Dear Quentin,
In 2018, I was let go from my six-figure job. As a then-57-year old woman, I was unable to find a similar job, even with an MBA. (Some interviewers were even so bold as to ask “how old are you?” which I know is illegal, but what can you really do?) After a year, I found a small job, initially part time, which then transitioned into full time, paying me one-fourth of my previous salary.
Initially, I lived on my severance, but as time went on, I was forced to dip into my retirement early to keep my insurance and pay expenses. I had $500,000 when I left my corporate job. Last year, I launched a small bookkeeping business, which is now the bulk of my income, but I am not yet making enough to completely stop taking retirement disbursements. My retirement balance is down to around $400,000, and I currently withdraw $1,500 per month.
I have contracts with monthly clients for about $2,300 per month. I do clean-up work (correcting people’s QuickBooks records), but that is not guaranteed work, so while it does produce income and occasionally gives me more money, I can’t count on it as a steady income. The part-time work nets me around $1,000 per month, which basically covers my insurance premiums. The rapid rise in food costs has really hurt my budget.
“‘Inflation is really making things challenging. I have taken on other part-time work to supplement my income.’”
I am 61, and also single. I could probably do without the retirement withdrawal if I was sharing costs with someone. But having been single for more than 20 years now, I don’t see any romantic prospects in the future. As it stands, the retirement withdrawal almost covers my house payment, and my business income has to cover everything else.
Inflation is really making things challenging. I have taken on other part-time work to supplement my income. I’ve cut all the expenses I can, and spend most days with one light on in my office and the thermostat set to 80 degrees. I’ve looked into downsizing my home, but with the current interest rates, it seems like staying put is cheaper.
I drive a 14-year-old car. Hopefully it will last a while longer as the prospect of a car payment to add to my budget really stresses me out. I’m tired and can’t sustain this pace. But I am so afraid I am going to run out of money. Any suggestions for me?
Running Out of Money
Dear Running,
With $400,000 in the bank, you have time to put a plan into action.
Your industriousness is impressive and, while losing your job at such a critical time — as you were entering the years of your peak earning potential — you have certainly rallied. You, and millions of Americans are in the same predicament, unable to move due to high interest rates.
Another option for splitting costs would be to rent out a room in your home, especially if you are in a position to downsize. This would give you extra income for utilities and food, but also help alleviate any isolation you may be feeling now that you are spending more time at home.
A tenant would not be forever. “Hopefully you can build up your bookkeeping business to increase your income, and when it gets to a sufficient level, you could live by yourself again,” says Robert Seltzer, founder of Seltzer Business Management in Los Angeles.
“‘Never judge tomorrow by today. It’s hard, when each day feels like a week, and each month feels like a year.’”
You are getting closer to the retirement finish line. And there are benefits to getting older — and, in particular, turning 65 in three years. “When you turn 65 and Medicare kicks in, your high cost of medical insurance would be dramatically reduced,” Seltzer adds.
Never judge tomorrow by today. It’s hard, when each day feels like a week, and each month feels like a year. But your circumstances may change for the better. There may also come a time when you can use the equity in your home to buy a smaller house upfront.
Use your network
Elissa Sangster, CEO of Forté Foundation, a nonprofit with a mission to advance women to leadership through access to business education, suggests you leverage your MBA through your social and academic networks, and seek out career services via your alma mater.
“Jump on a Zoom meeting for a quick review of your résumé and possibly learn more about how job listings are posted for alumni,” she says. “Or possibly your business school offers alumni networking (virtually or live) where you could meet other MBAs who might have job leads.”
She also suggests you explore free online workshops, webinars or skills training that might help you network and also give you ideas about further career opportunities. MBAs, she says, “can travel across industries and you can repurpose skills from one job into another.”
When you turn 62, you will be able to withdraw Social Security, but be warned that you will receive approximately 30% less than what you would get if you were to start making withdrawals at the age of 67.
“‘If you make withdrawals from your Social Security at 62, you will receive approximately 30% less than what you would get at 67.‘”
The earnings test starts at $21,240 in 2023 so your excess earnings would be $18,360, given annual income of $39,600, said Bruce Tannahill, a director of estate and business planning with MassMutual, so that would reduce your Social Security benefits by $9,180.
If you can, wait before taking Social Security. Cary Carbonaro, senior vice president and director of women and wealth at Advisors Capital Management, advises you to stick to withdrawing 4% of your $400,000 nest egg. (You’re withdrawing slightly above that currently.)’
Upon reading your letter, other financial planners are optimistic. Larry Pon, a CPA based in Redwood City, Calif., says you should be charging no less than $80 an hour. “That is a bargain for someone with an MBA and your experience,” says. (The Moneyist agrees.)
There are some advantages to being self-employed: You can fully deduct your medical insurance premiums, and you can lower your tax bill by deducting your business expenses — including mileage, computer costs, office costs, education and dues, Pon says.
You earn $1,000 from your part-time job, but think carefully about how much time you put into it, and whether that’s taking away from your business, and whether it’s better to seek out more bookkeeping work. “Tell your existing clients that you are looking for more work,” Pon says.
Bitter irony
There is a bitter irony that someone in your position — with your experience, qualifications, and entrepreneurship — is finding it so difficult to get a job. Workers over 40 are protected by the Age Discrimination in Employment Act, but of course hiring managers bring bias to the table.
There are many other ways of finding someone’s age, aside from asking. Applying for a job online often asks people to list the years they were in college, for instance, and even in interviews most hiring managers could probably give a pretty good guess.
A recent report found that older workers were not even the main beneficiaries of “age-friendly jobs” — jobs that offer less physical labor, more use of social skills, and less grinding environmental conditions — which may reflect the wider work culture.
“These results suggest that while the creation of age-friendly occupations is supportive of employment at older ages, relying on the creation of new age-friendly jobs may not be sufficient for boosting employment of older workers,” the researchers wrote.
You’re struck out on your own with your bookkeeping business. Your age and experience are your biggest assets. Let’s not forget Ronald Reagan’s famous — and probably scripted — comment to Walter Mondale during a televised 1984 U.S. presidential debate.
“I will not make age an issue of this campaign. I am not going to exploit, for political purposes, my opponent’s youth and inexperience,” Ronald Reagan said in response to a question from a journalist about whether he was too old to be president. It was a mic drop moment that few people have forgotten.
Your clients, as I’m sure you agree, are lucky to have you. Word of mouth is the most powerful marketing tool of all.
“There is a bitter irony that someone in your position — with your experience, qualifications, and entrepreneurship — is finding it so difficult to get a job.”
MarketWatch illustrationReaders write to me with all sorts of dilemmas.
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