Retirement is no longer an endpoint for many employees but a turning point into a new phase of work.
Some people continue to work for their former employers but on a part-time basis, or as contractors. Others seek out other kinds of work, sometimes the work they’d always wanted to do.
And many people are working well past their prime retirement age out of necessity because unexpected expenses or other financial setbacks have depleted their nest egg.
It’s difficult to gather data on the number of Rhode Islanders working full time or part time past the traditional retirement age of 62 to 67. The R.I. Department of Labor and Training does not track participation in the workforce by age, according to a spokeswoman.
The state agency did, however, provide an average based on a recent U.S. Bureau of Labor Statistics report. It found that 34,600 people in Rhode Island who were 65 or older in 2020 were working either full time or part time.
That labor force was about one-third the size of the next-youngest age group, people age 55 to 64. The state’s biggest age group working in the labor force last year was people age 25 to 34, a group numbering 106,600.
Why do people keep working even after they qualify for their maximum amount of Social Security benefits? There are many variables, but for at least a portion of the semi-retired, it’s not based on financial necessity.
‘At retirement, you’ve never had more wisdom.’
DONNA SOWA ALLARD, Sowa Financial Group Inc. vice president
Donna Sowa Allard, vice president of Sowa Financial Group Inc. in Lincoln, said she has many clients who have stepped back from full-time work but are not ready to retire.
“Ideally, a lot of people would rather not stop their job cold turkey,” she said. “They would rather go down to 20 hours or two days a week.”
Many of the people she’s working with as a certified financial planner have been preparing for retirement. They have not under-saved. For them, the choice to keep working into retirement years is a matter of staying active and engaged in doing something they enjoy, Sowa Allard said.
“I know someone who is in his 70s,” she said. “He left his main position, retired from that, then worked as an independent contractor for another year and a half.”
For many people in professional settings, they still feel vital even though they’ve reached the traditional retirement age.
“You don’t work in an industry where hard labor is required,” Sowa Allard said. “You’re using your mind. At retirement, you’ve never had more wisdom. You’ve never had more experience. So you’re actually quite valuable. I think a lot of people feel called to continue, wanting to be valuable.”
One of Sowa Allard’s own family members, she said, worked a part-time job until she was 80.
“Because she liked it,” Sowa Allard said.
That said, many Americans are in a position where they feel they have to work past full retirement age to help supplement their benefits. If a person starts to collect Social Security before full retirement age, say at 63, and continues to work, they are limited in what they can earn before retirement payments are reduced. This year, the limit is $18,960 for a single person.
Once they reach their full retirement age, the penalty doesn’t apply, Sowa Allard said. “It’s meant to deter people from taking it, claiming while they are also working,” she said.
Many people who work well into retirement years out of necessity have discovered too late that they didn’t save enough. In particular, many baby boomers are finding themselves in that position, given increased life expectancies and increased living expenses.
John Martin, a spokesman for the AARP in Rhode Island, said many factors are combining to encourage people to keep working into retirement.
They’re worried about outliving their savings, he said. And some people have been hit with unexpected medical expenses at a later age, which has affected their financial planning.
Others are carrying debt, including college loans taken out for their children. Some public employees have discovered they have reduced pension payouts.
“And many people have concerns about exactly what their Social Security benefit will be when they reach the age they long planned to retire at,” Martin said. “They see all these changes, not many of them good for the bottom line of retirement savings, and they want to stay in the workforce for one or two years.”
Martin has seen that employers also are more willing to recognize the value of older workers. Over the years, he said he’s fielded calls from employers asking if AARP could spread the word about job openings to semi-retired members.
Older workers are often seen as more reliable, with a more predictable work ethic.
Because of improvements in health care, people can work longer because they’re often healthier, Martin said.
“Generally speaking, hiring someone who may be semi-retired, and looking for some extra hours and some extra income, is not an employee who is probably going to be passing through,” he said.
Mary MacDonald is a PBN staff writer. Contact her at Macdonald@PBN.com.