Paper airplanes in a row

Second Careers Late in Life Extend Work

Moving into a new job late in life involves some big tradeoffs.

What do older people look for when considering a change? Work that they enjoy, fewer hours, more flexibility, and less stress. What could they be giving up? Pensions, employer health insurance, some pay, and even prestige.

Faced with such consequential tradeoffs, many older people who move into second careers are making “strategic decisions to trade earnings for flexibility,” concluded a review of past studies examining the prevalence and nature of late-life career changes.

The authors, who conducted the study for the University of Michigan’s Retirement and Disability Research Center, define a second career as a substantial change in an older worker’s full-time occupation or industry. They also stress that second careers involve retraining and a substantial time commitment – a minimum of five years.

The advantage of second careers is that they provide a way for people in their late 40s, 50s, or early 60s who might be facing burnout or who have physically taxing jobs to extend their careers by finding more satisfying or enjoyable work.

Here’s what the authors learned from the patchwork of research examining late-life job changes:

People who are highly motivated are more likely to voluntarily leave one job to pursue more education or a position in a completely different field, one study found. But older workers who are under pressure to leave an employer tend to make less dramatic changes.

One seminal study, by the Urban Institute, that followed people over time estimated that 27 percent of full-time workers in their early 50s at some point moved into a new occupation – say from a lawyer to a university lecturer. However, the research review concluded that second careers are more common than that, because the Urban Institute did not consider another way people transition to a new career: making a big change within an occupation – say from a critical care to neonatal nurse. “Unretiring” is also an avenue for moving into a second career.

What is clear from the existing studies is that older workers’ job changes may involve financial sacrifices, mainly in the form of lower pay or a significant loss of employer health insurance. But they generally get something in return: more flexibility. …Learn More

Fewer Contingent Workers Seek SSDI

The vast majority of so-called contingent workers – think Lyft drivers, AirBnB hosts, independent contractors, consultants, and freelancers – have built up the work history necessary to apply for federal disability benefits if they become injured.

The 86 percent coverage rate for contingent workers in their 50s and early 60s is less than the 92 percent for regular workers – but not by much.

Despite their relatively high rates of eligibility, however, older contingent workers are significantly less likely to end up on Social Security Disability Insurance (SSDI) than similar workers in traditional jobs, according to a new study by the Center for Retirement Research.

This finding is mainly driven by contingent workers’ lower application rates for SSDI. Applications are lower even for people with the physical, cognitive or emotional conditions that the government explicitly lists as SSDI-eligible.

“Even the contingent workers who need SSDI the most are less likely to apply for and be awarded benefits,” the researchers said.

They offer a couple reasons for the lower application rates. One reason might be that contingent workers would get less in their disability checks than workers with traditional jobs receive, because the benefits are based on earnings – and contingent workers earn an average $592 per month less than other workers.

A more compelling explanation is that they simply lack access to the natural avenues for learning about the program’s existence and their potential eligibility: unions, fellow employees, and a traditional employment arrangement.  For example, private-sector employers often require people on their payrolls to apply for federal SSDI before receiving the company’s disability coverage. Contingent workers outside of this kind of arrangement are rarely covered by any employee benefits, let alone private disability insurance. …Learn More

Photo of an older white man

Why are White Americans’ Deaths Rising?

Rarely does academic research make a splash with the general public like this did. A grim 2015 study, prominently displayed in The New York Times, showed death rates increasing among middle-aged white Americans and blamed so-called “deaths of despair” like opioid addiction, suicide, and liver disease.

Rising mortality, especially for white people with low levels of education, ran counter to the falling death rates the researchers found for Hispanic and black Americans. The husband and wife team who did the study proposed that “economic insecurity” might be an avenue for research into the root cause of white Americans’ deaths of despair.

A 2018 study took up where they left off and found a connection between economic conditions and some types of deaths. Researchers from the University of Michigan, Claremont Graduate University, and the Urban Institute said poor economic conditions – in the form of local employment losses – have played a role in the rising deaths since 1990 from chronic health problems like cardiovascular disease, particularly among 45 to 54 year olds with a high school education or less. However, they could not establish a connection to the rise in deaths of despair.

In a 2019 study in the Journal of Health and Social Behavior, these same researchers instead focused on what is driving the growing educational disparity in life expectancy trends among whites: life expectancy is rising for those with more education but stagnating or falling for less-educated whites.

As for the health reasons behind this, they found that chronic conditions like cardiovascular disease and even cancer are critical to explaining less-educated whites’ life expectancy, and they warned against putting too much emphasis on deaths of despair. In the medical literature, they noted, cardiovascular disease, and some cancers are consistently linked to the “wear and tear” on the body’s systems due to the stress that disadvantaged Americans experience over decades, because they earn less and face adversities ranging from a lack of opportunities and inadequate medical care to substandard living environments. …Learn More

Washington, DC skyline

Spotlight on Our Research, Aug. 1-2

Topics for this year’s Retirement and Disability Research Consortium meeting include the opioid crisis, retirement wealth inequality over several decades, trends in Social Security’s disability program, and the impacts of payday loans, college debt, and mortgages on household finances.

Researchers from around the country will present their findings at the annual meeting in Washington, D.C. Anyone with an interest in retirement and disability policy is welcome. Registration will be open through Monday, July 29. For those unable to attend, the event will be live-streamed. The agenda lists all of the studies.

Here are a few:

  • Why are 401(k)/IRA Balances Substantially Below Potential?
  • The Impacts of Payday Loan Use on the Financial Well-being of OASDI and SSI Beneficiaries
  • The Causes and Consequences of State Variation in Healthcare Spending for Individuals with Disabilities
  • Forecasting Survival by Socioeconomic Status and Implications for Social Security Benefits
  • What is the Extent of Opioid Use among Disability Applicants? …

Learn More

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Boomers with Disabilities Often Retire

One in four workers in their mid-50s will eventually encounter difficulties on the job, because their bodies start breaking down or they aren’t as sharp as they used to be.

When a new, disabling condition is long-lasting, 63-year-olds – still a young age to be retiring – are two times more likely to stop working than other people their age, according to a new study by Mathematica, a Princeton, N.J., research firm.

The researchers started out with a fairly healthy group of 55-year-olds and followed their career paths through age 67. Strikingly, even people as young as 59 who have experienced a new work-limiting health condition leave the labor force at a much higher rate than those who did not. It’s inevitable that many, though not all, of the oldest workers in this group decide to retire, rather than find a new job.

Of course, the nature of the work factors into whether someone decides they have to retire. When older workers have physically demanding jobs, they are more likely to report a new disabling condition, the study found. It can be extremely difficult to soldier on in occupations such as construction or heavy industry.

With less physical jobs, however, it is more feasible to work longer even with a disability. For example, a lawyer or administrative assistant could conceivably keep working, even if it became difficult to walk.

In addition to the physical challenges, disability couldn’t come at a worse time financially for baby boomers, a significant minority of whom are not well-prepared for retirement.

They would benefit from staying in the labor force as long as possible to save more and hold out for a larger Social Security check every month. …Learn More

How China Trade Affects Social Security

shipping containersIf you don’t know this fact about Social Security, join the club. The percentage of earnings for all
U.S. workers combined that is subject to the Social Security payroll tax is falling. Growing income inequality is the reason.

Thirty-five years ago, Social Security taxes were levied on 90 percent of all workers’ earnings. By 2016, this taxable share of earnings had declined to 82.7 percent, according to federal data, and it will continue to drop over the next decade.

The payroll tax is 12.4 percent of an individual worker’s earnings, with half deducted from his paycheck and half paid by the employer. But the tax has a cap: once earnings reach $132,900 – the cap for 2019 – they do not have to pay the tax for the rest of the year.

This is where inequality comes in. Since incomes above the cap are growing much faster than regular workers’ incomes, a bigger share of earnings is escaping the cap every year.

The decline in the taxable share aggravates the existing problem that benefits being paid out by Social Security now exceed the tax revenues coming in.

A recent study identified growing U.S. trade with China as one important factor that is shrinking the share of earnings subject to the payroll tax.

China is now the largest source of U.S. imports. The increase in trade volume over several decades has contributed to U.S. income inequality by sharply eroding earnings for workers in the low-wage, low-skill industries that have lost factory jobs to China. But trade with China has actually been good for workers in the top 1 percent – their earnings have increased slightly. Think of the high-tech entrepreneur selling software to a Chinese manufacturer. These are the types of people who stop paying the payroll tax partway through the year, when their earnings exceed the cap. …Learn More

biking through amsterdam

Men Who Work Longer, Live Longer

In 2007, the majority of workers in The Netherlands were retiring by their early sixties to take advantage of the country’s generous pension scheme. Then came a sweeping 2009 policy that rewarded older workers with a tax break if they remained employed and active.

In a new study, researchers used this tax break – the Doorwerkbonus, or continued work bonus – to ask the question: do people who worked longer in response to this policy also live longer?  The short answer is “no” for women but “yes” for men. Delaying retirement increased men’s lifespans by three months, compared with a group that was not eligible for the bonus, possibly because working longer improved their health.

The tax break was the equivalent of a wage increase for all older workers in every sector of the Dutch economy. The bonus started as a 5 percent tax cut for working people in the year they turned 62, increased to 7 percent at 63, and 10 percent at 64. After that, the rewards from work dwindled, falling to 1 percent for everyone over 67. (In 2013, the size of the tax break was reduced.)

Prior to the new study, other researchers had examined whether earlier retirements caused people to die younger. But Alice Zulkarnain and Matthew Rutledge at the Center for Retirement Research took the opposite tack. They asked: were the Dutch living longer because they delayed retirement after the Doorwerkbonus went into effect?

While the policy did increase men’s life spans slightly, women seemed unaffected, because fewer of them responded to it by working longer.

Is there a lesson in the Doorwerkbonus for American boomers?  This study indicates that working longer will not only put more money in retirees’ pockets, it might also add to their life spans. …Learn More

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