We're going to need a new definition of retirement.
Baby Boomers are retiring on a daily basis, but that doesn't mean they've stopped working or even want to stop working. And their retirement planning and work choices are not always about the money.
A new study for Banker's Life Center for a Secure Retirement shows that even though 72 percent of retired Baby Boomers aren't working for pay, there's a large group that is. And of those 72 percent who aren't working, nearly half would like to work but can't because of their health, health of someone else or because they can't find a job.
The study, which surveyed more than 1,000 Baby Boomers and more than 2,200 retired Baby Boomers ages 51 to 69 with an income between $25,000 and $100,000, says 69 percent of retired Baby Boomers say they would have liked to have worked longer but find that they retired earlier than expected. Among those, nearly eight in 10 retired early for reasons that were not in their control, such as a personal health situation (39%), being laid off (19%) or could no longer perform their job (6%), says Scott Goldberg, president of Banker's Life.
"A lot of people have been sold on this idea of figuring out how much you need to retire, and you'll hit that number, tell your employer, and then you're all done," Goldberg says. "The reality is that many people don't get to choose how long they can continue to work because of personal health reasons or taking care of a loved one or maybe they get laid off."
Some 28 percent of retired Baby Boomers are either currently employed or have been employed for pay during retirement, Goldberg says. Of those currently working, 61 percent say they are working because they want to work, not because they have to work. In contrast, more than seven in 10 non-retired Boomers say they are working because they have to work, he says.
"I think there's an element here where we have some strange definitions that we're working with," Goldberg says. "What is retirement? Does it mean not working? It doesn't appear to mean that anymore. It's now taking on the definition along the order of 'you're no longer doing your primary career.' We asked people in the study how they say they're retired if they're in fact working. People self-identify. You ask if they're retired, and they say, 'Oh, yes. And I now do this.' People seem to understand that we don't have a good definition of what retirement means today."
Meanwhile, many retired Boomers who are in a position to continue working are doing so for reasons beyond just pay, Goldberg says.
While money is the top singular reason for continuing to work for many employed retirees, six in 10 work for non-financial reasons, including to stay mentally alert (18%), to remain physically active (15%), to have a sense of purpose (14%) or to stay socially connected to others (7%), Goldberg says.
"People want to get paid and certainly being able to postpone withdrawing from your savings for even a few years can have a tremendous effect on the longevity of your retirement savings," Goldberg says. "I think what's really interesting with this study is that we found that more than half of the people said they're working longer for reasons other than pay."
Furthermore, half expect to work beyond age 70 or as long as their health will allow, Goldberg says. That's telling because other studies show 65 is no longer the traditional age of retirement, he says.
"I think it's somewhat mind-blowing that you have about half of the people say, 'I'm going to work not only past 65 but potentially past the age of 70.' Let's face it, for our employers, it's really good news. You have a group of very experienced people who have a lot of knowledge to bring to the table. Plus, they tend to be a little more socially mature."
Ninety four percent would like to have some type of special work arrangement - flexible hours or telecommuting. They don't necessarily want to continue the routine or be in the same position or industry they were in at the height of their career, but they would like to find some way to remain active in the commercial world.
"Retirement is a long period of time, and people want to stay mentally and physically active, and they want the social interaction and sense of purpose," Goldberg says. "Employment offers all of those things. It's a an increasingly important part of their retirement planning strategy."
Flexibility trumps pay for working retirees, he says. Boomers are willing to work for less money in retirement.
Nearly three-quarters of employed retirees report that their per-hour compensation in retirement is less than before retirement, with more than half reporting their hourly compensation now is much less than before retirement, Goldberg says.
Many working Baby Boomer retirees trade reduced compensation for the increased employment flexibility that retirement offers, Goldberg says. Nearly nine out of 10 employed Baby Boomer retirees have work arrangements other than full time, including part time (59%), freelance (18%) or seasonal (7%), he says.
"There is an overwhelming number of people who are doing things that are entrepreneurial, self-employed, freelance consulting," Goldberg says. "A lot of what we see are encore careers where people finally get a chance to do something they're passionate about and something they're able to do because it's just not about how much they're being paid. They're able to satisfy that itch they had during their working career."
Despite lower compensation, working Baby Boomer retirees say they are happier and more satisfied with their job than non-retirees, Goldberg says. Some 78 percent are just as satisfied or more satisfied with their job now than they were with their job before retiring. One-third (32%) report being much more satisfied now. Compared to non-working retirees, employed retirees report lower stress levels, better relationships and other positive impacts.
"Consider work in retirement, even if it is only part time," Goldberg says. "Because we are living longer into our retirement years, the financial and health benefits of working longer can enhance the retirement experience. They say they're personally satisfied when they're working with lower stress levels and better relationships. They report they're happier, with the combination of having something to do and social interaction and being stimulated. All of us get these things out of work but when you're doing something strictly for the income, you may not have as many choices. When income becomes a secondary reason, all of sudden the whole world opens up to you."