updated 8/2/2009 6:36:17 PM ET 2009-08-02T22:36:17

Our story last week on the “new retirement plan” — simply work til you drop —drew heavy mail from people trying to figure out how to keep a paycheck coming in when they had expected to be relying on their (now crushed) nest eggs. It turns out that doing so is not without risks.

When I retired at the age of 66, I felt I was pushed over the edge because I plan to carry on working. …. I am a qualified bookkeeper, and I really would like to even work from home. But it is not easy to do that. Well, I can’t see it. What do you think?
RM, London

It is not easy to do. Embarking on a career as a solo practitioner after years of working for a company — especially in your 60s — can feel like “starting over.” Most people at the later stages of their careers didn’t expect to have to do that.

The good news is that bookkeeping is one of those professions for which your age is an asset not a liability. My Inbox is full of stories from readers who report that they were greeted enthusiastically by potential employers — only to be told after the interview that the hiring manager was looking for someone with “less experience” (read: "younger" and "cheaper"). As a bookkeeper, the fee you charge is going to be comparable to a recently-minted CPA; your customer gets the added bonus of your experience. And I don’t care how old you are as long as the books balance at the end of the month.

One place to start would be to contact clients from your former employer who liked your work and see if they have any assignments for you. You may be able to give them a better price than an “full-service” company that has a bigger overhead. Unless you signed an agreement with your former employer not to do so, you’re free to recruit new customers from your — likely extensive — list of former customers.

No matter how active you plan to be, you’re starting a new business — which means you may have to invest some money to get it off the ground. That’s risky at a time when you’re trying to conserve your next egg to pay the bills. But think of it as an investment in yourself.

You’ve gotten off to a good start with your Web site which is another great way to recruit new clients. Since you're competing with larger firms for customers, you may also want to invest in some professional Web design to present the best face possible to people looking for your services.

You may also need to find a partner who has sales and marketing skills that you didn’t have to develop when you were working for a larger company with its own sales and marketing staff. Bookkeeping and marketing are very different skills. Some people have both. Some people don’t.

As for working from home, you're also well-positioned to do so — with a good laptop computer and a decent Web connection, you could operate your new business from a beach in the Caribbean (with occasional visits to clients) if you so chose. But you’ll have to develop the trust of your new client list first.

When analysts recommend that an individual withdrawal no more than 3 to 4 percent of their retirement income annually, are they talking about the interest gain or direct from the principal? If the principal, is it assumed you take the gain off the top as part of your annual income?
— Jean S.

It could be either one, which is why “rules of thumb” like this one are often not very useful.

Financial planners have lead us all to believe that there is a magic algorithm to retirement planning: that if you pump a few numbers into a “retirement calculator" a Magic Number will pop out showing you how much you need to save by retirement age. Then you draw down a fixed amount every year and you’re set for life.

There are a number of reasons why this doesn’t work. First, the algorithm relies almost entirely on two completely unknown variables: how much will your nest egg grow through investment, and how much will future inflation rob you of purchasing power as the years ago by. Since no one knows what these two numbers will be next year — let alone for the next 30 years — this algorithm is pretty much useless.

The other formula — how to draw down a nest egg — is a little more reliable. For many retirees, this means converting your savings into an annuity – a cousin of a life insurance policy — that pays you a fixed monthly amount for life. For many retirees, the security of that fixed income is well worth the cost in fees to the issuer of the annuity.

Those fees are the most critical question when researching which annuity to buy: these are extremely complex contracts, written by the company collecting the fees, and all but impossible for the average citizen to analyze. Best to find a trusted insurance broker or financial planner (who doesn’t earn a bonus commission to steer you to a high-fee annuity) to help you choose the right one for you.

But even then, the security of a fixed income for life only goes so far. Most people don’t have the same level of expenses year in, year out — even before retirement. So even if you already have a monthly household budget and stick to it, you can't accurately predict when your car is going to need a new transmission. (If you haven’t already made a budget, retirement is definitely the time to do so.)

The retirement industry's TV ads and slick marketing brochures present a seductive picture of your Golden Years: a smiling senior couple out for a stroll in front of their retirement beach house, with their friendly retirement planner just a few steps behind them. It's a seductive image. But no matter how well you plan for retirement, life — especially your financial life — will continue to be filled with surprises. Advisors who rely on a formulaic plan for drawing down your nest egg to pay the bills in retirement may be painting a picture that’s just not realistic.

Are these Google ads for making cash at home for real?
— Janet B. Payson, Ill.

Since we have yet to hear from a reader who has found a “cash at home” pitch that worked (or found one ourselves), we doubt it.

These come-ons seem to sprout like mushrooms when times are tough. Which makes sense. With so many people out of work looking for a way to make ends meet, the pool of vulnerable targets for these scammers is huge.

According to the Federal Trade Commission, these scams come in many flavors but most are variations on a few time-honored themes. Here are three:

Medical Billing: The “crisis” in medical record keeping offers limitless opportunities for home-based invoice processors. This may be true. But — after you’ve taken the bait and paid for the “information kit” — there’s a key piece of information missing in the kit: You’ll have to line up your own customers.

Home-based manufacturing: From toys to plastic kitchenware, assembling products at home — on your own schedule — sounds like a great way to make some extra money. When you’ve forked over for specialized equipment needed to make this stuff, and your assembled products are rejected for “quality standards,” you'll then learn the only one making money is the scammer who sold you on the idea.

Envelope stuffing: How hard could that be? For a fee, you get a kit or instruction book — on how to sell kits or instruction books to others who want to stuff envelopes. You'll get helpful tips on making up your own info kit and stapling pitches on telephone poles.

For more on these scams, check out the FTC Web site.


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