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Source: Jean-Pol Grandmont via Wikimedia Commons.

Recent research shows that 47% of retirees say they end up working -- or they plan to work -- after retirement. And that's not just a post-recession necessity: Some 72% of retirees polled in an Age Wave/Merrill Lynch report said they want to keep working after retirement.

"We're at a tipping point," says the study. "A majority of people will be continuing to work after they retire -- often in new and different ways."

So is the concept of retirement waning entirely? And if so, what roles will investments and savings play in this process?

Let's take a closer look and identify not only a number of the factors behind this trend, but also the potential for the changing retirement landscape to change the way we understand retirees and the approaches they're taking to what have traditionally been post-employment years.

A new retirement model
First, let's turn to how post-retirement, second-phase careers manifest. Consider the following four-phase retirement model for the working retiree:

  1. Pre-retirement: Five years prior to retiring, 37% of those who intend to work afterward begin to prepare for continued employment. Two years before retiring, 54% of these individuals significantly increase those preparations.
  2. Intermission: Next there is often a break. Among retirees who intend to work, 54% first enjoy time away from employment -- typically about 2-1/2 years.
  3. Re-engagement: For up to a decade after intermission, retirees who return to work then engage in new careers. Some 83% of them do this part-time, and about one-third opt for self-employment.
  4. Full retirement: In the final phase, retirees disconnect from work and adopt what we usually think of as a traditional retirement lifestyle: They focus on leisure and non-work priorities.

What is motivating this shift toward preparation, a break from work, resumption of work, and then leisure? More than one factor, it turns out. Retirement is deeply connected to the financial realities of the 2000s and 2010s (and what will come next, too), but it is also evident that ambition, obligation, and social impulses are at play.

Roots of the new "non-retiree"
In some categories, only 4% of the polled retirees said they felt financially prepared for post-work years. In the best-case categories, only about half said they felt prepared. And when it comes to retirement income, 28% of retirees said they needed the wages from post-retirement jobs to pay their ongoing bills.

Of course, these are people who were acutely affected by the 2007-2009 recession. A study published by the National Poverty Center tells us that between 2007 and 2013, older workers saw essentially no returns on their equity investments -- a sector in which prices fell 50% during the peak of the downturn. The value of 401(k)s and IRAs plummeted by $2.8 trillion overall. Declining interest rates cut into the potential retirement income of investors as well: The average total wealth of early baby boomer households decreased by 2.8% from 2006 to 2010.

Based on the NPC's estimate that household wealth would have increased 5.4% in a non-recessionary environment, the difference in these soon-to-retire investors' finances amounted to some 8.2 percentage points never realized.

Although it seems obvious that retirees and near-retirees continue working for financial reasons, there are other factors at play as well.

"Retire-preneurship" and retiree motivations
In some cases, aging workers' shifting retirement plans come down to their personal motivations; it's not always about the cash they need to fund post-work years. For example:

  • Four out of five retirees still see themselves as being at the top of their game in terms of professional acumen. These individuals seek a kind of retire-preneurship.
  • A third of retirees find work that allows them to give back to a community or contribute to a cause-oriented project.
  • And 24% seek the continued interpersonal contact that comes with a workplace.

Sea change: Thinking about the future
What we can say for certain is that the traditional concept of "save, invest, retire, withdraw" is undergoing a transformation. Many retirees either need or want to return to work after a break in their career paths.

When they do, some 58% of them take on work that's different from what they did throughout their careers. And Merill Lynch estimates that by the time millennials retire, they will rely on employment for some 26% of their income -- as opposed to 5% for the "Silent Generation" and 17% for baby boomers.

That might not be enough to significantly alter the way we approach asset portfolios, but for future generations who keep working past age 65-67, it will almost certainly have an impact on early stage income needs, as well as their financial choices during their 40s and 50s -- typically a period of intense investment.

Retirement planning paradigms will shift if more workers are preparing for a second career instead of outright dependency on savings and returns. And if the second career comes with benefits? Then post-retirement workers stand to augment health care costs to boot. This could mean changes in the assisted-living and elderly housing sectors, with working retirees commanding greater resources to pay for their homes and medical expenses.

The numbers suggest a sea change is under way. We're often no longer really retiring, in the traditional sense, even if we still think we are. And we may well find retirees moving further along this path, redefining post-career work -- and its consequences -- in the decade to come.

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