Baby Boomers & Retirement
Today, many people reaching the age of retirement don’t actually intend to retire in the traditional sense. Research by the Massachusetts Institute of Technology Age Lab shows that more than 80 percent of baby boomers who are approaching 65 don’t plan to stop working, even if they have to leave their current jobs.
"Comfort" is one of the main reasons why boomers’ are continuing to work, according to the research. Many do not think that the funds they’ve put aside for their remaining years will suffice. About 40 percent of boomers were rocked by the financial crisis of 2008-2009, and have lost substantial parts of their savings for retirement. But money is only part of the motivation. These retirees simply do not want to sit on the porch and read the paper. They want to continue to enjoy the stimulus that work provides.
Many retirees would simply like to continue working at their current jobs, according to a recent study by Bankers Life’s Center for a Secure Retirement. However, about 20 percent are laid off once they reach retirement age, while 40 percent have to leave their current jobs for health reasons, and about 10 percent leave to care for other family members.
Fortunately for retirees, there are considerable possibilities for them to continue working. A few will find new full-time jobs but many will seek part-time and freelance roles and this type of work has become more easily available in the current economy, according to the study. However, many will be disappointed by the amounts they will be able to earn in these positions. According to the study, the majority of retirees who seek to continue working don’t expect to have to take a pay cut. Nearly three-quarters of those who actually do get new jobs find that they are earning less than they were in their pre-retirement careers. More than half say that the reduction in earnings is considerable.
An increasing number of companies are allowing boomers to stay with their current jobs on a part-time basis – albeit with reduced salaries. It’s a good deal for the companies who make the offer because they are able retain those experienced workers who would have retired while paying less for it. On the flip side, its beneficial for retirees, who do not experience the well-known onset of depression which plagues many retirees who suddenly find themselves with nothing to do.
There is more good news for retirees who choose to keep working and find new jobs. According to the Bankers' Life study, the vast majority find that they like their new work arrangements better than the ones they just left. The same retirees say that they are enjoying improved relationships with their families and less stress – much of this comes from being able to continue working but part-time or in a freelance role which allow them to spend more time with loved ones.
Alternatively, a recent report by global management consulting firm McKinsey, says there are still too many obstacles to enable retirees to keep working. Some companies won’t hire retirees because they are concerned about elevated healthcare costs. Other companies find that the labor laws in some states simply do not permit such employment or make it exceptionally difficult. Then, there are companies where the corporate culture just does not work well with older people, the report said. There are, however, a number of incentives that are under consideration by the U.S. government to help companies hire post-retirement age workers. One is to make changes in the social security system so that it doesn’t penalize these older workers. Once a worker has been on the job for 35 years, the eventual payout from social security doesn’t increase, even if the worker stays on the job. So post-retirement workers not only earn less money, but they continue to pay into social security even though it doesn't contribute to their future.
The Social Security Administration is considering a proposal to declare workers ‘paid up’ once they have contributed to the system for 35 years. This means there wouldn’t be any further social security deductions on their paychecks, nor would employers have to pay their share of social security to these workers.
Another option proposed by some consultants is phased retirement. Instead of forcing retirement-age workers to leave, employers can gradually phase them into part-time, and eventually into freelance work over a period of years.
Ultimately, change is bound to come for these workers as the demand by retirement-age boomers to stay on the job continues to grow.