retire at 60 or younger and only 6% plan to work past 65. When thinking about early retirement—whether it’s your idea or your employer’s—here are some important issues to consider.

  • Health insurance availability: Many companies provide insurance to compliment Medicare to those who retire at normal retirement age. Early retirees can pay for coverage under COBRA for up to 18 months. Employees asked to retire early are typically offered a package that includes health insurance coverage for some period of time, say six months. After that, coverage is up to you.
  • Income: Will income from the traditional “three-legged stool” of Social Security (when available), pension and personal savings be sufficient to meet post-retirement income needs? Experts estimate that a retiree needs 70% to 80% of preretirement income to maintain his or her standard of living.
  • Retirement savings: Depending on age, will funds be available from company and personal retirement accounts, including 401(k) plan, regular IRA, Roth IRA, SEP IRA or Keogh plan? Except in the case of disability, most arrangements provide a penalty for distributions made before age 59 1/2.
  • Part-time employment: Many early retirees work part-time to supplement retirement income until Social Security and other retirement benefits kick in.
  • Early retirement impact on the exercise of stock options and similar benefits: Some stock options cannot be exercised after the employee retires. Early retirement may require an employee to accelerate exercise of options or forgo some benefits. To accelerate options before retirement, you may need an infusion of cash.
  • The retiree’s family situation: Does the retiree still face expenditures for big-ticket items such as a child’s education, a wedding or similar outlay?
  • Early retirement impact on pension and Social Security benefits: Most companies offer full retirement benefits at age 65, with reduced benefits available as early as age 60. Retirement before age 60 may result in a substantial reduction of benefits. Full Social Security benefits are currently available at age 65; reduced benefits are available at 62.


As vice-president of internal audit for Fina Inc.’s U.S. operations, Willem Willemstyn viewed retirement as a passing fancy when he was in his 50s. “I enjoyed my job, the people I worked with and my travels throughout the United States. It was too interesting to give up.” Willemstyn oversaw reviews of the financial controls in Fina’s manufacturing process, inventory and fixed assets at its refineries, crude oil production facilities and petrochemical plants.

But as he was approaching age 64, he began to think seriously about retirement. Willemstyn explains: “At a certain time in life, you get to a point where you say, ’Enough is enough. I’ve done my share. It’s time to take it easy.’”

Even though it was his own choice, Willemstyn experienced a letdown at first, as he shifted gears to a retirement lifestyle. “There was a noticeable difference in day-to-day activity,” he says. “The most distinguishable thing was the disappearance of fixed responsibilities, deadlines and schedules. All of a sudden the rigorous routine of the business world I enjoyed so much stopped.”

The first year, Willemstyn traveled to Holland to visit family. At home, he went to work on the household tasks his wife had been saving for years. “But that ran out pretty quickly,” he says. At the end of the year, he joined SCORE to counsel and teach workshops on operating and cash flow forecasts and budgeting. For Willemstyn, the reward is helping start-up companies and business owners avoid potentially damaging mistakes. “All that I learned during my career is not going to waste, because someone can profit from it.” Volunteering for SCORE benefits him personally as well. “I keep my brain working and stay abreast of accounting developments. It’s fun to do the things you’ve done all your work life. You can’t just stop.”

Besides weekly gym workouts, travel and volunteer work, Willemstyn now has more time to devote to sailing, which he learned in his 20s while living in Rotterdam, near the North Sea. He and a neighbor used to confine sailing on nearby Lake Grapevine to weekends during their work years. Now they can go anytime there’s a wind and the spirit moves them. Willemstyn finds the sport “very pleasurable. You try to make the boat go as fast as the wind will make it go. Or you sit back and relax.... We don’t have to go anywhere.”


The success or failure of your investment portfolio is key to achieving your retirement goals. Joan Gruber, CFP, president of Joan M. Gruber Investment Advisors, Inc., advises retirees not to be too conservative with their investments. “Your portfolio should take on the role your job had in terms of earning power. And just as you insisted that your employment earnings increase yearly at least by the cost of living, you should similarly demand the same performance from your investment portfolio. To increase portfolio earnings, Gruber says, ”you may have to include assets with the potential to increase in value, which means taking on investment risk.“

Fidelity’s Johnston warns that many people don’t understand their true life expectancy. The result, he says, is they can ”outlive their retirement funds.“ According to IRS life expectancy tables, there is a 50% chance that, in the case of a couple retiring at age 65, one spouse will live beyond his or her 90th birthday. As a result, Johnston stresses that preretirees should plan their retirement assets to last for 25 years or more,” and invest accordingly.


Retirement, early or normal, forced or planned, is a major life decision. Being prepared—financially and emotionally—is important because this stage of life will, one hopes, last for many years. In the sidebar, the individuals interviewed in this article offer their best advice on how to cope with the changes retirement will bring. The checklist outlines some financial concerns for someone contemplating or coping with retirement. Good luck!

How to Contact SCORE

The Service Corps of Retired Executives (SCORE) is a 12,400-member volunteer association sponsored by the U.S. Small Business Administration. It matches volunteer business management counselors with present and prospective small business owners in need of expert advice. For the telephone number of the nearest SCORE office, call 800-634-0245 or contact a local SBA office, listed under “U.S. Government” in your telephone directory.

©1999 AICPA


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