Time to Retire?
How do you know when it’s time to retire?
A younger colleague asked me that the other day. It’s such an important question and there is so much to consider, but I didn’t hesitate in answering.
But first, the forks on the road to retirement and the subsequent pitfalls. After 50 years in wealth management, my perspective is in large part informed by discussions with clients, colleagues and friends on their own retirements, as well as their business and family succession planning.
If we are blessed with sufficient health and wealth to have choices around retirement, it seems to me that we have four broad options.
Those who cash out to retire early, whether through the sale of their own business or a public company or after early successes in other fields, often choose to retire early, to smell the roses. But those roses may soon wilt, if the retiree doesn’t have a well-thought-out plan to pursue other interests. The prospect of increased longevity (now 87.3 years for men in the top 1%; almost 89 years for women1) can compound any feelings of boredom or restlessness, as more free time has to be filled, as well as funded. Starting a new business may seem like a remedy – and it may very well be – but it can also lead to financial and other forms of stress.
Others are forced into retirement earlier than they had hoped, perhaps because of changes in management at their public or private companies, and must manage an unplanned retirement, to make the best of it. It can be tough, but it can also prompt a rewarding second act – and a better understanding of what to expect from eventual retirement. The fortunate ones may be able to serve on boards or join entrepreneurial firms that value professional experience and expertise.
Increasingly, those who enjoy it continue working for years or even decades after the traditional retirement age. This can work out well for everyone involved, or it can stifle colleagues who tire of waiting in the wings, or annoy spouses who are looking forward to traveling or relocating. And there may be personal opportunity costs in not exploring other interests.
Some retire gradually, working with their colleagues to shift responsibilities, and reducing their hours and compensation along the way. If thoughtfully and collaboratively managed, this slow retirement can work very well.
My view is also influenced by my own experiences at each of these forks, stories that I’ll leave for another day. Suffice it to say that a traditional retirement at 65 made no sense for me, as I felt throughout my 60s much as I did in my 30s, and I had a new and growing wealth management firm to manage. Besides, my mother and father made it into their mid-90s; if I really do live four to five years longer than my parents, as Baby Boomers can apparently expect, there’s no reason to settle into a rocking chair just yet.
At 72, another five or 10 years at my current 60-hour-plus workweek doesn’t make much sense for me either. I don’t have the same high energy, the same unrelenting focus, and the same willingness to endure many more New York winters. I have grandchildren to play and travel with, and other passions to explore (for proof of that, look no further than the image below where you’ll see one of my drone photos from a recent trip to Portugal). I also have a spouse who has been at my side for 46 years, and we have made our decisions together.
“Time is a river: a view of the Douro”
Ⓒ2019 Jeff Maurer
I have a plan, to stay active and engaged. I’ll remain Chairman of Evercore Wealth Management and Evercore Trust Company, working mostly from our relatively new office in Palm Beach. I’ll counsel clients and colleagues, remain on our firm’s Strategic Planning Committee and continue to contribute to the pages of Independent Thinking, as well as to my charitable interests in both Florida and New York. When I seek to add stress back into my life, I will play a little golf.
But why now, exactly? How did I know that this was the year to transition out of the day-to-day responsibility of running our business? I was able to answer my colleague’s question so readily because I was reminded not only of all these experiences but also of a conversation with a doctor at the Hospital for Special Surgery in New York 15 years ago. When I asked how I would know the right time to schedule my bilateral knee replacement surgery, he simply replied: “You’ll know.” He was right about that. (And about other things too; the surgery was very successful, and I haven’t felt knee pain since.)
On reflection, isn’t that how we address so many of life’s big transitions, at least the ones over which we have some control? We discuss, dither, desire and even dread the next stage while at the same time preparing for it, financially and in other ways. But when the time is really right – to marry, to start a business, and to retire – we often simply know.
Building a New Nest: Key Considerations in Changing Domicile
Jeff Maurer and Helena Jonassen, Partner and Wealth & Fiduciary Advisor hosted an event on October 17 to address client questions about changing domicile. The event, which was attended by clients around the country, indicated that a lot of people are at least thinking about moving. Certainly, it is not a decision to be undertaken lightly.
“New York state in particular has always been aggressive about non-residency audits and has become even more so in recent years,” said Jeff Maurer, noting that more than half of the approximately 3,000 people audited each year between 2010 and 2017 lost their cases, resulting in a cumulative $1 billion in revenue.
Helena Jonassen cited five key criteria in establishing domicile: the residence a taxpayer considers home; employment and active business involvement; time spent in the new (and the old) location and the quality of the time spent there; situs of near and dear possessions, such as artworks and the family dog; and family connections – where are the immediate member of their family, where do they gather? The case for each needs to be clear and convincing, she said.
An earlier Independent Thinking article, Florida Bound: Moving to a Warmer [Tax] Climate, discusses this subject at length. To discuss changing domicile in the context of your family and business circumstances, please consult your attorney and your Evercore Wealth & Fiduciary Advisor.
Jeff Maurer remains Chairman of Evercore Wealth Management and Evercore Trust Company; he will step down as CEO at the end of 2019. He can be contacted at firstname.lastname@example.org.
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