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Sept. 18, 2019, 9:52 a.m. EDT

Why working has become the new retirement

The gap has narrowed between planning to work in retirement and actually doing so

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By Kerry Hannon


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This article is reprinted by permission from NextAvenue.org .

For years, many workers nearing retirement have professed plans to work part-time during retirement. But few retirees have actually continued working part time. Things are changing.

A recent survey of pre-retirees and retirees shows that the gap between planning to work in retirement and doing so has narrowed. I have to confess I was a little bit surprised and more than a little pleased to see the results. Let me share with you what the researchers found and what retirement analysts say is going on.

Findings of a survey of retirees and pre-retirees

The LIMRA Secure Retirement Institute surveyed recent retirees and pre-retirees (ages 55 to 71) who’ve retired within the past two years or plan to retire in the next two years and had at least $100,000 in assets. Among the pre-retirees, 27% said they plan to work part-time in retirement and 17% said they expect to gradually reduce their hours before stopping work entirely. Among the retirees, 19% are working part time and 17% have reduced their working hours.

The study found an interesting gender distinction, too: a quarter of the female recent retirees phased into retirement, while just 16% of male recent retirees did. Men may be less likely to phase into retirement than women because it’s harder to do so due to their preretirement job functions, the LIMRA researchers noted; 23% of the retired men surveyed worked in managerial job functions before retirement compared with 13% of women.

There are, I think, three big reasons why previous studies showed a much higher percentage of pre-retirees planning to work in retirement than the percentage of retirees who were working part time.

Also read: The FIRE movement is a hot topic — but irrelevant to most Americans

First, pre-retirees have been overly confident and optimistic about their desire or ability to work part-time in retirement. Second, health challenges frequently prevent retirees from working in retirement. Third, people in their 60s and 70s have typically had a hard time getting hired due to age discrimination.

So, what’s going on now?

“The numbers are in good alignment because the pre-retirees were two years or less from retirement. So they had a pretty good idea what they were going to be doing,” said Alison Salka, director of LIMRA and LIMRA Secure Retirement Institute Research. “The closer you are to retirement, the more accurately you can predict what you are going to do. You’re also more likely to have been planning for it.”

Why people work part-time in retirement

Salka said the three primary reasons for continuing to work among employed recent retirees are: for spending money, because they enjoy their work and to stay intellectually engaged.

Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies (and a Next Avenue Influencer in Aging), told me she found it “encouraging that the gap between pre-retirees’ vision of transitioning into retirement compared with the experience of recent retirees is finally starting to close.”

Working at least part-time in retirement is a good thing for many retirees, Collinson said. “It enables them to earn income, continue saving for retirement and bridge savings shortfalls — with more free time for personal pursuits,” she noted.

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