Working in Retirement is the reality for us

More from Merrill Lynch Global Wealth Management Work-in-Retirement Survey

Up until the beginning of the 20th century, most people did not retire. The economy was largely agrarian and family-based, and all generations pitched in. Then, in the early 20th century, much of the labor force migrated from the family farm to the factory assembly lines. Speed, agility, adaptability and strength were at a premium: age and experience, once an asset, became a liability

With increasing life expectancy, lengthening retirements, and difficulties funding so many non-working years, times are changing: A growing number of people are beginning to question whether a 20+ year retirement without work is practical, desirable or affordable.

After decades of decline, working in later life is making a comeback. Today, 40% of people age 55+ are working — a level of engagement in work among this age group not seen since the 1960s. As more people continue working in their later years, the U.S. workforce is steadily transforming. In prior decades, workforce growth was driven by the influx of young workers. In the last seven years, however, workers age 55+ accounted for virtually all workforce growth

Working in retirement is likely to become even more commonplace as Generation Xers and Millennials eventually head toward their retirement years. While many of today’s retirees say they can count on Social Security and employer pensions to fund most of their retirement, future generations are far more likely to say they will need to rely primarily on personal savings and income from working during retirement

Most pre-retirees do not aspire to go directly from preretirement  work to retirement work. About half (52%) of working retirees say they took a break from working when they first retired. The average Career Intermission is roughly two and a half years (or 29 months).

For many, the Career Intermission phase—a “gap” or sabbatical period—is a chance to step away from stress and responsibility after an often strenuous pre-retirement career.

Retirees who participated in this phase are five times more likely to say its top benefit was to have a chance to relax and recharge (68%) than a time to take on other responsibilities

However, there are some potential downsides to the Career Intermission phase. Retirees say the biggest challenge of reentering the workforce after taking some time off is “skills slippage. Other top challenges include biases from employers, losing touch with business trends, and lost relationships with key business contacts. And for older workers seeking employment, it can take nearly twice as long to secure a job as younger jobseekers.

After the Career Intermission phase, many of today’s retirees return to work, beginning the third phase of retirement: Reengagement. The study found that, on average, this phase lasts nine years. Many retirees report that retirement can be a gateway to a new—and far more enjoyable—way of working. In fact, retirees are four times more likely to say they are continuing to work in retirement because they “want to” rather than because they “have to/

Greater financial flexibility in later life can enable people to work more on their own terms. First, most retirees today can count on Social Security, Medicare, pensions or personal savings to help support their income. Second, many have fewer financial burdens and family obligations than they did in their pre-retirement years, and seven out of 10 homeowners age 65+ have paid off their mortgage

This study, which was completed in March 2014, was conducted in partnership with Age Wave and executed online by TNS. The survey included 7,078 survey respondents. Findings in this report are based on a sample of 3,503 respondents age 25+, representative of the U.S. national population by age, income, gender, and geography. By age breakdown, the 3,503 are: 720 Silent Generation (age 69-89), 1,781 Boomers (age 50-68), 517 Generation Xers (age 38-49), and 485 Millennials (age 25-37). The report also includes findings based on an oversample of 1,856 working retirees age 50+ who self-identified as both “retired” and “working.” This group includes unpaid workers who volunteered ≥ 20 hours per week. An additional sample of 2,829 affluent respondents age 50+ with at least $250,000 in investable assets (including liquid cash and investments, but excluding real estate) are not detailed in this report and will be included in a future release. Informing all findings, focus groups were also conducted among both pre-retirees and retirees.