Paths to Retirement

In a report issued in 2010 called Ageing in the 21st Century, a group looked at paths people are taking to retirement. Here is some of what the report says

Traditionally, workers transitioned from full- time work to full and permanent retirement. Increasingly, retirement is a process, often occurring in a series of steps over several years. Studies using longitudinal and cohort data demonstrate multiple paths to retirement, revealing changes over time and between cohorts in how and when people choose to leave the workforce.  Some studies demonstrate a path leading from full-time to part-time work to full retirement. Others go from a full-time career job to another shorter duration job to full retirement. These intermediate jobs are often referred to as bridge jobs.

Other studies reveal a pattern of unretirement in which workers retire completely from full-time work and, after a period out of the workforce, return to either full- or part-time work. Younger generations are not only working longer but they are much less likely to move from fulltime employment to full and permanent retirement. A 2010 study showed that the traditional pattern was followed by over 50% of men born 1913 to 1917. Of men born just two decades later, 34% follow this traditional path. Forty-five percent of men born 1943 to 1947 move to part-time work before retiring, and 26% of men and 29% of women in this cohort return to work after a period of retirement.

Transitional retirements are increasingly the norm. Early Baby Boomers, especially women, are more likely than those in earlier cohorts to move to a bridge job before retiring. Both men and women in this cohort are also more likely than earlier cohorts to leave the workforce involuntarily through layoffs. Another study explores alternative explanations for unretirement, for example, that returning to work is the result of an unexpected event or unanticipated financial shortfall or, alternatively, that a return to work is anticipated and even part of retirement plans. Full retirement is defined as reporting currently not working any hours for pay and describing oneself as retired. Partially retired workers are defined as people who report that they are retired but are also working fewer than 35 hours per week.

Over the period 1992 to 1998, about 52% of workers followed a traditional path. The balance of participants reveals a range of retirement patterns: 12.9% move to full retirement and then to part-time work; 6.3% go from retirement back to full-time work; nearly 8% remain partially retired throughout; 13.7% move from work to partial retirement to full retirement; and 7.2% go from work to partial retirement back to full-time work. Thus about 30% of workers unretire within six years of retiring. Overall, younger workers and men are most likely to unretire. HRS participants are asked if they would like to continue doing some paid work after they retire. The vast majority of workers anticipate their retirement patterns.

For this cohort, born 1931 to 1941, only 8% of those who say they had not expected to return to work actually ended up returning to work. Workers are more likely to return to part-time work then full time, especially if they are eligible for full Social Security retirement benefits.