The gap has narrowed between planning to work in retirement and
actually doing so
By KERRY HANNON Published: Sept 16, 2019 9:48 a.m. ET
This article is reprinted by permission from NextAvenue.org.
For years, many workers
nearing retirement have professed plans to work part-time during retirement.
But few retirees have actually continued working part time. Things are
changing.
A recent survey of
pre-retirees and retirees shows that the gap between planning to work in
retirement and doing so has narrowed. I have to confess I was a little bit
surprised and more than a little pleased to see the results. Let me share with
you what the researchers found and what retirement analysts say is going on.
Findings of a survey of retirees and pre-retirees
The LIMRA Secure
Retirement Institute surveyed recent
retirees and pre-retirees (ages 55 to 71) who’ve retired within the past
two years or plan to retire in the next two years and had at least $100,000 in
assets. Among the pre-retirees, 27% said they plan to work part-time in
retirement and 17% said they expect to gradually reduce their hours before
stopping work entirely. Among the retirees, 19% are working part time and 17%
have reduced their working hours.
The study found an
interesting gender distinction, too: a quarter of the female recent retirees
phased into retirement, while just 16% of male recent retirees did. Men may be
less likely to phase into retirement than women because it’s harder to do so
due to their preretirement job functions, the LIMRA researchers noted; 23% of
the retired men surveyed worked in managerial job functions before retirement
compared with 13% of women.
There are, I think, three
big reasons why previous studies showed a much higher percentage of pre-retirees
planning to work in retirement than the percentage of retirees who were working
part time.
First, pre-retirees have
been overly confident and optimistic about their desire or ability to work
part-time in retirement. Second, health challenges frequently prevent retirees
from working in retirement. Third, people in their 60s and 70s have typically
had a hard time getting hired due to age discrimination.
So, what’s going on now?
“The numbers are in good
alignment because the pre-retirees were two years or less from retirement. So
they had a pretty good idea what they were going to be doing,” said Alison
Salka, director of LIMRA and LIMRA Secure Retirement Institute Research. “The
closer you are to retirement, the more accurately you can predict what you are
going to do. You’re also more likely to have been planning for it.”
Why people work part-time in retirement
Salka said the three
primary reasons for continuing to work among employed recent retirees are: for
spending money, because they enjoy their work and to stay intellectually
engaged.
Catherine Collinson, CEO
and president of the nonprofit Transamerica Institute and Transamerica Center
for Retirement Studies (and a Next Avenue Influencer in Aging), told me she
found it “encouraging that the gap between pre-retirees’ vision of
transitioning into retirement compared with the experience of recent retirees
is finally starting to close.”
Working at least
part-time in retirement is a good thing for many retirees, Collinson said. “It
enables them to earn income, continue saving for retirement and
bridge savings shortfalls — with more free time for personal
pursuits,” she noted.
The savings shortage
Many 50+ workers haven’t
saved enough to fully retire at the traditional retirement age of 65, Collinson
explained. According to Transamerica, the estimated median total household
savings in all retirement accounts among the semiretired is $216,000. “It
will be difficult, if not impossible, to make these savings last a retirement
of twenty-five or more years,” Collinson said. And with every passing year, the
percentage of retirees with pensions is shrinking, adding to the need by some
new retirees to work part-time.
Collinson’s theory on why
the working-in-retirement gap of wish and reality narrowed in the LIMRA report:
“The labor environment is becoming more conducive to workers extending their
working lives and pre-retirees planning a transition to retirement.” In today’s
tight labor market, employers are increasingly hiring older Americans to work
part-time in retirement.
The gig economy and retirees
By 2026, the Bureau of
Labor Statistics estimates, the labor-force participation rate of Americans age
65 to 74 will grow to about 30%, compared with roughly 17% in 1996.
“With the proliferation
of the gig economy and the digital marketplace, it’s easier than ever
for experienced professionals to do freelance and consulting work, although it
still requires careful planning and preparation,” Collinson said.
Bingo.
In fact, demographer
Peter Francese recently told Barron’s that
he believes the current figures on boomers in the labor force are
understated. Many people in their 60s and 70s, he said, are working part time
off-the-books, so they’re not counted in the government’s labor force figures.
Advice for working part time in retirement
My bottom line: if you
plan to work in retirement, don’t wing it.
You need to start
planning a few years ahead of time. You might need to add some employment
skills, or at least keep yours up-to-date.
It’s a good idea to
network with people you know at employers where you’d like to work in
retirement and that hire part-time workers.
If you want to start
your own business as a consultant or launch an entrepreneurial effort,
you’ll want to gear up gradually by doing your market research, getting
financially fit and laying the necessary groundwork. (Shameless plug: My new
book on midlife entrepreneurship, Never Too Old to Get Rich, includes
stories of people who’ve launched businesses as their second acts, with their
advice for others.)
Next Avenue also has many
stories on working part time in retirement, including this blog post I
wrote, How to Keep Working Into Your 60s
and Beyond. The RetirementRevised.com podcast,
Working After 50, has been running a series on the subject, too.
Kerry Hannon is the
author of “Never Too Old to Get Rich: The Entrepreneur’s Guide to Starting
a Business Mid-Life.” She has covered personal finance, retirement and careers
for the New York Times, Forbes, Money, U.S. News & World Report and USA
Today, among other publications. Her website is kerryhannon.com. Follow
her on Twitter @kerryhannon.
This article is reprinted
by permission from NextAvenue.org, © 2019 Twin Cities Public
Television, Inc. All rights reserved.
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