Retired Boomers Going Back to Work: It is Not About the Money!

Today, more people are continuing to work at some capacity during retirement compared to past generations. And the reasons—as well as the benefits—leading Americans back to the labor force in what’s supposed to be their “non-working years” are not entirely money motivated, a recent study finds.

Many retired Baby Boomers (Americans born between 1946 and 1964) who are in a position to continue working are doing so for reasons beyond just pay, according to a study from Bankers Life Center for a Secure Retirement released in May 2015. “Age 65 is no longer the magical age of retirement,” says Scott Goldberg, president of Bankers Life, a Chicago-based company that focuses on the insurance needs of middle-income Americans who are retired or approaching retirement. The study, “New Expectations, New Rewards: Work in Retirement for Middle-Income Boomers,” surveyed 1,005 middle-income Boomers and 2,293 retired Boomers aged 51 – 69 with an annual household income between $25,000 and $100,000 between February and March 2015. Boomers Are Back to Work Because They Want to Work The key findings indicate that middle-income Boomers view employment as part of the retirement experience today, as many are returning to work even after they’ve retired—and they’re doing so at their own free will. Many Who Are Retired Want to Work:  Nearly one-third (28%) of retired Baby Boomers are either currently employed or have been employed for pay during retirement, according to the Bankers Life study. Of those currently working, 59% say they are working because they want to work, not because they have to work. Many Still Working, Want to  Retire:  On the flip side, more than 7 in 10 (71) of non-retired Boomers say they are working because they have to work. So why re-enter the workforce? For many retirees, it isn’t just about the money. Why Work in Retirement: Many reasons To no surprise, money was the top singular reason for Boomers to continue working in retirement, but it wasn’t the only driver influencing retirees’ decisions. Nearly six in 10 (59%) of employed retirees said they work for non-financial reasons, whether it’s:

• To stay mentally alert (18%)
• Remain physically active (15%)
• To have a sense of purpose (14%)
• To just simply stay socially connected to others (7%).

“There is a meaningful number of people that don’t need the money,” says Goldberg. “Working is part of how people identify themselves and how they contribute, and that’s coming across in the survey.” Why Work in Retirement: Flexibility is more important than income Flexibility was also a key factor in the decision to keep working, even if it does mean working for less money. Slightly under three-quarters (72%) of employed retirees report that their per hour compensation in retirement is less than what they made before retiring. Boomers, however, are willing to trade less pay for more flexibility in their employment. Many employed Boomers (88%) have taken work arrangements that avoid the 9-to-5 full-time grind. Of these workers, 59% said they are employed part-time, while 18% work freelance gigs and 7% take on seasonal jobs. These jobs, or “encore careers,” offer an opportunity to pursue something different from a retiree’s past profession, Goldberg says. “When you’re in your earning years, making a career change can be more difficult to navigate because of income considerations, but as people age and begin to find themselves at a more traditional retirement age, they often have more flexibility,” he says. “And so they’re asking more employers to be flexible with them and they’re looking at deploying their skills in a different environment.” Keep working, save longer Whether driven by personal, social or monetary motives, there are plenty of advantages of working during retirement. But perhaps the most important consideration for retirees thinking about ongoing work is how such a career move can impact retirement savings for when you actually retire. “Employment is one of the very best things you can do to retire financially secure,” Goldberg says. Not only can it generate additional income, but Goldberg says it can also let a retiree defer taking withdrawals from their savings or other financial assets they have, as a result furthering the longevity of those assets to use later in life—when working finally stops. “From a financial standpoint, those extra few years of income can have a real impact on your overall retirement plans, even if you’re not saving additional money during that time,” he says. Going back to work during retirement is a significant life choice and it’s important to weigh all of potential impacts such a move can have on your health, personal savings and retirement plans.