By Steve Vernon, September 22, 2016, CBS Money Watch
Working longer is becoming the go-to retirement plan for millions of older Americans who report they expect to keep working well into their retirement years. Many say they need the money and benefits, and most likely they’re right.
How many older workers are working at “good” jobs, compared with those who are desperately holding on for purely financial reasons? It turns out that defining “good” and “bad” jobs can have many subtleties, and it’s highly individualized to people’s goals and circumstances.
The Schwartz Center for Economic Policy Analysis (SCEPA) publishes a monthly report on unemployment for workers age 55 and over. Its August “older worker at a glance” brief noted that the unemployment rate for these older workers, as reported by the U.S. Bureau of Labor Statistics (BLS), is 3.5 percent, a historical low. This low rate is often cited as evidence that older people can continue working if their retirement income falls short. But simply focusing on this rate can be misleading. Note that this particular measure counts those who are unemployed as people without jobs who’ve been actively looking for work in the past four weeks.
The SCEPA brief also reports a total unemployment rate of 8.7 percent for workers age 55 and older. This rate is the sum of the BLS unemployment rate, workers who are working part-time but would rather work full-time and unemployed people who’ve recently given up looking for work. When you add jobless older workers who gave up looking after more than four weeks, the resulting unemployment rate is actually 12 percent. For these 12 percenters, just about any job might be considered a good one.
The SCEPA brief goes on to report that an increasing share of older workers are in “bad” jobs – 29.1 percent in July 2016 compared to 27 percent in July 2006. SCEPA defines a “bad” job strictly in financial terms. It’s a job for people working 30 hours per week or more that pays less than two-thirds of the median wage for such workers. In July, this median wage was $880 per month.
Other considerations can be used to define good and bad jobs. “Finding work that fulfills a sense of purpose is a major theme for older workers,” said journalist and author Mark Miller, who is also the editor of retirementrevised.com. “Many people who have found themselves stuck in unfulfilling careers are looking for that second chance to get it right, and the research tells us they are happier, healthier and more likely to ultimately enjoy a successful retirement.”
Among the many other aspects for defining a good job are a harmonious work environment, friendly colleagues, flexible schedules or a short commute. A recent report by Merrill Lynch and Age Wave looked at the reasons retirees cited as motivation for working:
- Staying mentally active (62 percent)
- Staying physically active (46 percent)
- Maintaining social connections (42 percent)
- Keeping a sense of self-worth (36 percent)
- Needing the money (32 percent)
Note that financial need ranked well below other considerations. As a result, it’s possible that many older workers may intentionally accept lower-paying jobs in exchange for increasing their fulfillment and freedom. In fact, many retirees report that they’re happy even though they have less income compared to when they were working previously.
What does all this mean if you’re approaching your retirement years? Spend the time doing the math and determine how much money you really need to support the life you want. Figure in how much income you’ll receive from Social Security, prudent withdrawals from savings and a pension if you have one. This exercise can help you find work that’s best for your unique goals and circumstances.
You’re much more likely to enjoy life in your retirement years if you’re working because you want to and not because you need the money. And if you really need the money, you might enjoy life more if your work keeps you mentally, physically and socially active. Work that’s flexible or part-time might also give you the freedom to pursue your hobbies, interests and travel.
If you’re in your mid-50s or early 60s, now’s the time to start planning for your retirement years, including estimating your sources of income and determining how much you’ll be relying on work. If you need to continue working in your retirement years, it will take some planning and effort, including taking care of your health, updating your skills and nurturing your contacts. But doing so will increase the odds that you’ll find good work and have a good life in retirement.
To Your Successful Retirement!
Michael Ginsberg, JD, CFP®