Atypical Work in Retirement Could Help Seniors Prolong Careers, Increase Retirement Security

For seniors who are not quite ready to stop working once they reach a traditional retirement age, nontraditional work could help them to prolong their careers with more flexible hours and less stress, even though such work typically comes without benefits like healthcare coverage and retirement benefits. This is according to a research brief published by the Boston College Center for Retirement Research (CRR).

“Researchers define nontraditional jobs in various ways, including gig-economy jobs, on-call work, temporary positions, part-time slots, and/or self-employment,” the brief reads.
“Most of these definitions focus on the worker’s relationship to the employer. This brief, like previous CRR briefs in this series, instead looks at the characteristics of the jobs, defining nontraditional jobs simply as those with neither employer-provided health insurance nor a retirement savings plan.”

For seniors who retire with savings insufficient to meet their expenses in retirement — which the brief refers to as “underprepared workers” — the research finds that their general situation sees a notable improvement in their situations.

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“[T]he results do not support the hypothesis that underprepared workers are more likely to use nontraditional jobs in late career,” the brief reads. “However, they do suggest that underprepared workers who switch to such jobs see a substantial improvement in their retirement security.”

Underprepared workers are more likely than their sufficiently-prepared counterparts to seek out nontraditional work in their later years, and doing so might help such workers to shore up any gaps in retirement financing by enhancing their retirement security, the brief reads.

“The results show that underprepared workers who continue to work past 62 see a clear improvement in their retirement readiness by ages 67-68, as shown by the increase in their replacement rates,” the brief says. “What’s surprising, though, is that the gain for those who switch from traditional to nontraditional work is actually slightly greater than the increase for those who stay in traditional work, albeit not by a large amount.”

For both the cohorts, engaging in retirement-age work helped to sufficiently close the gaps in retirement security each was experiencing around ages 61-62.

“The analysis finds no evidence that those who approach retirement relatively underprepared are more likely to switch from traditional to nontraditional work late in their careers,” the brief’s conclusion reads. “But underprepared workers who do engage in nontraditional work after age 62 are able to close much of the gap in their retirement security by ages 67-68. These results provide further evidence that working longer is financially beneficial to those who are healthy enough to do so. The novel finding is that even jobs that do not offer health and retirement benefits can help substantially in closing the retirement security gap.”

Read the brief at the Boston College CRR.

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