"In this sticky web that we're all in, behaving decently is no small task." -- Novelist Stacey D'Erasmo

Saturday, September 8, 2018

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?)


Janette said...

#3- I have a good friend who has worked for a hospital for 20 years. She was told she had a year to completely reeducate herself (on her own dime- big $$$) to keep her job. Her current skill set is still needed, but they could hire much younger workers to do it. They laid her off. Too young to fully retire (61), she is now working at a convenience store. Masters degree behind the counter- it was the only place that would hire her! I am gaining much more understanding about the Walmart greeter.
The research seems correct from my antidotal life. Thank you for finding some great sources.

Anonymous said...

Oregon Live in Portland Oregon did an article on the most expensive counties in which to live, my brother in law lives in the top top expensive county..He works and gets a svc disability check..He works because he has nothing else to do lost his love of his life and bought from the state of Oregon a 30 year old single wide mobile in a mobile home park..He seems happy, but pays a pad rent about $600 plus a month, he makes good money now and has since 2007 but seems to think if he stops work he will get more ptsd and die well hells bells he is 68 and takes 2 buses about 2 hours to get to that job in a shitty part of north Portland..He befriends mentally ill women and pays for them a lot..I say meet a teacher and have a good time keeping company they make tons in that school up the street from his mobile home..he just laughs and says he is oky doky the way he lives..well he is so much like his Mom he will just squander his money on women who are mentally and physically ill, his love of his life died 2 and 1/2 years before he finally got his svc connected money, too late to enjoy their life together..We are nice to him but live over 100 miles from him and cannot drive that length of miles just to see him..life is about living not dying..I say seize the day and enjoy what you worked for he is fully vetted for his social security and a tiny pension from the company he works for..I say use it or lose it..life is too short to keep working and working to make a company richer..just saying!!!!!!!!!!!!!!!!!

Kevin in Virginia said...

Tom, this post is spot on - only a fraction of why I still work is the financial compensation. It's the interesting people I meet, the issues in which I engage, the enjoyment of being engaged in things that matter. When it's too much trouble, when I don't feel like getting up early or traveling to a meeting, I'll opt out. But now? No way. Thanks for the broad range of issues you open for our consideration.

Rebecca Olkowski said...

I've almost always been self-employed so I'll have to keep working until it's no longer possible. That's okay, though. I like to keep busy.

Marcial said...

I resemble these remarks. While not retired, I'm at the age where it's an option and by preparing for and reading about retirement, I can keep it that way.

gigihawaii said...

I like being retired. I don't do much but still enjoy the symphony, opera, and live theatre.

Jennifer (UnfoldAndBegin) said...

It's far easier for someone in a white collar job to continue working into their 70's and more likely that' they'll want to. Not so for a blue-collar worker.

Anonymous said...

I'm in a forced retirement conundrum now. I was laid off in May and will turn 62 in December. I need to find some kind of job in order to put off SS, but if I don't I'll be forced to pull the SS trigger. Dividend income will help, but finding even a lower level accounting job at this age is impossible. All you hear is "overqualified".

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