7 hard truths about working beyond retirement age
So you plan to do a little work after you retire? Nothing strenuous, mind you, just something part-time to help your savings last longer. Or perhaps you aren't ready to step away from your current full-time job, especially if your boss will allow you to stay on with a more flexible schedule. Whatever the reason, and whatever the plan, 60% to 80% of us consistently tell surveys that we plan to keep bringing home a paycheck well beyond what most employers consider normal retirement age. But hold on. Holding a job after 60 isn't as simple as you might imagine. Just because you want to keep working, or need to keep working, doesn't mean you'll be able to keep working. You might also be surprised at how much — or, in many cases, how little — senior workers often earn. Here are seven things you should absolutely know before staking your financial future on soldiering off to the old office every morning or landing a part-time gig down at the hardware store.
We like to think we have control over our lives, but fate isn’t fickle for nothing. Many retirees report that they were forced to stop working earlier than they intended. Some were laid off from jobs they'd held for years and hoped to keep well into their 60s or even early 70s. Other say health problems made work — any work — impossible. Since the downturn in 2008, annual surveys by the Employee Benefit Research Institute show that about half of retirees left the workforce before they were ready and about half of those blamed their departure on medical problems. Even when times were good, one-third of more recent retirees said they were abandoning careers earlier than planned. Bottom line: No one should be shocked if the best-laid plans for holding a job after 60 don't work out.
The best way to find employment after you reach retirement age is to hang on to the job you have now. Starting over somewhere else will almost certainly result in lower pay and fewer benefits. So if you enjoy what you’re doing (or can at least tolerate it), don’t abandon ship because of some preconceived notion that it's "time" or you want to work fewer hours and your current employer insists its full-time or nothing. Staying put is the surest way to maintain your income and postpone taking Social Security. That is a very big deal. Although you can start getting checks when you turn 62, your benefits will be at least 76% bigger if you wait until you're 70. That's when you'll really want to stop working — and you'll really need the extra money.
Anyone who looks at government employment data might think older workers are in high demand. The unemployment rate for Americans 65 and over is just 5%, which is considerably lower than the overall unemployment rate of 7%. Seniors looking for work also report being unemployed for an average of 41 weeks, which is shorter than for some younger groups, according to the Bureau of Labor Statistics. But only about one in five Americans that old still holds down a job, including part-time employment. Most have left the workplace, given up any plans for ever returning and aren't counted in those stats. Here's the unfortunate reality facing any senior looking for work: “If you are an older worker and out of a job," says Sara Rix, senior adviser for the AARP Public Policy Institute, "chances are really good that you’re not going to find another one.”
In the old days, when defined benefit pensions were common, bosses and employees had a structured relationship when it came to retirement. People knew when it was time to retire, and moving to a company-provided pension was a predictable transition (complete with gold watch). Today the first generation of Americans is entering retirement dependent on a hodgepodge of 401(k) savings, Social Security and maybe something else. A host of them wish their companies would let them stay on part-time or have flexible schedules, but experts say companies haven’t responded in large numbers to these desires. Many companies are as confused about retirement as the workers themselves. “They’re kind of oblivious as to how are they going to terminate this relationship,” says Steven Sass of the Center for Retirement Research at Boston College. “They don’t have a response to how do you terminate this relationship in a way that’s civilized.”
More seniors are working than ever before — about 9.5 million of those 65 and older, according to the Bureau of Labor Statistics. A recent Gallup poll found that 12% of those older Americans are still working full-time, up from 9% in 2010, suggesting that a growing number of us are trying to hang on to our jobs beyond retirement age. But employers are most inclined to keep highly skilled and educated employees who are the hardest to replace. That's why Gary Burtless of the Brookings Institution, a Washington, D.C., research group says that “the trend toward later retirement is not occurring at random but is concentrated among distinctive classes of workers, possibly among workers who have above-average productivity." Or to put it another way, anyone with a C.P.A. or Ph.D. or M.D. after their name has an easier time retaining their job as they get older.
According to the Census Bureau, workers between 65 and 74 earn 18% less than those between 55 and 64. Why is that? “Much more of that employment at upper ages is part-time,” says Sara Rix of the AARP Public Policy Institute. “The unfortunate thing is that when you move to a new job, you’re generally not as valuable to your new employer." Indeed, the careers of workers who are past retirement age generally follow one of two widely divergent paths. Those seniors who are skilled (or fortunate) enough to retain their full-time jobs continue to earn just as much as ever — maybe even more. But older workers who are pushed out the door by longtime employers often must take lower-paying, part-time positions — think Walmart greeter — and see their incomes fall dramatically.
There are also psychological and emotional issues to switching jobs late in life. “Chances are you are going to be working for someone who is younger, and that raises issues for both you and the boss,” says Steven Sass of the Center for Retirement Research at Boston College. That creates “a reversal of the authority relationships that we typically have in our lives." Bosses have both negative and positive preconceptions about older workers, and a key is finding one that values the positive side— reliability, for instance, as opposed to, say, energy level. While many seniors find happiness giving up the role of alpha dog and joining the pack, for some it's a rough transition.