New Trends in Retirement

     I discovered a new retirement website, the University of Michigan Retirement Research Center, that does original research on various issues of retirement. (A new site to me; maybe you already know about it.) So I've added a link to my resource list at the bottom of the blog, as another place for people to find answers to all the questions about retirement. Scroll down to the end of the blog to see the entire list.

     There are plenty of commercial, organizational and media sites focusing on retirement, including other academic sites, such as the Stanford Center on Longevity and the Center for Retirement Research at Boston College. Who knew that universities were so interested in us seniors?

     If you know of any other useful retirement site, I'd love to hear about it. Meanwhile, here are a few trends in retirement as identified by the University of Michigan.

     1. The traditional career arc is changing. The experience of a decades-long fulltime job, followed by full retirement, is becoming the exception rather than the rule. Instead, many workers are leaving fulltime work in their 50s, and taking lower-paying "bridge" jobs they may hold for several years before finally entering full retirement. People in bridge jobs have different attitudes and expectations compared to fulltime workers, which significantly affect loyalty, commitment and incentives in the workplace.

     2. As a corollary, more people are choosing semi-retirement. Due to lack of a secure pension, or forced early retirement, a significant group of retirees are now holding part-time jobs. The fraction of partially retired workers has risen dramatically. In 1960, less than 10 percent of people in their late 60s were partially retired. Today, more than 20 percent of us in our late 60s consider themselves partially retired. (I include myself in this group.)

     3. Today, workers have less control over the timing of their retirement. Despite efforts from the government to ban age discrimination, multitudes of workers in their 50s and early 60s have been laid off or forced into early retirement. In addition, almost as many late-stage workers are being passed over for new jobs. At least some of this phenomenon results from businesses responding to difficult economic conditions since 2000. (This happened to me; probably happened to someone you know, too.)

     4. But they also have more flexibility. In 1970, Social Security introduced a gradual increase in the delayed retirement credit, meaning that employees working beyond normal retirement age continue to build up credits for Social Security. Workers now have the flexibility to take retirement anywhere between 62 and 70, and theoretically they receive the same expected lifetime benefits. Also, the decline in defined-benefit pension plans has reduced instances when workers face age-specific work disincentives. In other words, fewer companies require workers to retire at age 65 whether they want to or not. That's the silver lining of defined contribution plans: now you can decide when to retire, rather than the pension plan pushing you to retire at a certain age.

     5. The more money you make, the more likely you will keep working. It seems counterintuitive. You'd think the lower your salary, the longer you'd have to work. But it doesn't pan out that way, presumably because higher paid workers have better jobs, ones they not only want to keep but are also able to keep. (In my case ... I wish!) The fulltime employment rate for 65 year olds on the lower end of the payscale is down, while the rate for highly paid workers in their late 60s has been rising since the 1990s.

     6. People spend longer periods of time in part-time careers. People who leave the fulltime workforce early need to make more income. They tend to fall into the lower end of the payscale to begin with, and in the end have devoted fewer years to earning a salary. Therefore, instead of taking full retirement at 65 or 66, many keep working their part-time jobs until age 70 or beyond, to make up for lost wages earlier in their career. (I've been a part-timer for over 15 years now.)

     7. Inflation, housing prices and the stock market have little impact on retirement. The Michigan Retirement Research Center says that a high inflation rate results in a slightly higher retirement rate, because wages lag inflation and therefore lower the rewards of working. Housing prices and stock-market performance have only a minimal influence on the timing of retirement, and even then only for wealthier individuals. Most people time their retirement based on their own tolerance and ability to work, not on general economic conditions or prospects for the stock market. (Yes, true for most of us, don't you think?)