More and more Americans are incorporating work into their retirement years.
The traditional image of retirement as a time of purely leisurely pursuits is no longer the norm for many Americans. A growing number of people over the age of 65 are choosing to remain in the workforce for a variety of reasons. In fact, the U.S. Bureau of Labor Statistics expects the trend to continue, predicting that 13 million Americans aged 65 and older will be in the labor force by 2024.
So why the shift? People are living longer, healthier lives at a higher cost of living than previous years, so they need to support themselves financially for a longer period. And for some retirees, staying in the labor force is not just a means of preserving income, but an outlet to stay mentally and physically active and perhaps to pursue fulfilling “encore” careers often found in public service or education.
Taking on part-time work instead of fully retiring is also gaining traction. According to a recent Harris Poll survey, 79% of workers between the ages of 57 and 75 want to work part-time after retiring from full-time work. One reason for the trend is workers fearing they’ll need the extra cash: two-thirds of respondents reported not feeling financially prepared to fully enjoy their retirement, and over 20% said the financial punch of the COVID-19 pandemic has delayed their full-retirement plans.
Workers would “semiretire” if they could find a flexible work schedule, transition into a consulting role, or work reduced hours with reduced benefits, according to Harris. Unfortunately, only 21% of respondents said their current employer offers semiretirement roles, such as mentoring positions, where they can work fewer hours with more flexibility.
While many people reaching retirement age are choosing to remain in the workforce, traditional retirement is still a popular choice. In the third quarter of 2020, approximately 28.6 million baby boomers reported retiring – an increase of 3.2 million from the 25.4 million who reported being retired in the same quarter of 2019.
Whether you choose to continue working in your current profession, pursue a new career or focus on hobbies and loved ones, there are many ways to stay active in retirement. Keep your financial advisor informed as you chart a course that works best for you, as your income can affect benefits factors like Social Security and Medicare premiums. Retirement as we know it may be transforming, but the possibilities for having a fulfilling one are endless.
Sources: Bloomberg; New York Times; Pew Research Center; Investopedia; FoxBusiness.com; AARP; U.S. News; newretirement.com; Encore.org; Fast Company; Kiplinger; Wall Street Journal; Bureau of Labor Statistics; Express Employment Professionals