October 6, 2020

Boomers Move into Post-Career Jobs

Many baby boomers retire the conventional way – by leaving their career jobs. For the others, the first step in retiring involves stopping over in a different job than they’ve held for years.

A sketch of the older workers who transition to post-career jobs – and their reasons for doing so – emerges from a survey of a fairly elite group of mostly college-educated professionals: clients of the Vanguard investment company.

They made the job transitions for a variety of reasons.  More than half of them either had initially retired but decided to go back to work or were forced out of a long-term job by a layoff, firing, or business closure. However, Vanguard’s clients are apparently in good health, because they rarely made changes due to a medical condition.

The boomers usually changed jobs during their 50s. The post-career jobs were often in entirely different occupations or industries, which required the workers to make big trade-offs, according to the 2015 survey, which was designed by Vanguard and several academic researchers.

The old positions were usually full-time, and, as a result, had rigid schedules. Half of the people who found a new job said they now have flexible schedules. But everyone who moved into a post-career job took a 20 percent pay cut, on average, either because they’re working fewer hours or are in a different industry or occupation where the skills honed over the years are not as valued.

There’s also telling evidence that many of the boomers in post-career employment were eager to make this tradeoff. They typically moved from the career job to the new one in about a month, an indication that many had landed the new job prior to leaving the old one. …Learn More

October 1, 2020

Cash from Kids Slows After Parents Retire

It’s not unusual for workers who grew up in lower-income households to help their parents out financially.

But a new study uncovers a twist in this familiar story: once the parents are old enough to collect Social Security, the money flowing from adult child to parent slows down. And when this occurs, the offspring are able to start saving money.

Social Security, by reducing disadvantaged parents’ reliance on their children, “may be able to interrupt the cycle of poverty between generations,” Howard University researcher Andria Smythe concluded from her analysis.

To chart changes over time in cash transfers within families, Smythe followed U.S. households’ finances between 1999 and 2017 using survey data from the Panel Study of Income Dynamics.

She found that the financial support going to parents in the bottom half of the U.S. income distribution was substantial. These parents received about $8,000 from their offspring over time. In contrast, among the higher-income families, money consistently flowed in the opposite direction – from parent to child.

After the lower-income parents turned 62 and started their Social Security, the likelihood the adult children would continue to support them declined, according to the study, which was conducted for the Retirement and Disability Research Consortium.

This, in turn, had a positive effect on the adult children’s wealth. People who grew up in lower-income families saw the biggest bump in wealth, adding about $13,000 in the years after their parents turned 62.

Social Security benefits, Smythe concludes, “may contribute to wealth-building among the adult children’s generation.”

To read this study, authored by Andria Smythe, see “The Impact of Social Security Eligibility on Transfers to Elderly Parents and Wealth-building among Adult Children.” …Learn More