Today we continue our coverage of the great retirement book What Retirees Want. It is packed full of great information and statistics about the state of retirement today.
If you’ve missed any posts in this series, there are two ways to catch up. You can begin with the first post, which is an introduction and overview of the book, and click through to the next posts at the end of each one you read. Or you can check out my retirement category and scroll through the posts there.
Like with other books I’ve reviewed on ESI Money, I will share some key passages from this one and give my thoughts on their conclusions.
This book has a lot to say about working in retirement and I shared some of that last time.
Today we’ll continue with their thoughts on the subject.
Let’s get started…
The Life Cycle of Work-in-Retirement
The book begins this section with the following comments on working in retirement:
For some, the essence of retirement is to be free of work. They may have accomplished their career goals, be financially secure, have a slate of retirement activities planned, or want to be rid of the responsibility and stress of holding a job. Others may not have enjoyed their work and have been counting the days until retirement. Those at the opposite end of the spectrum can’t imagine not working. They enjoy their work, have gotten good at it, and are passionate about it. This category includes high proportions of artists, entertainers, writers, educators, craftspeople, and those who build things, including family businesses.
For the large portion of retirees in between, part-time work can be an attractive option, especially early in retirement, and they commonly take a break from work before returning to it.
Many people who know they want to work in retirement give themselves a head start beginning several years in advance, and their preparation naturally intensifies as retirement approaches. They talk with friends who are working in retirement, network with professional colleagues, consult with their employers about opportunities to continue working in retirement (or phasing into it), perhaps get some additional education or skills training, and put together a personal “business plan.” Some engage career planners when approaching retirement.
About half of working retirees told us they took a significant break from work when they first retired. They wanted to take time to relax, recharge, give “not working,” a try, take extended vacations, get some projects done, and perhaps do some of the work-in-retirement preparation that they’d postponed. The length of these “career intermissions” varies widely, but most are more than six months, and the average intermission is over two years. Those who take intermissions tend to enjoy them as sabbaticals – chances to escape the responsibilities and stresses of busy careers – more than filling them with new responsibilities.
As the standing joke has it, “I failed at retirement and went back to work.” One working retiree gave us a different spin: “it took just three years of retirement before the bucket list started getting empty.” Returning to work after an intermission may require some catching up with industry changes, technologies, or everyday methods and skills. But the intermission has probably clarified what work retirees want to pursue and how much they want to work. Some will job hunt, some move into jobs that have been waiting in the wings, and some take the plunge to work for themselves or start businesses. Retirees tend to have the flexibility and perspective to reengage with work on their own terms.
Almost all working retirees decide at some point to “financially retire.” They may have met career goals, solidified their financial security, encountered health problems, or simply decided that they were ready for more leisure and other activities. When they do finally fully retire, they may experience a reduced version of the culture shock people feel when retirement means quitting full-time work “cold turkey.”
As you might imagine, I have a TON of thoughts on this:
- Obviously, many (most?) people who retire do not work. They are DONE. I think this is probably more likely with those who really hated their jobs and those who retired later in life, but the book doesn’t say anything about that. This said, work does have some benefits that can contribute to having a great retirement (for example: keeps people active, builds in social activities, keeps minds challenged, etc.) that will need to be found elsewhere if not from work.
- “Stress.” Yes, work is stressful, especially if you MUST work. But if you work because you want to, enjoy it, or have other reasons, somehow the stress seems to fade away for the most part. I work running two sites and the stress is almost not noticeable and about 1% (if that) of the stress I had in my career.
- “Others may not have enjoyed their work.” If you look at the stats, this would be most people. The majority of Americans do not enjoy their work…it’s that simple. But in retirement the things that make work joyless — like having to do what a boss says because you need the money, working for a company/in an industry because it pays more not because you like it, working hours/on projects/in locations you don’t like, etc. — can go away for the most part. If you truly do not need the money, you are in the driver’s seat and can pick the type of work you want with the parameters you desire (assuming you’re good at it, of course.)
- “They enjoy their work.” Then why do they retire? Maybe they were forced to? Maybe they wanted to cut back to semi-retirement and their employers wouldn’t allow it? Something else?
- “This category includes high proportions of…writers…and those who build things, including family businesses.” Me, me, me!!! Haha. This is also a list of what people who had other jobs in their careers can do once they retire…they can begin writing (articles, blogging, etc.) and/or start a side hustle business. If someone was interested in either of these in retirement, my suggestion would be to begin working on them before retirement. This would allow you to make sure you like them as well as seeing if you could be successful with them.
- “Part-time work can be an attractive option.” I would guess that this is the most common type of employment in retirement. It provides the benefits from working without being over-bearing and having a lot of the downsides of full-time career work.
- “Many people who know they want to work in retirement give themselves a head start beginning several years in advance.” Yes!!!!! This is vital IMO. I would recommend thinking about retirement work about five years before actual retirement, then test it out three years or so before retirement (as a part-timer on nights and weekends if need be). As with most things, a trial run can identify pros and cons that can be adjusted in time so that by retirement the plan is pretty solid and successful.
- “About half of working retirees told us they took a significant break from work when they first retired.” In one way, this isn’t surprising. After working 30, 40, or more years, I think most people would like a break to rest, relax, and recharge. That said, I’m surprised that the breaks are as long as they are…
- “The length of these ‘career intermissions’ varies widely, but most are more than six months, and the average intermission is over two years.” This tells me that when those people go back to work, they probably go back to jobs that are not that related to their original careers since many of their contacts, skills, etc. have faded in a few years. If two years is average, that means many are well over two years. I know that after I had been retired for a couple years it would have been hard to get back to the level I was in my career. I had been out of the game long enough that my skills were rusty, I wasn’t up to speed on the latest business developments, my network was cold, and so on.
- ” ‘I failed at retirement and went back to work.’ One working retiree gave us a different spin: ‘it took just three years of retirement before the bucket list started getting empty.’ ” I actually think the first quote is more accurate. If you MUST go back to work because you have run out of things you find interesting to do, that is a retirement fail IMO. And really, I think it’s a lack of imagination and willingness to try new things. You’re going to tell me that work is the best option when compared to all these retirement activity options? Really? This list started to get empty? How can that even happen? I think it’s completely a retirement fail to go back to work because “there’s nothing else to do.”
- “Almost all working retirees decide at some point to ‘financially retire.’ ” Yes, even me. One day I’ll hang up my keyboard here at ESI Money and go do…I’m not sure yet, that’s a long way off. 🙂
Let’s move on to the next topic…the challenges retirees have when going back into the workforce.
As you’ll see, I predicted many of them above.
Skills Obsolescence and Other Barriers
The book shares several thoughts and a couple charts on the issues retirees have when they go back to work, starting with this:
There are, of course, challenges to reentering the workforce, especially following a lengthy career intermission. When older workers seek employment, it can take nearly twice as long to find a job as younger workers take.
Retirees find the biggest issue to be skills slippage, and 40% of Boomers say they are keeping their skills up to date to ensure they’ll be able to continue working in retirement if needed. Other barriers include employer assumptions regarding role and pay, losing touch with business trends, and lost relationships with key contacts.
We asked working retirees for their advice to pre-retirees who are considering employment in retirement. Three-fourths recommend being open to trying something new and being willing to earn less in order to do something you truly enjoy. We also asked what they would do to make themselves more employable. Keeping up with technology tops the list, followed by physical and mental exercise and taking relevant classes. Those are all deemed more important than cosmetic changes to oneself or one’s resume.
I have several thoughts on this but let’s cover a few charts first.
Here’s the first one which details the top challenges to reentering the workforce:
- Skills slipped – 44%
- Employers believe people returning to work should accept lower role or pay – 43%
- Lost touch with changes in my business – 42%
- Employers believe the break indicates a lack of commitment – 37%
- Lost relationships with colleagues, customers or industry contacts – 35%
And here are results the list what working retirees recommend to remain employable:
- Keep up with technology – 50%
- Exercise/work out – 31%
- Take classes – 22%
- Mental exercises – 21%
- Color my hair – 9%
- Omit dates or earlier jobs from resume – 7%
- Cosmetic surgery – 1%
Ok, here are some thoughts from me:
- The book lists “ageism” as an issue in this section as well, so I’ll mention it. Yes, it’s a problem in some cases for sure. But based on most of what I see above, the reasons people are not employable (or at least employable at the same level they were when they worked) seem valid to me.
- If you’re going to take 2+ years off and then come back to work, there are going to be re-hiring issues directly related to TAKING 2+ YEARS OFF! Come on! It’s not that employers are being unfair. But they know that skills have probably slipped and there is less of a commitment (if nothing else a perceived one, though in many cases it’s probably real) from someone who looks at a job as more optional than someone else. And if you work in any sort of a field that relies on technology, two years can be a lifetime when it comes to work-related knowledge.
- The above is why “When older workers seek employment, it can take nearly twice as long to find a job as younger workers take.” It seems pretty accurate for me given the average time they have taken off (not to mention they may be a bit more picky about what jobs they would even consider.)
- “Retirees find the biggest issue to be skills slippage.” Uh, yeah. Two years of wasting away again in Margaritaville can put quite a damper on your work-related skills.
- “Other barriers include employer assumptions regarding role and pay, losing touch with business trends, and lost relationships with key contacts.” Two of these (the last two) are directly related to the time off. If you don’t work for a couple years you will lose touch with both trends and contacts — it’s that simple. As for role and pay, because of the loss of skills/abilities, retirees should be looking at lower levels of responsibility and thus pay. So the problems seem to lie with retirees’ expectations. For some reason they think they should be able to pick up where they left off which is not reasonable — their skills have declined so their responsibilities and pay should decline as well.
- “Three-fourths recommend being open to trying something new and being willing to earn less in order to do something you truly enjoy.” I think if you’re going to take two years off that you must be open to new jobs and earning less. Otherwise you’re probably in for a rude awakening.
- If you look at the first chart’s results, all of the reasons are tied to the extended time retirees take off between retiring and then looking for work again in retirement. If they don’t want to have to find jobs in new fields and/or make less, they should take less time off in between. I’m not saying they should or shouldn’t, the choice is theirs, but they can’t expect the world to wait for them to relax and recharge and then welcome them back with open arms at the same pay and responsibility.
- As for the suggestions for remaining employable, some are related to time off (keeping up with tech, taking classes) while some are more “can this person do the job?” sort of issues (if you aren’t mentally sharp, look old/tired, etc.) it’s going to be hard to find a job whether you are 30 or 70.
- “Cosmetic surgery.” LOL.
- Seriously, this is yet another reason that I think a side hustle is a great thing. It can help you get to financial independence faster as well as provide a job for you in retirement. But you can’t take two years off from it either, so there’s that “downside.” If you find one you enjoy, there’s no need to take the time off. And if it’s a side hustle that allows for flexibility of time and location (like writing for a website does), then there’s no reason you can’t do it while you take two years “off” to relax.
- BTW, it took me about six months to wind down — to completely destress after leaving my career. Two years (which is just average — many breaks are longer) seems especially long to me. So my recommendation is that if you want to work in retirement and be employed near/at the level/pay you used to, then take six months off at most and then get back to it. Two years is going to give you some major hurdles to overcome.
Let’s move on…
Four Types of Working Retirees
Next the book looks at the four main types of working retirees.
I like this section because we know two things: 1) not all working retirees have the same experiences and yet 2) many working retirees have common experiences. So the book lumps the retirees who work into four groups so we can see the major trends happening among different subsets.
They begin with this introduction:
We’ve described how people work in retirement for a variety of reasons and in a variety of patterns. Looking across them, our research has revealed four distinct types of working retirees, each with different attitudes, priorities, and ambitions for work and its place in life. Recognizing and appreciating these segments can help organizations be realistic about the variety of older employees and how to attract and retain them.
They then list this breakout of working retirees as follows:
- Builders – 15%
- Contributors – 33%
- Balancers – 24%
- Earners – 28%
Next they go on to describe each of these types, starting with Builders:
Builders keep right on working and achieving in retirement. Work is an important part of their identity, and they feel at the top of their game. Working in retirement provides the opportunity to use their expertise, try new things, and accomplish more. Builders have the highest levels of engagement and satisfaction (84%) with work. They are energized by work, see it as a way to stay mentally and physically healthy, and feel they would be bored if they didn’t work in retirement. They are proud of their accomplishments and most likely to consider themselves workaholics, even in retirement.
Builders are also the most likely of the segments (39%) to be self-employed and to have started their own businesses in retirement. They tend to stay in the same line of work because they’re good at what they do. They do the most planning for working in retirement and are least likely to take a significant career intermission. Demographically, Builders are more likely to be men (61%) and highly educated. They have the highest levels of income and assets, and they are most likely (54%) to feel financially prepared for retirement.
Some thoughts:
- I am fine if someone works in retirement (obviously). But how do you define “retirement” if they simply “keep on working”? How is that retirement? What makes it retirement? Do they move from their careers (i.e. “retire” from their 30+ year careers) to something else (like their own business)? I don’t get what makes them “retired”. In a way it sounds like they “retire” but they keep working at the same job, company, hours, etc.
- For example, I would probably most likely fit into this group. I retired from a career I studied for for six years (college and grad school) and then worked at for 28 years. I retired from this career/field (marketing) and working at a company for someone else. I immediately started working for myself, writing for a site that I had actually started before I retired. So is this what Builders do? If so, I get it. If they simply keep working in the same or a similar line (i.e. they work for company “A” and then “retire” to work for company “B” in a similar position, hours, etc.), I don’t see how this is retired. I think I need more information on this segment.
- “See it as a way to stay mentally and physically healthy.” These are two of the non-monetary advantages to working in retirement and IMO are great reasons to keep going. For me, staying mentally sharp is one reason I keep running my sites (I work out to stay physically healthy since sitting at a computer doesn’t do much for that. Ha!)
- “Feel they would be bored if they didn’t work in retirement.” I just don’t get it. Really? If you’re not working you’re bored with life? That just seems sad to me. I can see that people want to keep working because they enjoy it or because it delivers other benefits — but to keep at it simply to fend off boredom seems like a lack of imagination to what the possibilities in life could be. These people seem stuck at the 8-year-old “I’m bored” stage.
- I’m a big fan of self-employment in retirement and while they are the “most likely of the segments to be self-employed”, most of them (over 60%) work for someone else.
- “They tend to stay in the same line of work because they’re good at what they do.” As we noted above, much easier to do if there’s not a two-year break in work.
- “They do the most planning for working in retirement.” One key to a great retirement is planning in advance for it, so kudos to this group.
As we leave this segment, let’s just note they are the smallest of the four — only 15% of the population.
Next we have Contributors:
Contributors find ways to give back, often by working for nonprofits. Retirement is a whole new chapter of working life and an opportunity to do good. Work is a means to the end of helping others, the community, or worthy causes, and those results constitute much of the reward of working. Contributors are very engaged at work and have a high satisfaction level (75%).They also tend to feel happy, connected to others, and content in their lives. They feel that giving back in retirement should be the norm.
Most Contributors change jobs in retirement to pursue a passion or interest. Four in ten work for nonprofit organizations, and they are also most likely to volunteer significant amounts of their time. Many have prepared for working in retirement by volunteering in a relevant field, taking classes, and networking with colleagues or friends. If they take a career intermission, they return to work because they want to be making a meaningful contribution. Demographically, the majority (53%) of Contributors are women. They tend to be well educated and comfortable financially.
Some thoughts:
- When I talk about considering “work” in retirement, I call it “work or work-like” opportunities. And work-like is generally volunteering — a way you can get the mental, social, etc. benefits of work plus a sense of mission/helping others. The only thing missing (in some cases) is pay.
- Retirement expert and author Wes Moss says that volunteering is the top core pursuit in retirement and the information above appears to validate that claim. I’m surprised that 1/3 of working employees fall into this group — that seems like a lot.
- I’m not sure what the split is between working for a nonprofit (i.e. getting paid) and simply “working” in a volunteer capacity. I wish they had spelled that out.
- These people seem to clearly retire from their careers and then choose to do something that interests them, probably something they would have done for much of their lives if it had paid well enough. Good for them for choosing something they like to do (rather than doing it just because they would be bored without it) as well as helping others.
- Again, preparation before retirement results in good outcomes during retirement. Anyone seeing a pattern here?
- “If they take a career intermission.” My guess is that these people take fewer and shorter career breaks than the averages.
Next we have Balancers:
Balancers work in retirement largely for the activity and social connections, and without letting work dominate their lives. They may need the extra money, but work-life balance is the top priority. They feel that they have paid their dues and that retirement is their time. They want enjoyable work, flexible schedules, and likeable colleagues. They are relatively satisfied (67%) with work, but not highly motivated to put in extra effort, and they don’t feel a strong need to give back. They tend to feel happy, content, and relaxed about life in general.
Balancers are most likely to work part time without changing lines of work. They did little to prepare for working in retirement, and if they take career intermissions, they return to work because they simply found a good opportunity. Demographically, Balancers’ gender split is 50-50, and they are most likely to be married. They are somewhat less educated than average but have above average income and assets. Less than half (42%) feel financially prepared for retirement.
My thoughts:
- “Balancers work in retirement largely for the activity and social connections, and without letting work dominate their lives.” Sounds like they have it all together, but…
- “They may need the extra money.” Let me just say, “yikes!” Working because you want to and simply earning as a bonus is one thing, but working because you “need” the extra money is poor advanced planning IMO. Working in retirement to make the finances work is probably my least favorite margin of safety. This said, the book says they mostly work for non-financial reasons, so the need doesn’t seem dire.
- “They want enjoyable work, flexible schedules, and likeable colleagues.” This is a big advantage of working after you retire — you can often be more picky in what you do and thus you can be employed in the sorts of things that mean more to you.
- “Not highly motivated to put in extra effort.” See above on why retirees find it difficult to land a job. This is one reason employers can be skeptical of people who work in retirement.
- “Balancers are most likely to work part time without changing lines of work.” Sounds like what many would call semi-retirement to me, which I think is a good transition between completely working and fully retired.
- “They did little to prepare for working in retirement.” Oops.
- “Less than half (42%) feel financially prepared for retirement.” Double oops. It seems to me that much of the reason they are working is because have to (rather than want to).
And the final segment is the Earners:
Earners keep working primarily to pay the bills, and with less satisfaction than the other segments. They’re the least likely to say they’d keep working if they won the lottery, or that they’d be bored if they didn’t work. Earners express more frustration than other working retirees do, including over ageism, lack of training, and feeling irrelevant or unmotivated. They may feel like they got a raw deal – that retirement was supposed to be leisure time. They have poorer general health and miss more days of work due to personal illness than other retiree workers.
Earners most often work for an organization other than they retired from. Whether they pursue a different or similar line or work, their priority is the income. They did little preparation for working in retirement and often regret that they didn’t plan better. Those who take a career intermission return to work when they need the additional income. Demographically, they are slightly more likely to be female (53%), most likely to be unmarried, and have less than average education. They have the lowest assets and income, and are least likely to have guaranteed pensions. Almost none feel financially prepared for retirement.
Basically, these people didn’t plan well for retirement and are now forced to work. It’s that simple.
This is what can happen when people don’t think about retirement and its various implications (especially the financial ones as noted here) until either too late or even after they retire.
Not much to say other than be sure to work hard and plan for retirement so this isn’t you.
That’s it for today.
For the next post in this series, see What Retirees Want, What Retirees Do with Their Leisure Time.
Phillip says
“If they simply keep working in the same or a similar line (i.e. they work for company “A” and then “retire” to work for company “B” in a similar position, hours, etc.), I don’t see how this is retired. I think I need more information on this segment.”
As a professor in Math, my dad falls into this segment. He was top in his very narrow field, published hundreds of academic papers and a book in his area. He continued research, publishing and reviewing academic papers 10+ years after he retired for $0 (e.g. he was strongly encouraged to retire at 72 to make room for a new tenured professor). Post retirement, he still got invites as a guest lecturer at universities around the world. For some visits, he and my mom even paid for their own travel because certain foreign universities were short on funds (math isn’t a highly funded area). IMO, academics, education and the arts are a few segments that fall in this category.