Baby boomers are working longer because they can’t retire. Here’s why that’s a good thing
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The stealthy snap of former “The Cosby Show” star Geoffrey Owens bagging groceries at a Trader Joe’s in New Jersey rocketed around the internet.
While Owens, 57, expressed only gratitude for the “dignity of work” he performed at the grocery chain, some websites carried comments that seemed to shame him for taking on the job.
And he’s not the only baby boomer to be judged for assuming an encore career.
Boomers are increasingly facing a reality in which they are unable or unwilling to retire, but struggling with sometimes negative attitudes toward workers of a certain age, both in the workplace and out.
As Dave Grant, CFP, founder of Retirement Matters, Inc. puts it, there’s the assumption that older people somehow have it made, or at least should have it made. “When you retire,” he says, “from an outside perspective, it seems like you’ve made it in the financial world.”
Retirement has traditionally been seen as the ultimate financial success and an extended period of non-work is the pinnacle, although the reality is whatever anyone wants or needs to make it.
We all have preconceived notions of retirees and what they should look like – grandparents sitting on the nest egg they built up over decades spent at a single company, supplemented by abundant Social Security and pensions. That’s often not the reality for those facing retirement today, though.
More than half (58 percent) of baby boomers don’t know how much they should have saved for retirement. Just 25 percent believe their savings will actually last throughout retirement, according to a report by the Insured Retirement Institute, and only 58 percent have any retirement savings.
An evolving outlook on retirement
“Today’s workers have a much more fluid vision of when and how they want to retire,” says Catherine Collinson, president of nonprofit Transamerica Center for Retirement Studies. “With the idea of working longer and then fully retiring at an older age, the transition can be switching from full time to part time, working in a different capacity or even doing something like starting a business or pursuing an encore career.”
According to a 2017 survey by the center, only 23 percent of workers plan to take a traditional approach to retirement in which they immediately stop working. Some 47 percent plan to either reduce their hours at work or transition into a different role.
As Collinson puts it, the concept of retirement is changing.
Health benefits of working longer
Research shows that those who keep working after reaching retirement age actually live longer on average. Of course, this is assuming they at least somewhat enjoy the work and find it fulfilling. In other words, they perform meaningful work.
But what is meaningful?
According to Grant, most would-be retirees take on consulting or part-time roles within the industry they’ve always worked. Some even start their own businesses, which may allow them more freedom. One study by the American Psychological Association shows that post-retirement workers who remained in the same career field were actually those most likely to see health benefits.
If the role you’ve been in your entire career doesn’t bring meaning to your life, though, Grant advises using your skills to find something else that does.
For example: “If there’s a lawyer doing corporate legal work for the entirety of their career, and they switch to legal work that helps the community, that now brings a lot more meaning to their work on a very personal level, but they can still earn some money from doing that using the skills they developed throughout their whole career.”
Mental health considerations
Sixty percent of boomers said that income was the driving force behind taking on a job after retirement, but 57 percent said that they wanted to stay active and 48 percent wanted to keep their brain alert, according to the Transamerica survey.
The center’s survey didn’t ask workers about mental health specifically, but it’s an important part of the discussion as well. “If you start to decline mentally, you can start to decline physically, and it accelerates the aging process if you’re not engaging in both physical and mental activities,” Grant says.
A study by Mental Health America found that 58 percent of adults over age 65 believe it’s “normal” to get depressed as they grow older. According to the CDC, though, depression is not a natural effect of aging.
Collinson and Grant agree that social aspects of the working world can play a part in reducing mental health issues later in life. “Academics and medical researchers will even indicate that working in retirement and maintaining social connections can promote good health, and full retirement, if it results in being isolated and alone without a sense of purpose, can be really bad for your health,” Collinson says.
A paper by the National Bureau of Economic Research backs up the claim. Their research found a direct correlation between shrinking social networks in retirement and cognitive decline.
“If you lose that social circle, you may not be by yourself, but you’re starting over finding that social circle again and that affects you mentally and cognitively,” Grant says.
Keep up your knowledge and skills
So how can older workers tackle all this?
According to Transamerica’s survey, negative attitudes towards older workers often stem from younger workers perceiving them as less productive and unwilling to learn new ideas. To combat this, Grant and Collinson suggest maintaining a strong network, learning as much as you can and further developing the skills you’ve picked up throughout your career.
Not everyone wants or needs to work later in life, but Collinson says there’s never been a better time to be on the job hunt as an older worker.
“Employers have very quickly been changing their views on age and hiring,” she says. “Some employers are actually rumored to be seeking out retirees as recruiting ground because they’ve exhausted the labor supply of younger workers.”
Decide what’s best for you
Research shows the health benefits of working through retirement have a direct correlation with stress level. Therefore, baby boomers who continue to work out of financial necessity, either by taking on a new job with new stresses and unfamiliarity or remaining in an already high-stress environment, may not see health benefits.
Ultimately it comes down to balance. Doing as much as you can to ease the financial burden before reaching retirement age can make the decision to keep working feel more autonomous. Max out your retirement accounts and traditional or Roth IRA.
Then, you can decide whether your best path involves stopping work altogether, putting off retirement, taking on an encore career, consulting in your field, or working at Trader Joe’s.