Work and Retirement: Boomers Redefine What Retirement Really Means

People who are preparing to retire likely have several notions of what they expect retirement to be like. But a new study from Merrill Lynch in partnership with Age Wave reveals a few common myths about work and retirement —along with today’s reality. Researchers examined four retirement job myths and explored their corresponding realities, along with considering the experiences of retirees who are currently working in retirement as part of the March 2014 study, revealing how today’s working retirees are forging a new path. Myth 1: Retirement means permanently exiting the workforce. Reality: There are more people in the 55-plus age group working today than there have been since the 1960s, according to Merrill Lynch, and more than 70% of pre-retirees report wanting to work in retirement. In fact, in the coming years, the researchers believe, it will be increasingly unusual for retirees not to work. “With increasing life expectancy, lengthening retirements, and difficulties funding so many non-working years, times are changing: A growing number of people are beginning to question whether a 20+ year retirement without work is practical, desirable or affordable,” finds the Merrill Lynch study. Myth 2: Retirement equates to a period of decline. Reality: Previous generations typically viewed retirement as a time of continuous leisure without work, writes Merrill Lynch. But in today’s reality, the new generation of working retirees are pioneering a new retirement landscape, which now includes four different phases. The “New Retirement Workscape” is characterized by a more engaged and active retirement, kicked off by Phase 1’s Pre-Retirement, followed by Career Intermission, Reengagement, and Leisure.

1. The pre-retirement stage includes preparing to work in retirement while still belonging to the workforce full-time.
2. However, more than half (52%) of working retirees said they took a break after retiring before they started working again—on average, 29 months—to recharge and relax.
3. The third phase, reengagement, lasts on average nine years, according to Merrill Lynch’s study. Because many of today’s retirees can count on Medicare, Social Security, and pensions to help support their incomes, their greater financial flexibility enables them to work more on their own terms in “FlexCareers,” says the study, including part-time or even starting their own business.
4. “After engaging in FlexCareers, working retirees enter the fourth phase of retirement: Leisure,” the report says. “Shifting from a mix of work and leisure, retirees in this phase have permanently stopped working and view this time in their lives as an opportunity to rest, relax and focus on other priorities.”

Myth 3: People primarily work in retirement because they need the money. Reality: There are four types of working retirees, the Merrill Lynch study reveals: Driven Achievers, Caring Contributors, Life Balancers, and Earnest Earners. “While some work primarily for the money, many others are motivated by important nonfinancial reasons,” the report says. Getting an income stream from work can play an important role in maintaining financial security in retirement, considering nearly every state falls short in key retirement readiness areas such anticipated retirement income and major retirement costs like housing and healthcare, according to the National Institute on Retirement Security’s 2014 Financial Security Scorecard analysis. But many retirees say they find the nonfinancial benefits of working—including saying physically active, maintaining social connections, and having a strong sense of self—even more important. Pre-retirees ranked “the money” and “staying mentally active” the top two reasons they believe they’ll stay working in retirement, according to the Merrill Lynch Study, while working retirees were twice as likely to say “staying mentally active” compared to “the money” when asked what they feel is the most important reason to work. Myth 4: New career ambitions are for young people. Reality: Many older adults view working in retirement as an opportunity to do something different or even pursue career dreams they weren’t able to explore during their pre-retirement years, says the report. Almost six in 10 working retirees surveyed (58%) said retirement was a chance to transition to a different line of work, and retirees who participated in the Career Intermission phase are more likely to launch into new career paths upon reentering the workforce compared to those who didn’t take a break (68% vs. 47%). “The top reasons retirees moved to a new line of work were not financial, but for a more fulfilling career: to have more flexibility, more fun and less stress,” says Merrill Lynch. As current generations pioneer the new retirement landscape, it’s important to plan ahead as to what your retirement will look like, the report concludes. This includes discussing plans with your partner, talking with employers about future opportunities to continue working on a more flexible basis, and working with a professional to identify opportunities and risks in starting your own business in retirement if that is of interest. Get more information about work and retirement here. Or if work is a financial consideration for you, use the NewRetirment Retirement Calulator for an automated assessment of your plans. Find out when can you retire, how much do you need, will you run out of money and much more…

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