Retirement is changing. The question is how? A scan of retirement headlines suggests that it’s largely negative, driven by overburdened retirement structures and elderly people working minimum wage jobs long into their so-called Golden Years. I think the reality is more complex, and a lot of it is simply the recognition that we have new choices.
That was made clear by a recent survey1 that found 72% of pre-retirees, defined as people older than 50 but not yet retired, plan to work in some form during retirement. 5% said they plan to work full time, 35% plan to work part time and 33% hope to cycle between work and retirement. Only 28% replied that they planned never to work again.
It is easy to fit this into the narrative of retirement hardship, and certainly that is the reality for some, but a deeper look suggests there is more going on. While money is a factor, 51% of pre-retirees listed staying mentally active, 43% listed staying physically active and 32% listed social connections as reasons for working.
Interestingly enough, 58% of current retirees who are working are in a different line of work than their pre-retirement careers, with flexibility, more fun/less stress, and the desire to learn new things the top reasons for the switch. Marc Freedman, in his book, The Big Shift2, was one of the first to understand the change toward working retirement and the benefits it can bring, giving the phenomena the name Encore careers.
His research suggests that up to nine million people are engaged in Encore careers, which he defines as a new phase between what we would consider our main career and what we would traditionally consider old age. Freedman focuses a great deal on inspirational stories of reinvention, people who pursued their passions or became entrepreneurs who in a previous generation would have simply retired.
My own view is that a 65 year old today has more health, greater life expectancy and more to offer economically that a 65 year old of a generation or two ago. And even if finances force them to work longer than the traditional retirement age of 65, there is no reason for them to work in the same way or the same field. The more people recognize a new phase – some later in life in between stage similar to the way adolescence sits between childhood and adulthood – the more they can take advantage of it.
For a healthy person, working longer makes sense. They can pay more into the retirement system and delay taking benefits, which should increase the benefits they receive. But let’s not overlook the personal and societal benefits of working in a new way. When you consider the options, you may decide that “retirement” is not going to be part of your retirement, at least not yet. And that may be great news.
Chip Castille, Managing Director, is head of the BlackRock US Retirement Group.
1Work in Retirement: Myths and Motivations, Merrill Lynch, 2014
2The Big Shift, Navigating The New stage Beyond Midlife, by Marc Freedman, PublicAffairs, New York, 2011