Retirement is no longer a one-time, permanent event. Exits from the workforce are becoming more gradual, and many employees move to another job before leaving the labor force completely. In fact, an abrupt retirement that continues for the rest of your life is now the exception, rather than the rule, according to a series of studies recently published by Joseph Quinn and Kevin Cahill of Boston College and Michael Giandrea of the U.S. Bureau of Labor Statistics. Here's a look at some of the ways workers are transitioning into their retirement years.
Bridge jobs. "People are retiring in a process where they leave a full-time career job and then transition to a job that is less intensive, working less hours or fewer weeks per year," says Michael Giandrea, a research economist at the Bureau of Labor Statistics. Among people who were employed in full-time jobs after age 50 and subsequently retired, 61 percent of men and 60 percent of women moved to another job before retiring completely. Slightly more than half of these "bridge jobs" were part-time positions. Young retirees and those with self-reported good health were the most likely to move into a bridge job before retiring. In many cases, people also switched careers at the same time. "People aren't going to the same type of job, they are doing something different, often in a different occupation or industry," says Giandrea. "The majority of people are taking pay cuts and making much less money for working typically fewer hours."
For some people, these bridge jobs are a way to remain active or try something new. Other workers take them out of financial necessity or to get valuable employer benefits. "The use of bridge jobs is more likely at both ends of the socioeconomic scale," says Joseph Quinn, a Boston College economics professor. "The people at the bottom end need the pay and the medical coverage. At the upper end, it's a lifestyle choice. They like feeling productive and have friends at work." Men and women earning less than $10 per hour or more than $50 per hour are considerably more likely to move into bridge jobs before retirement than middle-class workers earning between $10 and $50 per hour.
Back to work. Many people return to the workforce after a period of full-time retirement. An analysis of people who held a full-time job in 1992, then retired for at least a two-year period by 2008, found that 16 percent of the men and 14 percent of the women later returned to work. Retirees were more likely to reenter the workforce if they were younger and in better health. Workers with only a 401(k) or no workplace retirement benefits were also more likely to return to work than those with a traditional pension.
Some factors influenced men's and women's retirement choices differently. Women with dependent children at the time they retired were significantly more likely to return to work than those without children under 18, but this was not true for men. Men who do not own a home were more likely to reenter the workforce after retirement than male homeowners, while there was no significant difference among women. However, both men and women with a working spouse were more likely to find a new job after a period of retirement than those without a spouse who was still employed.
Phased retirement. A far less common way to transition into retirement is to reduce the number of hours you work for your current employer. "The opportunity for what people have called 'partial retirement,' cutting back hours at your existing employer, is relatively limited," says Giandrea. Only a few employers have formal phased retirement programs that allow workers approaching retirement age to gradually work less hours or fewer days per week. A Society for Human Resource Management member survey of 600 human resources professionals found than only 5 percent of companies offered a phased retirement program in 2011, down from 12 percent in 2007.
Most other transitions to part-time work at the same employer are ad-hoc arrangements negotiated with individual supervisors and management. Phased retirement can complicate pension calculations, and workers need to make sure they continue to work enough hours to qualify for the health plan if they are under age 65. Employees also need to renegotiate which responsibilities they will keep, as well as fair pay for their continued work. Sometimes it's easier to get a part-time job at a new company than to ask for less responsibility and fewer hours at your current job.