Three out of four (72 percent) pre-retirees over the age of 50 say their ideal retirement will include working – often in new, more flexible and fulfilling ways, finds a new study from Merrill Lynch, conducted in partnership with Age Wave.
We asked advisors whether the aspirations of retirees are any different in India. Hemant Rustagi of Wiseinvest Advisors feels that the preference to work after retirement depends on the kind of skill sets people possess. “Generally, people who have a normal job would not like to work after retirement. Those who have technical know-how work as consultants after they retire. In India, the preference to work after retirement also depends on the financial condition of the family.”
The new retirement workscape
Results from the study indicate previous generations viewed retirement as a permanent end of work followed by continuous leisure. However, modern-day reality for many pre-retirees and retirees is a dynamic future that the study defines as “The new retirement workscape,” represented by four different phases:
Pre-retirement – Five years before retiring, 37 percent of pre-retirees who
want to work in retirement will have already taken some meaningful steps to
prepare for their post-retirement career; this rises to 54 percent among those
within two years of retirement.
Career intermission – Most pre-retirees do not seek to go directly from pre-retirement work to
retirement work. They want a break, a sabbatical: they need some time to relax,
recharge and retool. More than half (52 percent) of working retirees say they
took a break when they first retired. These career intermissions average 2.5
years.
Reengagement – The study found that, on average, this phase lasts nine years
and includes a new balance of work and leisure. Compared to those in their
pre-retirement careers, people working in these “FlexCareers” are nearly five
times more likely to work part-time (83 percent vs. 17 percent) and three times
more likely to be self-employed (32 percent vs. 11 percent).
Leisure – In
the fourth phase of retirement, people welcome the opportunity to rest, relax,
socialize, travel and focus on other priorities. Working retirees expect health
challenges (77 percent) or simply not enjoying work as much (61 percent) to be
the most likely causes of their stopping work permanently.
“This study confirms that as people
live longer and healthier lives, they’ll continue to find satisfaction from
work even after they retire from their primary career,” said Ken Dychtwald, Ph.D.,
founder and CEO of Age Wave in a press release. “For many, work is an enriching
experience that may not end at the age of 65 or even 70. Whether it’s
continuing to do what they love, pursuing a long-desired interest or simply
seeking to remain socially engaged, there’s a revolution brewing. People have
come to realize that retirement doesn’t necessarily represent the end of an
active life, but rather the beginning of new and exciting chapters.”
Gajendra Kothari of Etica Wealth
Management says “In India majority of the workforce is in the unorganized
sector. Also, many families have their family business. So there is no concept
of retirement among them. They continue to run their businesses/shops till they
are fit.”
The study debunks four myths about
working in retirement:
Myth 1: Retirement means the end of work.
Reality: During prior decades, workforce growth in the U.S. was driven by the
influx of younger workers. During the last seven years, however, workers age
55+ accounted for virtually all workforce growth. Today, 40 percent of people
age 55+ are working – a level among this age group not seen since the 1960s.
And, according to this new study, 80 percent of working retirees say they’re
doing so because they want to vs. because they have to (20 percent). Gajendra
says that the situation in India is slightly different. “Companies here would
prefer to hire younger workforce. Elders may not be able to that productive and
efficient as a 30 year old. Companies tend to offer VRS to their workforce
because they think they can get higher productivity by hiring younger workforce,”
Gajendra adds.
Myth 2: Retirement is a time of decline.
Reality: A new generation of working retirees is pioneering a more engaged and
active retirement. Eighty-three percent of retirees agree that working in
retirement is a kind of antidote to aging because it helps people stay more
“youthful,” while 66 percent say that when people don’t work in retirement,
their physical and mental abilities decline more rapidly.
Myth 3: People primarily work in retirement because they need the money.
Reality: While a large number of retirees are definitely working for the money
to pay the bills, many more are motivated by nonfinancial reasons. When working
retirees were asked what they feel is the most important reason to work, they
were twice as likely to say “staying mentally active” (62 percent) as they were
to say for “the money” (31 percent). “Some people work after retirement because
of passion and love for their work. Money may not be the only reason to work
after retirement. They wish to keep themselves busy,” observes Hemant.
Myth 4: New career ambitions are for young people.
Reality:
Nearly three out of five (58 percent) working retirees transition to a different
line of work in retirement, and are three times more likely than younger
workers to be entrepreneurs – or “retire-preneurs” as the study describes. Most
retirees who moved into a new line of work did so to have a more flexible (51
percent) career with more fun and less stress (43 percent).
The study also defines – for the
first time – the four types of working retirees, each with distinct priorities,
ambitions and reasons behind why they choose to work during retirement:
1. Driven achievers (15 percent of working retirees) tend to be
workaholics, even in retirement, and feel they are at the top of their game so
why slow down.
2. Caring contributors (33 percent) are motivated primarily by their
desire to give back and make a difference, either through volunteering or
working for pay.
3. Life balancers (24 percent) have discovered a less-stressful, more
flexible way of working that allows them to keep their valued social
connections, while maintaining much needed income.
4.
Earnest earners (28 percent) generally need the income and have far more
frustrations and regrets about working at this time in their lives.
When working retirees were asked to
share their best advice for people who want to work during retirement, more
than anything they said “be open to trying something new” (76 percent) and “be
willing to earn less to do something you truly enjoy” (73 percent). Other tips
to help prepare for a successful retirement career include keeping up with
technology – with seven times as many working retirees citing the importance of
this vs. trying to appear younger as a means of improving their ability to work
in retirement.
The survey included 7,078 survey respondents. Findings 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).
