'Unretirement' may be viable well into the future, study says

Working and "unretirement" have become themes for older Americans, and a recent study suggests that's unlikely to change – as long as people want to stay in the labor market.

Currently, employers view older workers as being at least as valuable as younger ones, and evidence suggests that in most professions, productivity does not decline substantially with age.

A paper this month from the Center for Retirement Research at Boston College found “a case for tempered optimism” about the prospects for working past traditional retirement ages. The author, Geoffrey Sanzenbacher, evaluated aspects of several studies on the topic to get a more comprehensive picture of the future of work for older people.

“Very few employers view older workers as less productive. The majority say that older workers are equally productive, with a large fraction seeing them as more productive,” Sanzenbacher wrote. “On the cost side, the news is less positive. While the majority of employers see older workers as equally costly, a sizable minority see them as more costly than younger ones.”

But an outlier in the productivity comparison between younger and older workers was financial services – that industry showed a significant reduction in productivity with age, the paper noted.

To see if there were companies intentionally recruiting older workers, Sanzenbacher collected data from an employment board targeted at people 50 and up, RetirementJobs.com. Generally, pay for jobs posted on the site was higher than that for comparable roles for workers of any age advertised elsewhere.

“Another piece of good news is that the jobs are more likely to be full-time positions,” he wrote. “The main caveat is that these jobs seem less likely to mention either health or retirement benefits.”

Even so, the types of jobs available in the future could change. One study from the Center for Retirement Research compared the suitability for older workers for the types of occupations expected to grow between 2020 and found no correlation. That, Sanzenbacher said, is encouraging.

“Those jobs older workers can do are apparently not going away, even if the ones they are currently doing appear to be becoming less common,” he wrote.

The findings are notable as many older Americans consider working longer or returning to jobs, either for needed income, intellectual stimulation or a sense of purpose. Following the “great resignation” that prompted otherwise unplanned retirements for many during the pandemic, many have or are planning to return to work in some capacity.

WHAT ADVISORS SAY

Contract work can be helpful for people who want some income but also flexibility, said Crystal McKeon, chief compliance officer at TSA Wealth Management.

“It appears to be more palatable for employers to hire older employees on a contract basis than as a full-time employee. If they pay them by the hour or by the project, the risk is less than hiring a high-salary employee,” McKeon said in an email. “I also suspect that the higher cost of insurance for older employees plays a role in the trend of older and more experienced employees ending up as contractors.”

Leslie Beck, principal at Compass Wealth Management, said she suggests consulting for retired clients who want a bit of work.

“My experience has been that many retired clients do want to work, but do not want to have to stick to a fixed schedule, which many employers want from an employee,” Beck said in an email.

After working extensively with clients who return to work after initially retiring, advisor David Demming, president of Demming Financial Services, said he came up with a “rule of five” and a tagline of “working for play is different than working for pay,” he said in an email.

“For every $5,000 of income, it frees up a $100,000 of assets to invest more aggressively,” Demming said.