Good News for Baby Boomers Delaying Retirement?

By Markets Fool.com

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There are a number of clear benefits to working later in life.

The first, and most obvious, is financial: More time working means less time having to stretch your retirement savings. With the average baby boomer nearing retirement only holding $136,200 in savings, that's a pretty darn attractive reason on its own. Plus, that job could potentially enable you to add to your savings, depending on the job.

There are clear health benefits as well. The biggest one: Working later reduces your chance of death. (Seriously.)

Not particularly easy

But there are serious barriers to delaying retirement, as evidenced by the fact that the typical American retires at age 62, despite not having nearly enough financial resources for a financially safe and secure retirement at that age. Many elderly Americans have struggled to find meaningful employment after their jobs were eliminated or they were offered a buyout to leave.

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Fortunately, according to new research (link opens pdf) published by the Center for Retirement Research (CRR) at Boston College, that particular problem may be getting better for many Americans. CRR researchers analyzed data from the Current Population Survey from 1996 to 2012 to identify occupations that were disproportionately hiring elderly workers and examine what percentage of workers in the 50-64 age group were being hired into these jobs. The research's goal was simple: Determine what percentage of older workers are forced into this narrower band of occupations, and examine how this trend has changed over time.

The good...

As this chart shows, relatively fewer people over time are forced into these jobs over time, particularly women with at least some college.

Percentage of Older Workers Seeking Jobs Hired into Jobs with a High Ratio of Elderly Workers

Date Range

Men with No College

Women with No College

Men with at Least Some College

Women with at Least Some College

1996-2000

18.9%

3.5%

11.1%

7.9%

2002-2006

11.7%

2%

13.1%

3.8%

2008-2012

16.3%

1.3%

8.9%

3.3%

Source: Data from theCenter for Retirement Research(chart made by author).

That's good news, because it implies that people aren't forced as often into what the study's authors referred to as "old-person jobs" (yes, I'm also cringing at that phrasing) as they had been in the past. And that's particularly good news, as these particular jobs in general paid less than other jobs -- 7.4% less for those aged 55-59, and 5.9% less for those aged 60-64 (although I should note that once the authors adjusted for the skills required in those jobs, they were roughly equivalent in pay to similar jobs).

As the researchers noted in the study's conclusion, they found "a broadening of occupational opportunities since the late 1990s, in particular for better-educated women. In addition, 'old-person' jobs pay no less than other jobs."

...and the bad

One of the study's major limitations was that it only examined people who landed jobs, which doesn't account for the people who are trying and failing to find encore employment. And given that the American Society on Aging found that 45% of 55-64 year olds unemployed in 2014 were long-term unemployed (had been searching for -- and failing to find -- a job for 27 weeks or longer), there's a big group of boomers who may be left behind even as jobs improve for those with them.

The most important thing you can do is get ahead of the problem. Fortunately, there are a number of tactics you can use. Here are two I suspect would be particularly helpful:

Formal education. Look at the first chart I included from CRR above. The lower numbers for both men and women with at least some college means you will have greater job flexibility and opportunity with those classes under your belt. Your employer may have an education program whereby they will cover classes up to a certain annual cost (or a certain number of credit hours). Even if your employer doesn't have that, the government provides a number of tax incentives to help defray those costs if you take them on.

On-the-job education. Crosstraining in your current job may not sound like the best thing in the world, but it has a number of benefits. New skills will likely give you an advantage if you end up on the job market in your late-50s/early 60s, making you more marketable and able to diversify into more jobs. Plus, it's a great story to tell in an interview -- how you learned something new on your own because you're a go-getter. There are studies showing that learning new skills improves mental acuity, although they were related to leisure activities, so those benefits may not translate well to work-related skills. Finally, crosstraining makes you more useful to your current employer, hopefully putting you in a spot where your job is more protected at the outset.

Difficult, but not impossible

Baby boomers have a tough road ahead, given that many are drastically underprepared financially for retirement. Fortunately, some of the job-search difficulties many near-retirees have faced could be receding. And while issues remain, there's still time to make changes to put yourself in the best possible position should job disruption occur.

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