Does Late-Career Nontraditional Work Improve Retirement Security?

Policymakers and the media have expressed concern
that nontraditional jobs lack stability and financial security. Indeed, having a nontraditional job – defined
here as a job without employer health and retirement
benefits – during the prime saving years of ages 50-61
is associated with less retirement security.1
But nontraditional jobs need not be “bad jobs” for all workers.
Compared to traditional work, they may be a better fit
for those in their 60s looking to prolong their careers
by offering less stress and more flexibility.2
This brief, based on a recent study, examines how
workers use nontraditional jobs after age 62, relying on data from the Health and Retirement Study
linked to administrative earnings.3
It explores two
questions. First, are workers in their early 60s who
are underprepared for retirement more likely to use
nontraditional jobs? Second, are such jobs a useful
alternative to traditional work for those seeking to
enhance their retirement security?
The discussion proceeds as follows. The first
section introduces the data and the sample. The
second section describes the analytic approach,
which follows three groups of workers with different
employment patterns in their 60s. The third section
compares the retirement security of these three
groups at ages 61-62 and examines the changes they
experience in retirement security by ages 67-68. The
final section concludes that the workers who start out
less prepared for retirement are not more likely to
switch to nontraditional work in their mid-60s. But
underprepared workers who do switch improve their
retirement security as much as those who stay in
traditional work. These results suggest that extended
careers are financially beneficial, even in jobs without
health and retirement benefits.4