The title may sound like a bunch of older Americans in the Western part of the country fleeing current forest fires -- but this blog post is about a different kind of F-I-R-E: "Financial Independence, Retire Early." The FIRE movement gained traction with the under-50 set as a way to retire as early as possible by accumulating enough savings to fund a potential 50-year retirement. But the pandemic has cooled the interest in FIRE in one way and created a new class of adherents in another way.

One of the tenets often viewed as a cornerstone of retirement planning and part of the FIRE movement is the "4 percent rule." Here is a simple explanation of the rule from investment management firm Charles Schwab:

You add up all of your investments, and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation. By following this formula, you should have a very high probability of not outliving your money during a 30-year retirement according to the rule.

This rule seems quite adequate for a 30-year retirement but much riskier for a 50-year retirement. According to mutual funds giant Vanguard, applying the 4 percent rule results in an 18 percent chance of running out of money at the end of thirty years, but there's a 64 percent of running out of money in fifty years. The fact is Boomers on FIRE could be more successful in sustaining their financial independence in retirement than younger generations on FIRE. Basically, if the 4 percent rule holds, the youngest Boomer at age 57 will probably not outlive her money in fifty years, but a 35-year old Millennial very well might.

A recent article in The New York Times suggests that, before the pandemic, Millennial FIRE enthusiasts aimed for frugality in an effort to retire as young as possible, but the pandemic is changing that thinking: "Now, most newcomers to the movement are less motivated by quitting and more interested in having choices — without sacrificing too many of life’s pleasures in the meantime. This objective also makes the movement more accessible; early retirement is just not possible for most Americans."

It turns out that the pandemic may have recalibrated the expectations of those younger workers who were on FIRE. Thirty-eight year old Jamila Souffrant of the website/podcast "Journey to Launch" told The New York Times, "“I think a lot more people would have stepped back from work during the pandemic if they had the means to do so, especially if they had kids stuck at home or didn’t feel safe at their jobs. Financial independence is a privileged endeavor, and it’s not realistic for most people — they’ve got mouths to feed, and they might not even be making a living wage."

Boomers, on the other hand, have generally seen their retirement funds balloon thanks to the recent bullish stock market. As I wrote in my last post, retirees are for the most part optimistic and resilient, even when they retire early. Millions of Boomers have left the workforce during the pandemic, maybe because they are confident their financial independence is solid and their money will outlive them. That's a whole lot of Boomers on FIRE.

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There are essentially two basic sides to retirement: Financial and Personal. For the average Boomer, the Financial side is the engine of the Personal side. If we have been diligent about funding retirement accounts, generally have made wise investments and live well within our means, we should be able to comfortably "retire." But most Boomers quickly realize that there is no universal definition of retirement, because it's really up to each of us to define it.

One way to look at the Personal side of retirement is to ponder how to design your "ideal" retirement. Joe Kesler, author of the book "Smart Money with Purpose", has some excellent ideas about that. In an article he wrote for Humble Dollar that also appeared on Marketwatch, Kesler shared these six suggestions:

1. Ramp up creativity and learning. Kesler writes that learning during retirement "reminded me of the thrill of going to college, but without the stress of final exams."
2. Redesign work. Kesler says a fulfilling retirement should include a combination of leisure, service and work. Working at something you enjoy, whatever it may be, is liberating because "we no longer have to put up with the nonsense of the workplace—because we aren’t doing it for a paycheck."
3. Redefine identity. Because many of us were defined by our work identity, it's important to "fill the identity void with our new interests," writes Kesler.
4. Build deep friendships. Work friendships also need to be replaced. Kesler advises, "Look for friendships where you find yourself most passionate."
5. Capture Kodak moments. Without an all-consuming career, Kesler says you can "Use the extra time offered by retirement to reconnect with family."
6. Eliminate the toxins. Free yourself from things that perturb you, advises Kesler. "Don’t waste a lot of time in this new season of life with toxic relationships or annoying red tape."

I think Kesler does a darn good job of covering the key areas of the Personal side of retirement. We all know the Financial side can be challenging, but the Personal side can be downright vexing, particularly for those of us who are transitioning from long, fruitful careers. The very notion of reinventing ourselves (or "rewiring," as I call it) in our later years can be an unsettling proposition. That's why it's so important to plan ahead for retirement not just financially, but personally. Your happiness depends on it.

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The pandemic that laid waste to the American economy has led to an interesting paradox: Well-off Boomers started to disappear from the workforce not because they lost their jobs, but because they wanted to leave their jobs.

As I've mentioned in the past, the number of Boomers who retired in 2020 increased dramatically. In the third quarter of 2020, 3.2 million more Boomers retired than in the third quarter of 2019, according to the Pew Research Center. In Q3 2020, 28.6 million Boomers said they were now retired. A substantial number of Boomer retirees felt the detrimental impact of the pandemic. These unlucky working Boomers found that their employers were effectively using the economic downturn as a means of practicing ageism. Boomers were typically the first ones to get the axe when belts needed tightening as employers exhibited a preference for younger, less expensive staff.

Still, a different slice of the Boomer demographic has seen something of a silver lining in the pandemic. As reported by Entrepreneur.com, according to Bloomberg, 2.7 million Americans age 55-plus have said that "Covid-19 fatigue" is causing them to consider leaving the workforce earlier than they had planned. This group -- mostly affluent white Americans -- is well-heeled enough to think about calling it quits. Returning to an office after more than a year of telecommuting may just be more than some of these Boomers can handle. They're following a "life is short" philosophy. In the Entrepreneur.com story, one 58-year old "said he found himself spending more time about pursuing his other passions — including volunteering at the Salvation Army — and that staying home last year only reinforced his desire to leave."

Interestingly, Boomers may have really benefited financially during the pandemic recession because of a dramatic increase in the value of homes and stock shares. According to Entrepreneur.com, "Assets for Americans between the ages of 55 and 69 reportedly spiked by $4.2 trillion last year, including a $2.2 trillion increase in corporate equities and mutual fund shares and a $250 billion uptick in the value of private businesses."

Boomers who have decided to exit the workforce permanently creates another problem: a labor shortage. Employers simply cannot fill open positions. Isn't it ironic that those employers who previously discriminated against Boomers because of their age may now actually be desperate to hire them.

Editor's Note: This post has generated several comments, which can be found in the "Comments" section below the post. I have also included two of them here:

Such an interesting article! My husband is 62 next month and one those boomers who is dreaming of retirement. After going through the pandemic and a booming construction business that has him drowning in work as a surveyor, he has had enough. I don’t know if it’s in the immediate future, but we’re working toward that goal. - Julie Gorges

As always, another provocative blog post from Happily Rewired. Of particular interest is the ironic twist in the last paragraph observing that previously youth age-biased employers “may now actually be desperate to hire” senior candidates. It is worth noting that the impact of the pandemic, aside from the economic effect on the general population, has also driven cultural transformation raising the value of older people. Fredrick "Rick" Manning, BoomerRevolt.com

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One of the most striking effects of this year-long pandemic has been the remarkable shift to the online world. Many Boomers were already comfortable communicating digitally, getting information from websites and ordering products online, but there has been a virtual explosion (pun intended) of online everything lately. Just a few examples:

• The e-commerce increases for such retailers as Target and Walmart are breathtaking -- not to mention Amazon, whose revenue has soared into the stratosphere during the pandemic.
• Online grocery, food delivery and restaurant takeout orders have skyrocketed. Many of us (myself included) have tried grocery delivery services for the first time. Some of the restaurants in my local community have been very creative in offering specially created takeout meals, making them easy to order online.
• "Zooming" has become a common verb. I've attended countless webinars, meetings and online classes via Zoom. While it isn't always an ideal experience, it has been a safe haven replacement for in-person events. Kudos to organizations such as my local OLLI College for Seniors, which has managed to replace its in-person classes with online classes for all semesters.

For Boomers, one of the most enriching avenues has been online education. In "Remote Learning Isn't Just for Kids," a recent article in The New York Times, MIT AgeLab research associate Luke Yoquinto tells Kerry Hannon, the "growth of older age demographics will translate to new demand for enrichment in the form of digital education." He observes, “There are already tons of people who, once upon a time, by dint of age or circumstance, wouldn’t traditionally have gotten the chance to partake in education, but can now sign up for free online courses.”

Ironically, online education may be one of the great side benefits for Boomers of being isolated by the pandemic. It may have forced many of us to discover online courses we would otherwise have overlooked. Online education has become far more sophisticated: A course can be on-demand, so it can be consumed any time it's convenient for the learner. Live courses can be streamed from anywhere to anywhere, even with multiple guest speakers and elaborate audiovisual presentations, including video. The only limiting factor is the learner's internet connection, but access to broadband is increasingly common.

Online education isn't just for recreational learning, either. There are numerous online programs that lead to higher education degrees or professional certificates. For Boomers, that could mean new job opportunities or even alternative careers. Boomers interested in starting their own business will also find online training available; for example, the above-referenced article mentions three possibilities: GetSetUp, Blissen, and Work for Yourself@50+ from AARP.

Boomers who have continued to work through the pandemic may have experienced another big online shift -- the shift to working remotely. Some jobs could not easily be transitioned to online work, but for those Boomers who have been able to work from home and remain employed, remote work has been a godsend. In fact, there are many workplace efficiency analysts who believe remote working may end up being a permanent change.

If you're looking for a silver lining to the COVID-19 pandemic, the online shift may be it.

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One of the more popular phrases around the retirement circuit is "second act." It's a euphemistic way of acknowledging that an individual, typically a Boomer, is leaving a profession, career or long-standing job to embark on a new path. That new path may be entering an entirely different career, starting a business, volunteering for an organization or some combination thereof. Sometimes, a second act happens by choice, but it often occurs when an individual loses his or her job and the curtain involuntarily comes down. Sadly, ageism plays a leading role in such instances.

The pandemic has hit Boomers particularly hard. According to Bloomberg, some two million workers age 55 and older have left the workforce since March 2020. While about 2.7 million jobs have been created for workers under the age of 55 since August 2020, only 28,000 jobs were created for workers over 55 during the same period.

That's one of the reasons second acts are increasingly common right now among Boomers. Many times it is your second act that imbues you with a new passion, invigorating you with vitality that may have been waning in your first act. For over two years, Andy Levine has been cataloging second acts through his podcast, "Second Act Stories." By analyzing the stories of his guests, Levine has identified five "themes of successful second act entrepreneurs" that are worthy of mention:

1. "Find what feeds you"
2. "A successful second act is rarely a straight line"
3. "There are planners and there are leapers"
4. "The rise of the reluctant-preneur"
5. "You're never too old to make a change."

I highly recommend you read Levine's article about these themes at NextAvenue.org, but for purposes of this post, I'd like to concentrate on the first and last of his themes.

The first theme, "Find what feeds you," gets to the heart of what drives a second act. Not surprisingly, writes Levine, those second acts that achieve the most success "involve finding meaning and purpose." What's striking about a second act is it may involve a radical departure from a person's previous path. Often, a second act is built around a childhood passion or hobby. For example, one former software executive I know was creative and liked working with his hands. After he spent his first career on the corporate side, he learned to become a wood sculptor for his second act.

The last theme, "You're never too old to make a change," is perhaps the most obvious theme, but it is an important one. This theme reinforces the reality that age is nothing more than a state of mind. There are countless stories of people in their 60s, 70s, 80s and even 90s beginning a second act.

You'll be well on your way to a satisfying second act if you embrace your passion and disregard your age.

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Many Boomers are "retired," but those in the know don't think of it that way. Instead, they treat retirement as if it is a small business they run. Doing so is something Boomers either learn from running a business previously or from meeting with a financial adviser. Either way, it makes a lot of sense to treat retirement like a business. Here are some of the ways it will make a difference:

• Manage income and expenses in retirement, just like a small business.
  Retirement income may be fixed (such as a monthly Social Security benefit) or variable (such as a Required Minimum Distribution from an IRA, or interest from investments). It is important to know how much income you receive on a monthly and annual basis and from which sources so you can support your lifestyle. Expenses should be itemized and managed monthly or quarterly so you know when bills are due and where you are spending your money. This will also be helpful in managing cash flow.
  
  
• Do a projected budget each year.
  Owners of well-managed small businesses project their income and expenses annually (or sometimes more often) in the form of an operating budget. This is just as valuable an exercise for retirees. Projecting income and expenses for the next year based on current and previous years is a valuable lesson in fiscal responsibility. It allows you to compare income and expenses from one year to the next, look back historically at how income and expenses have changed, make necessary adjustments to the current year and make reasonable estimates of how much money is coming in and flowing out for the year.
  
  
• Analyze expenses carefully.
  Wise business owners assess each and every expense category to determine where they can operate more efficiently. In retirement, you can do the same thing. Make your own list of expense categories and examine each one individually as part of your overall budget. Your mandatory expenses (rent, utilities, etc.) should be separated from discretionary expenses. If you use the above-mentioned budgeting process, you can start to hone in on expense categories that can be reduced or perhaps even eliminated. 
  
  
• Build in contingencies.
  Experienced business owners realize that there could be unanticipated losses of income or unexpected expenses. The conservative way to plan for this is to build contingencies into a budget. In retirement, that means ensuring that you have adequate savings, an emergency fund or other financial vehicles such as equity lines available so you'll be prepared for something out of the ordinary. One of the largest expense areas in retirement tends to be health costs, so be sure to allocate contingency money for unanticipated medical needs.

These are just a few examples of ways in which you can treat retirement like a small business. If you've done any kind of personal budgeting, you're already off to a good start. Most of what I've described here can easily be done with spreadsheet software. It just takes a bit of time and financial discipline. If you are unfamiliar with basic accounting, there are plenty of sources available via a simple internet search. Numerous personal finance apps could be of assistance, and your financial adviser could also provide valuable guidance.

The end of the year is an ideal time to think ahead and set up a simple system so you can treat your retirement like a small business in 2021. 

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We are coming to the end of a year like no other. I suspect that most of us will be more than happy to see 2020 go. Of course, we face the question we often contemplate as a new year begins: Which path forward? It's a question that could be particularly challenging for Boomers right now.

On the positive side, it is looking like an effective COVID-19 vaccine will become available in 2021. If this is true, we may be in a position to look forward to eventually returning to a "normal" life -- at the very least, seeing people we love, enjoying social events and traveling if we so choose. It will be remarkably refreshing if many of the things we used to take for granted will be safe for us to do again. Still, even with a vaccine, we'll have to be wise about how we navigate life. The virus won't magically disappear. Wearing masks and maintaining some degree of social distancing, even if modified, will remain essential. That will be the new normal.

Many Boomers will likely be taking stock next year. We'll have to consider how the pandemic has affected our livelihood, our retirement, our financial condition, our physical health and our mental health. Everything needs to be re-evaluated, as with the financial meltdown of 2008-2009. Some of us may have to make tough decisions about working or not working, retiring or not retiring. Writing for NextAvenue.org, retirement expert Kerry Hannon reminds us to be cautious about taking early retirement. Drawing Social Security payments too early is one potential downside. Hannon cites Alicia H. Munnell, director of the Center for Retirement Research at Boston College, who writes, "Benefits claimed at 70 are 77% higher than those claimed at 62."

Hannon has some solid advice for anyone considering early retirement:

• Prepare a budget
• Carefully consider the pros and cons of any early retirement package you may be offered
• Determine all of your sources of retirement income
• Plan withdrawals from savings and investments
• Be sure to take health insurance into account
• Talk to a financial adviser.

She offers helpful information about all of these areas in her article.

I've always believed the toughest challenges can open up new and sometimes unexpected opportunities. For example, even at their lowest point and with numerous previous failures, some of the most successful entrepreneurs have persevered and prevailed. We can too, regardless of which path we choose to go forward.

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One of the lessons of COVID-19 is that connections with other people matter. Thankfully, despite isolation and social distancing, we have other ways to connect and communicate. While it is natural to gravitate to our peers, this is also a great time to connect with younger generations. One organization, Encore.org, is all about intergeneration connections. Through their "Gen2Gen" initiative, Encore.org is encouraging oldsters like us to find ways to interact with youngsters.

Encore's "10 Organizations Connecting Generations During the Pandemic" lists opportunities to make connections from your own home in ways that could be meaningful to both you and others. You can answer young people's career questions, you can be a young person's email pen pal, or you can engage in online mentoring. It's up to you how much time you'd like to invest and the means of communication you'd be interested in utilizing.

As Encore, reports, Boomers and older Americans aren't the only ones feeling the stress of pandemic isolation -- younger generations feel it too. A win-win situation could be intergenerational communication, says Encore: "While the pandemic continues to spread throughout the U.S., innovators — from all parts of the country and of all ages — are ushering in new ways to connect the generations, easing social isolation for both generations. They’re connecting strangers for caring calls, bringing together pen pals from different generations, and providing homework help to young people whose parents could use a break."

Encore.org is a great resource for remote intergenerational activities, but chances are there are opportunities in your local community to make connections with younger generations that don't involve face-to-face contact. It could be a refreshing, revitalizing experience at a time when we all need a lift.

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This is an unsettling time for everyone, and homeowners are no exception. The good news is that if you own a home, it is likely to be your most valuable asset -- probably of greater value than any other material possession. You may have used the equity in your home to borrow money. You may have refinanced over the years to reduce your monthly mortgage payment. Or you may have been able to pay off your mortgage by now, meaning the equity you have in your home is all yours. 

But today, the place you call home may very well be an empty nest. The kids have grown up and you have excess space you are no longer putting to good use. It's a dilemma for a significant number of Boomers. Do you stay put -- in more house than you really need? Do you put your beloved home on the market and downsize into more modest living quarters? Or is there some other way to take advantage of your most valuable asset?

Here's a smart alternative -- Boomer homeowner Art Barry calls it the "downsize side hustle." He and his wife Sharon considered downsizing, but none of the typical options were attractive to them. So they decided to downsize with a twist. Instead of selling their home and moving into smaller quarters, they stayed in their home and did some clever remodeling, converting an unused bedroom and bathroom into a rental unit with a separate private entrance. The idea turned their most valuable asset into an income-producing property. Art says, "If you have a home and have too much unused space, you can probably come up with a way to turn it into real money. We had positive cash flow with our first month of leasing."

What does it take to create an opportunity to make part of your home into a rental property -- and what's it like to be a "micro-landlord"? In his well-written book, The Downsize Side Hustle, Art covers his experience in detail. He goes through how he and Sharon did it, pros and cons of using contractors and tradespeople, furnishing, utilities, marketing and advertising, tenant screening, landlord and tenant responsibilities, leases and regulatory issues. While Art and Sharon decided they wanted to rent only to longer-term tenants, this same concept could apply to short-term rentals designed for vacationers.

Obviously, not every home can be modified to the extent that it can become a rental property, but maybe Art Barry's experience will inspire you to think creatively. A "downsize side hustle" is an intriguing idea that enables you to stay in your home while generating some income. In this tough economic environment, it may be a smart strategy to consider. 

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As difficult as it is to believe right now, we must all have hope that the United States and the world will eventually recover from this global pandemic. We will, however, likely be living under very different conditions in the near future -- what many are referring to as the "new normal." One can foresee, for example, an increased emphasis on social distancing, mask-wearing in public and the inevitable demise of the familiar handshake.

How will our lives as Boomers be different? Older Boomers who collect Social Security and are already on Medicare were probably relieved to have those safety nets in place during the pandemic. Still, their retirement savings have no doubt been battered. It could take years to rebuild the value of those investments.

Older and younger Boomers alike have been affected. If you were employed previously, you may have been laid off from your job. Post-pandemic, you may lose your job permanently. If you owned a small business or were part of the gig economy, you may have seen your income dry up or even had to shutter your business.

The hard truth is many of us had finally recovered financially from the 2008-2009 recession. We were probably on pretty solid ground until the coronavirus crisis hit. Suddenly, it obliterated our security.

So how do you find a way to pick up the pieces now? I don't claim to have any easy answers. I won't flood you with platitudes that you may find elsewhere.

But I do believe that given our collective experience, Boomers are generally better at facing and overcoming life's challenges. Why? Because age provides perspective... and we are generally a very resilient bunch. We have lived through downturns and upheavals and survived. Many of us have learned important lessons as we age: Being able to live below our means, valuing the little things in life, expressing gratitude for family and friends. Even in the midst of the global meltdown, I'm grateful for what I have.

So we will cope. We will stay positive. We will find a silver lining in this crisis. We will not allow it to steal our vitality and our exuberance for life. We will recover and prevail.

The road to recovery may be long. Some things in our country will need to fundamentally change for the better. But we have only to look at the selflessness of front-line workers and the countless acts of kindness displayed during this pandemic to recognize that the human spirit is alive and well. That will carry us forward.

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