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Worried You Don't Have Enough Retirement Savings? This Could Help

By Christy Bieber – Aug 10, 2020 at 7:02AM

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It won't work for everyone, but it could help you a lot if you can pull it off.

For many pre-retirees getting ready to leave the working world, retirement savings -- or rather the lack thereof -- create significant stress. Quitting work without having a nest egg you feel confident in is a risky proposition, and it's not a decision you should take lightly as you don't want to struggle for money in your later years.

The good news is, you don't have to commit to leaving work for good if you quit your primary job. In fact, the Center for Retirement Research recently revealed that working in a nontraditional job (one without benefits) can actually help you be more financially secure if you do it after you've hit the age of 62. Here's what you need to know about trying out this option. 

Older woman working stocking shelves.

Image source: Getty Images.

How working a nontraditional job can bolster your financial security

As CRR points out, working a job that doesn't provide benefits can hurt retirement security relative to traditional jobs when you're younger. That makes sense, as it can be harder to save for your later years if you don't have a 401(k) at work or if your employer doesn't offer health insurance and you need to pay for it yourself.

But things change when you get near the end of your career. Studies have shown a disproportionate share of jobs held by workers 50 and over are nontraditional and may include independent contracting or on-call work. Doing these jobs toward the later part of your life can help improve your retirement prospects, since they enable you to extend your career or to move more gradually into retirement by providing a better work-life balance. 

By making it both possible and more desirable to work for longer, nontraditional work arrangements can potentially enable you to delay claiming Social Security, thus maximizing your benefits and improving your retirement prospects. They can also enable you to save more money late in life and rely on your savings for less time. The effects of this are powerful, with CRR indicating that working longer -- even in a nontraditional job -- may be more effective in increasing your financial security in retirement than increasing the amount you save throughout your career. 

Unfortunately, the data also shows that people who reach age 62 with less retirement security may be less likely than their wealthier counterparts to enter into nontraditional work arrangements, rather than exiting the workforce entirely. And that presents a major missed opportunity, as taking advantage of these alternative work options substantially increases the likelihood of having enough money. 

In fact, CRR found those who do nontraditional jobs reduce the risk of being unable to maintain pre-retirement spending at least as much as workers who remain in traditional jobs with benefits into their 60s. 

Should you aim to work after age 62?

Not everyone can work into their 60s, and doing so isn't always desirable. But CRR's research provides some good news, in that you don't need a traditional job with full workplace benefits to bolster your financial security by working in your 60s. 

It may be easier to find nontraditional work as you age. If doing so can make all the difference in terms of having enough money in retirement, then it's definitely worth giving it a try if you can.

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