June 1, 2021

No-Benefit Jobs Better than Retiring Early

Many workers in their 60s lose some of their stamina. Either their bodies start showing signs of wear, or they don’t tolerate on-the-job stress like they used to.

People who find themselves in this situation but can’t afford to retire will appreciate the findings in a recent study: older workers who transition to a new job – and perhaps a less demanding one – have greatly improved their retirement finances, even if the new job lacks health and retirement benefits.

The starting point for the analysis was to identify 61- and 62-year-olds employed in career jobs and follow the changes in their retirement finances over time, as they break into three groups. Some retired, some remained in longstanding jobs with benefits, and some found no-benefit jobs, whether with an employer or as an independent contractor.

Matt Rutledge and Gal Wettstein at the Center for Retirement Research compared each group’s retirement prospects in their early 60s with where they ended up years later, after the majority of them had retired. The focus was on the people who, at 62, were falling short of what they would need to retire comfortably.

The financial assessments were based on so-called replacement rates – estimated retirement income as a percentage of employment earnings. The average target required for financial security in old age is about 75 percent of past earnings, though the precise number depends on how much the individual earned.

The researchers estimated replacement rates for the 62-year-olds who fell short of the targets and estimated the rates again when they were 67 or 68. Retirement security improved over time for the under-prepared people who continued to work – in contrast to an erosion in security for the people who, despite falling short, had retired at 62 and locked in a small Social Security check.

The most interesting finding concerned the older workers who had extended their employment by switching to no-benefit jobs. Their retirement income in their late 60s replaced 68 percent of their past earnings, on average – still less than what they need but up dramatically from 52 percent if they had retired early. …Learn More

March 30, 2021

Working Multiple Jobs to Make Ends Meet

If people need to work and can work, they will work. That’s my takeaway from a new set of data that sketches a clearer picture of U.S. workers who are holding down multiple jobs.

Nearly 8 percent of workers had two or more jobs in 2018, the latest year of data available from the U.S. Census Bureau. The data also show that holding two or more jobs becomes more common during economic expansions, when jobs are plentiful, and falls during recessions, when the opportunities dry up.

But the longer-term trend is up: the share of people holding multiple jobs has slowly increased over the past two decades. In a recent webinar, Census Bureau economist James Spletzer provided a couple of reasons.

First, the country has lost millions of manufacturing jobs over several decades. They have been replaced by lower-quality jobs in retail and in service industries like health care, hotels and food preparation – and that’s where multiple job holders tend to work.

A second, related reason for working in multiple jobs is the “stagnation of earnings at the lower end of the earnings distribution,” Spletzer said. …Learn More

April 21, 2020

Self-Employment More Prevalent Over 65

Workers of all ages are being affected by the damage COVID-19 is doing to the economy, but people who are loosely attached to the labor force may be more vulnerable.

That’s the situation for a small but growing segment of the U.S. labor market: self-employed people who are 65 and older.

When workers are in their prime, most of them are directly on an employer’s payroll. But a new study finds that self-employment begins to dominate as people work past traditional retirement ages and work as independent contractors, consultants, freelancers, or gig workers.

The detailed Gallup survey designed by the researchers shows that self-employment is more pervasive at older ages than previous data had indicated. Nearly half of all workers in their late 60s are self-employed, and that rises to more than two-thirds of workers in their late 70s. In contrast, only one-fourth of people in their late 50s are self-employed.

The Gallup survey was designed to capture self-employment more fully than the Bureau of Labor Statistics (BLS) does. That’s because the researchers asked detailed questions designed to get a more complete count of the independent contractors who may mistakenly have failed to report themselves as self-employed to the BLS.

In the study, independent contractor is the most common form of self-employment at older ages. This is mainly the province of an elite group who are able and willing to continue working several years after most people have retired. They are often professionals or former managers who said their primary motivations for being self-employed are remaining active or pursuing an interest.

But even at the oldest ages, a significant minority of independent contractors are working mainly for the money. …Learn More

January 30, 2020

A Cost in Retirement of No-Benefit Jobs

Only about one in four older Americans consistently work in a traditional employment arrangement throughout their 50s and early 60s. For the rest, their late careers are punctuated by jobs – freelancer, independent contractor, and even waitress – that do not have any health or retirement benefits.

Some older people are forced into these nontraditional jobs, while others choose them for the flexibility to set their own hours or telecommute. Whatever their reasons, they will eventually pay a price.

The Center for Retirement Research estimates their future retirement income will be as much as 26 percent lower, depending on how much time they have spent in a nontraditional job. During these stints, the issues are that they were not saving for retirement or accruing a pension and may have had to pay for health care out of their own pockets.

The researchers estimated the losses in retirement income to these workers by comparing them with people who have continuously been in traditional jobs with benefits. The workers in their analysis were between the ages of 50 and 62 and were grouped based on how their careers had progressed. The groups included people whose careers were primarily traditional but were interrupted by periods of nontraditional, no-benefit work, and people who spent most of their time in nontraditional jobs.

This last group lost the most: they had accrued 26 percent less retirement income by age 62 than the people who consistently held a traditional job. Who are these workers? They are a diverse mix that includes people who dropped out of high school and are marginally employed and people who are married to someone who is also employed and has benefits. …Learn More