To What Extent is Gradual Retirement a Product of Financial Necessity?

TitleTo What Extent is Gradual Retirement a Product of Financial Necessity?
Publication TypeJournal Article
Year of Publication2017
AuthorsCahill, KE, Giandrea, MD, Quinn, JF
JournalWork, Aging and Retirement
Pagination25 - 54
Date PublishedJul-01-2018
ISSN Number2054-4642
KeywordsBridge employment, Financial literacy, Older Adults, Retirement Planning and Satisfaction

Changes in the retirement income landscape over the past 30 years have left older Americans more exposed to market forces than prior generations, and more reliant on earnings to ensure their financial stability at older ages. These earnings come from a variety of nontraditional paths to retirement. Most older Americans reduce hours in career employment, change employers later in life, reenter the labor force after an initial retirement, or follow some combination of these 3 paths. The many pathways to retirement are undoubtedly the product of a flexible labor market and may be good news on balance; however, for some these job changes may reflect hardship, as vulnerable populations seek whatever employment they can find to prevent falling into poverty at older ages. We assess the magnitude of this segment of older workers using data from the Health and Retirement Study (HRS), a large, nationally-representative longitudinal survey of older Americans that began in 1992. We find that bridge job prevalence among those with little or no financial assets resembles that of individuals in the middle of the wealth distribution, implying that financial insecurity does not appear to be a main driver of gradual retirement transitions among career workers. Bridge employment among those with little or no financial assets is, however, more likely to consist of full-time wage-and-salary work. With the prospect of increased financial insecurity among older Americans, this analysis suggests that gradual retirements consisting of short-term, full-time wage-and-salary employment may become more prevalent in the years ahead.

Short TitleWORKAR
Citation Key9015