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Working past 62 improves retirement security: Study

Working past 62 improves retirement security: Study

October 15, 2020
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People who aren't prepared for retirement at age 62 aren't more likely than others to keep working, but those who do tend to benefit financially, a recent paper found

Working contract or gig jobs into one’s 60s has become a way for many people to retire gradually, and such arrangements are linked to greater retirement security, a recent study found.

People who remain in the workforce past 62 in jobs that don’t provide health insurance or retirement plans tend to do so after leaving career positions or because they have spent a lifetime in jobs without benefits and have little financial choice but to keep working.

A paper published this month by the Center for Retirement Research at Boston College examined how workers’ financial preparedness for retirement relates to their decision to continue working past age 62. The authors also looked at whether continuing to work actually helped people become able to retire.

“Holding nontraditional jobs — those that provide neither health insurance nor retirement benefits — at younger ages likely hurts retirement security relative to traditional jobs,” authors Matthew Rutledge and Gal Wettstein wrote. “But nontraditional work might be helpful to those looking to extend their careers for financial reasons.”

Nontraditional jobs include anything from lucrative contract work for people in highly specialized fields to part-time retail positions. Either way, having such work later in life generally improved people’s ability to retire, according to the study.

Of course, many people are unable to continue working for health reasons.

Among career workers in jobs offering perks like 401(k)s, those who had saved too little to retire comfortably were no more likely than peers with adequate savings to work in nontraditional jobs later in life. But for those who were financially unprepared to retire, working such jobs boosted their ability to retire “by at least as much as those who stay in traditional jobs,” according to the study.

“In fact, some evidence suggests that those who transition to nontraditional work have greater retirement wealth, especially business income, than those who stay in traditional work or who opt not to keep working,” the authors wrote. “Among those workers who are at risk of not maintaining their pre-retirement income level in retirement, however, nontraditional work appears to move them closer to retirement security.”