July 28, 2019 – Joseph Feibel

Once a person leaves the labor market, he begins losing his skills in whatever it was that he did to earn a living before he retired. In the labor market, absence rarely makes the heart grow finder. It is more often “out of sight, out of mind.”

If a person uses his free time to master new skills, such as those relating to a volunteer project, retirement can become an advantage. Not only is the organization helped which receives this donation of time and skill, but the person stays active, presumably at something that interests him more than his former job did.

The possibility of making the transition from being an unpaid volunteer to becoming paid is always there in large volunteer organizations. The volunteer continues to expand his skills and his personal contacts. He makes himself useful. At some point, the organization may be willing to pay for this usefulness. This reduces income risk for the volunteer.

Depending on the organization in question, the personal contacts that a volunteer makes can be used later as a way to get back into the labor market. To reduce the risks of retirement, a person can target a volunteer organization with an eye to establishing personal contacts that may become valuable later on.

This strategy works for retirees as well as it works for younger workers who use volunteering as a means of networking. Participation in a volunteer organization that is favored by entrepreneurs and rich people can put a person in close proximity to high-income people he would not otherwise meet. These people are always on the lookout for creative, hard-working people.

The retired person who moves onto the golf course or onto the highway in a motor home is making a life-shaping decision based on what may be unrealistic assumptions, namely, the ability of his former employer to fulfill its promises to retired workers.

Leisure is a tax-free way to live, but it is not cost-free. It forces people to consume capital that might otherwise be invested. It also comes at the cost of declining skills, which is the most important form of capital consumption.

The retired person can close off future employment opportunities by choosing leisure over service, or he can choose service and thereby extend or replace the skills that once provided him with a stream of income.

The longer you stay out of the service markets, the more rusty you become. Also, the more addicted to leisure you become.

It is not a good idea to choose leisure at the expense of service in the first five years after retirement. Most people do this, but most people are naive about the reality of the American pension system