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Many older workers would like to retire slowly, decreasing their hours at work before completely retiring. With the current economic downturn, people are expressing interest in working longer. People have a lot of their identity wrapped up in their careers, so reducing your hours can be a smoother transition both psychologically and financially. But is this option available to everyone? The Boston College Center for Retirement Research answered this question in a report titled Phased Retirement: Problems and Prospect.
Phased retirement is a white-collar phenomenon and high income individuals who are White, wealthy and educated are more likely to be able to reduce their hours with their employer. Interestingly, 73% of employers interviewed said they would ‘work out’ a phased retirement plan for certain managerial or higher level employees. These informal policies dominate over formal procedures with older workers being kept on to train colleagues or new staff. Unfortunately, not all workers are given the same options.
Employers point to a variety of constraints that make it difficult for them to provide phased retirement options. Pension plans or paying health insurance for older part-time workers is a frequently named drawback. Employers also express interest in only keeping certain employees. In fact, phased options are often offered to the best or favored employees allowing the employer to weed out undesirable workers. Still, one of the main reasons a company did not have phased retirement was simply because their business did not want or need part-time work.
The good news is that phased retirement options continue to increase among companies. If you are interested in phased retirement talk to your employer. Many different arrangements can be made to accommodate both the worker and the company. Here are some tips:
- Double check – does your employer already have a phased retirement program in place?
- Determine your needs – what do you want and what options are realistically available to you?
- Pension impacts – does your plan provide for phased retirement? how could it impact your benefits?
- Health insurance – what will happen to your health benefits if you reduce your hours?
- When can I start – does your employer have policies that could affect your decision? (for example: 6 months after you retire you can come back and work part-time)
- Employer expectations – what will be expected of you and how will your role and responsibilities change?
- Find more information from the Wall Street Journal and AARP’s Public Policy Institute
Recently I’ve been working on this crazy data analysis for my professor. I say crazy because it involves 9 waves of data (different interview time points), a sample of over 22,000 Americans nearing retirement, and over 400 calculated Dow Jones scores representing changes in the stock market from 1992-2008 (That took me a better part of a week!) Our data comes largely from the Health and Retirement Study (HRS), a nationally representative, longitudinal data set that looks at people over 50 and follows them through the end of their working lives and into retirement.
This all started with an idea about the lasting effects of the 2008 stock market crash. All else being equal, whether you were interviewed by the HRS in March or December should have no bearing on your retirement plans. Unless, of course, historical time and place played a role in your decisions. By December you may have been listening to the news, watching your stocks drop, and talking to your spouse about an unanticipated future. Did the changes in 2008 influence people’s plans for retirement? Preliminary results indicate, Yes. Many people who were planning on working till 62 or 65 are now planning to work longer or are no longer sure when they can expect to retire.
So we’ve taken it a step further (enter my hundreds of stock calculations) to examine stock market fluctuations from 1992 to 2008 and see whether or not economic conditions at the time people are interviewed have any effect on individuals’ plans for retirement. I mean sure, people may be thinking and worrying about it but have they really changed their plans? The answers are yet to come!
After reading a little bit about bridge jobs today I became more interested in this new term. What exactly is a bridge job, who are the people working at bridge jobs, and is this actually the more common form of retirement?
I found an excellent paper titled, “Retirement patterns from career employment” by Cahill, Giandrea, and Quinn, which answered all these questions for me. First of all, they define a bridge job as “intermediate labor force activity.” In essence it is the jobs that fill the gap between an individual’s career and their complete withdrawal from the workforce. This job is “bridging” the gap and is thus called a bridge job. It is interesting to me how people view retirement as a single event, a monumental exit from the labor-force, and yet the authors discover that nowadays this is the exception and not the rule.
The paper goes into detail about the people taking bridge jobs. Mostly, they find, a younger worker who leave their job (age 50-62) are more likely to take a bridge job than those older workers (age 63+). Most people who left their jobs in very good or excellent health are more likely to take a bridge job. Men and women who had no health insurance from their career job are more likely to take a bridge job when they left. With regard to pension plans, those with no pension or a defined-contribution pension (401k for example) are more likely to take a bridge job than those with defined-benefit pensions. Probably the most shocking finding was that bridge jobs are more likely at the two extremes of the wage distribution. People of low wage often took bridge jobs out of financial need and those of high wage who often could afford to retire, chose a bridge job for life enjoyment.
The most important findings of this paper are the implications that a sudden exit from the labor-force is no longer the norm. More and more people are taking on bridge jobs and adding their skills to the labor force, whether full time or part time, making large contributions to society. As we look into the future and see things beginning to change, such as the reduction in defined-benefit pensions, increased good health, and jobs that are enhancing the quality of life of older Americans, bridge job behavior will become more and more common and, it seems, this will benefit everyone.