How To Keep Working Into Your 60s And Beyond

A study by University of Michigan researchers I just read about in the Squared Away blog from the Center for Retirement Research at Boston College noted that “about 40% of Americans who were still working when they turned 62 had moved to a new occupation sometime after age 55.” But when older workers change occupations later in life, the study added, “they experience a decrease in hourly earnings.”

Let me unpack that study, which was called Occupational Transitions at Older Ages: What Moves are People Making? Then, I’ll offer my five rules to follow if you want to keep working into your 60s or beyond — especially if you want to change careers to do it.

Taking a Pay Cut After a Career Switch

I wasn’t terribly surprised by the researchers’ pay cut finding. The truth is, based on the workers I’ve studied and interviewed for my books and articles, most workers who change careers take a step down in salary when they start over.

But here’s the interesting part: The researchers said the earnings decline “may reflect strategic decisions on the part of workers who may be willing to trade earnings for work hours flexibility or part-time work.”

How Job Changing Is Changing

That echoes a recent report from The Center for Retirement Research at Boston College showing that workers in their 50s are more likely to switch jobs (not necessarily occupations) voluntarily and switch to ones that lengthen their careers, compared to previous generations. Those who change jobs are much more likely to still be in the labor force at 65 than those who stay put.

Here’s why the lower-wage finding by The University of Michigan researchers doesn't upset me as much as it might on face value (and why I don’t think it should get you terribly riled up either). Yes, it’s easy to feel undervalued when you’re the new kid on the block and paid accordingly. That said, I think you need to look at the broader picture: Staying on the job, even at lower wages, has some real benefits.

Working for Less, Enjoying It More

If the job change means you love work again, have less stress and keep earning a paycheck for a few additional years, that can boost your prospects for retirement security and your sanity.

You can still contribute to retirement plans and refrain from dipping into existing ones. You can delay claiming Social Security and get 8% bigger checks each year you don’t take benefits between age 62 and 70. And studies show that continuing to work helps people feel more relevant and needed and less isolated.

Women, Work and Retirement

It’s also worth noting that the Michigan researchers found differences between men and women regarding working into retirement. They discovered that women with higher earnings before retirement were more likely than men to return to work after retiring from their primary career.

Or, maybe, never leave it. As I wrote in this Next Avenue column, the Women Working Longer: Facts and Some Explanations study by Harvard University economists Claudia Goldin and Lawrence F. Katz reported that a large fraction of women are working a lot longer than in previous generations — past their sixties and even into their seventies. “Women are remaining on their jobs as they age rather than scaling down or leaving for positions with shorter hours and fewer days,” they said. “Higher levels of employment for women older than fifty-five years also appear to be among those who are healthier and whose occupations are the most rewarding and least physically taxing.”

5 Rules to Keep Working and to Switch Careers

So how can women and men boost their chances of working into their 60s and beyond, particularly in a new field? Here’s how:

1. Plan for a pay cut. If you hope to change occupations, start shaving debts and downsizing three or so years ahead of time. My mantra: In order to make a successful career transition, you need to be financially fit. Then, you can accept a job paying less than your previous position, but one that makes you happy or brings meaning to your life and perhaps helps others along the way.

2. Keep learning, and adding, skills. The job posting will indicate which skills are required for the position you’re chasing. If you currently employed and your employer offers continuing education or professional development programs, sign up for them.

3. Find out what the position pays. That way, you’ll be prepared when the time comes to discuss salary with a prospective employer. Job postings rarely mention salary, so search for what the position is likely to pay where you live at Glassdoor.com, Payscale.com, Salary.com or the site of the Economic Research Institute. For government jobs, check the U.S. Office of Personnel Management site.

If you’re interested in a nonprofit, check out the organization’s latest online tax filing (Form 990) to see how much its key employees earn. Keep in mind that working for a nonprofit with a mission that matters to you may make up for a drop in pay.

4. Realize that money is not everything. Find ways to sweeten the offer around the edges. See if you can bump up your benefits. For example, you might want to try for more flextime, telecommuting, more vacation time or the ability to bring your dog to work. (That last one would work for me!)

These kinds of perks might be more valuable to you at this age, giving you more time to do what you really want to do.

5. Consider which core benefits you truly need. Health insurance, retirement savings plans and paid time off could play a significant role in determining your perfect job right now. But if your spouse or partner has health benefits at work, for example, you may not need them. This could then be a bargaining chip to trade for something you do want, such as more vacation days.

One last thing: 82% of respondents to a survey by the American Institute for Economic Research reported that they made a successful transition to a new career after age 45. And of those who initially took pay cuts, half saw an increase in earnings over time after “a period of hard work and persistence.”

- Kerry Hannon