What Happens if You Try Retirement and Decide It's Not for You?

In this "What's Up, Bro" segment from the episode of Motley Fool Answers, Robert Brokamp and Alison Southwick consider a slightly heretical idea for a company like ours, which has as its mission getting people financially ready for retirement: Maybe you don't really want to retire at all.

Jumping off from a New York Times article that interviewed a number of people who had quit working, then gone back, they talk about the way society and we, as individuals, have changed since the traditional idea of retirement really took hold. They then weigh the value of just postponing retirement, and dig into the results of a recent study that shows how remarkably even a short delay will improve your financial situation when you finally do settle down to your post-employment life.

A full transcript follows the video.

This video was recorded on April 17, 2018.

Alison Southwick: So, Bro, what's up?

Robert Brokamp: Well, Alison, when many workers think of retirement [visions of travel, adventure, and full-time leisure might dance in their heads], the reality of retirement can be quite different, and that's the takeaway from a recent The New York Times article entitled Many Americans Try Retirement, Then Change Their Minds.

The article starts out with the tale of Sue Ellen King, who is a nurse who retired in 2015 at the age of 66. Her retirement lasted a whole three months.

From the article, a quote: "Days spent organizing recipes and photos, and lunching with friends, proved less engaging than expected." I hope her friends didn't read that article, by the way.

Southwick: Like, thanks.

Brokamp: When her hand-picked replacement needed a maternity leave, Ms. King jumped at the chance to return for three months, now back at work in a part-time position she designed all for herself. She calls herself a "failed retiree."

This phenomenon has come to be known as "unretirement." According to a 2010 study from Nicole Mastis of Harvard Medical School, more than a quarter of retirees eventually return to work. And a 2017 study from the RAND Corporation found that almost 40% of workers over age 65 had at one point been retired, but then they returned to work.

So, why do they go back to work?

For many, obviously, money is an issue, especially after the Great Recession and the stock market decline that we saw back from 2007 to 2009; but for many others, finances were not a factor. According to Dr. Mastis, the reasons often have to do with a sense of purpose, opportunities to use your brain, and social engagement. And because we're living longer [we're generally in pretty good shape and our jobs are less physically tasking than they were in previous generations], it's pretty reasonable for people to work into their 70s.

The article also quoted Michelle Wallace who had this to say about life after retirement. "I felt like I was free-floating, bobbing along on the ocean. I felt very ungrounded." Now at age 69 she works part-time for a small business that helps government researchers and she says she never plans to try retirement again. The bottom line is people should seriously consider working past traditional retirement age for plenty of non-financial reasons.

That said, working just a little longer can do wonders for your financial security, which brings us to our second item of the day, a study released in January entitled, The Power of Working Longer, by Gila Bronshtein, Jason Scott, John Shoven, and Sita Slavov. The main takeaway, here, is that working just six months longer has the same impact on your standard of living in retirement as having saved an additional 1% of your earnings for the past 30 years. It's amazing. It all comes down to just delaying Social Security, having a bigger nest egg [because you have more years to continue to it and you're letting it grow for a little longer], and having a shorter retirement because you're delaying your retirement.

So, put it all together. Before you retire, put some thought into whether that's really what you want to do. It might be that you want to consider other possibilities -- working just part-time instead of full-time retirement, or, if you're so burnt out from your job, consider a new career that you'd enjoy doing well into your seventies.