Predicting end-of-career transitions for baby boomers nearing retirement age.

Author:Boveda, Ingrid
Position::Merrill Lynch & Company Inc. - Statistical table

Retirement has traditionally been conceptualized as a point-in-time decision to physically and psychologically withdraw from the workforce on reaching a certain age. However, the expectations of older workers demonstrate a new retirement paradigm, with many more retirement trajectories. The purpose of this study was to examine actual career decisions being made by older workers and to understand sociodemographic factors that might differentiate their career trajectories. Data from the Health and Retirement Study (Juster & Suzman, 1995) were analyzed using multinomial logistic regression to compare 4 retirement trajectories (i.e., no retirement, full retirement, bridge employment, and encore career). Gender, age, education, marital status, health, and wealth differentially predicted the odds of pursuing each of the 4 retirement decisions. Career practitioners may use these results to help baby boomers make retirement decisions and provide them with appropriate education, guidance, and resources. Additional research is needed to examine other factors salient to each of the retirement trajectories.

Keywords: retirement, bridge employment, encore careers, baby boomers


The U.S. workforce is aging. It is estimated that by 2016 the number of employees between the ages of 55 and 64 years will increase by 36.5% (U.S. Bureau of Labor Statistics, 2008). The projected percentage increases in the labor force for employees ages 65-74 years and age 75 and older are even greater (83.4% and 84.3%, respectively). These estimates are in sharp contrast to the projected 2.4% increase in the labor force for employees ages 25-54 years and the projected 6.9% decline in workforce participation for employees ages 16-24 years. Although more older workers are remaining in the workforce or returning to the workforce, it should be noted that the overall labor force participation rate of those age 55 and older was 40.5% in 2012 compared with 80% of those 25-54 years old (Toossi, 2013). At the same time, the baby boom cohort (76 million people born between 1946 and 1964) has only just begun to move into the older workforce age brackets. Given this movement, there will no doubt be more people age 55 years and older working, yet also more people age 55 years and older making retirement decisions. In fact, the U.S. Bureau of Labor Statistics projected that between 2012 and 2022, 3.9 million more workers will leave the workforce because of aging or retirement than left between 2002 and 2012 (Toossi, 2013). Retirement, however, is no longer a dichotomous decision; older workers have multiple employment trajectories. The purpose of the present study was to understand the types of retirement decisions older workers are making and the sociodemographic variables that may predict who makes what decision.

The Aging Workforce: Social and Economic Impact

Understanding the career trajectories of older workers and specifically those of the baby boom generation is important because this segment of the population has, and will continue to have, a significant impact on the economy. When the baby boomers were at the peak of their working lives, the U.S. labor force participation rate hit a record high with corollary increases in home ownership and consumer spending (Casselman, 2014). There has been concern that when this large segment of the population leaves the workforce, there will be severe worker shortages (U.S. Chamber of Commerce, 2006, p. 13) and plummeting national productivity. A reduction in the labor force also means that there will be fewer people contributing to the economy and generating tax revenue to fund government programs such as Social Security. A healthy Social Security program is imperative to the well-being of society. The Social Security Administration provides monthly benefits to one in six U.S. residents, including retirees, people with disabilities, widows and widowers, and children (AARP, 2014). Social Security is received by 92% of those age 65 years and older and keeps 14.4 million retirees out of poverty (AARP, 2014). Economic forecasters have predicted that future taxes will fall short of benefit payments and that the Social Security Trust Fund will dry up by 2033 (Vernon, 2013). Dependency ratios may demonstrate the potential burden of a large number of baby boomers exiting the workforce. The old-age dependency ratio (i.e., the number of adults older than age 65 years divided by the number of adults between ages 18 and 64 years multiplied by 100) has fluctuated only from 17 to 21 in the past 50 years but is projected to rise to 36 by 2050 (Ortman, Velkoff, & Hogan, 2014). Thus, there are overarching social and economic reasons to explore retirement career trajectories and use this knowledge to inform labor force projections, retirement systems, and public policy. Understanding career trajectories of the baby boom generation and the factors affecting their decisions may also aid career practitioners, employers, financial planners, and academic advisers as they help baby boomers determine their future and provide appropriate guidance and resources.

Retirement Career Trajectories

For many people, retirement is no longer a dichotomous decision made at a single point in time; multiple retirement career trajectories exist. For example, in a large national survey of working adults, 50% said that they intended to retire by age 61 but planned to continue to work in some capacity for an average of 9 years into retirement (Merrill Lynch, 2006). Asked about their ideal work arrangements in retirement, most respondents indicated that they would like to cycle between periods of work and leisure (42%), followed by working part time (16%), starting their own business (13%), and working full time (6%). Two thirds of those who expected to work after retirement said that they would like to change their line of work. Of the survey respondents who wanted to pursue a different line of work, 60% of those ages 51-70 years had already begun to prepare by talking to others, researching specific opportunities, attending classes or training sessions, and even obtaining a degree or certificate (Merrill Lynch, 2006). Although older workers have begun to redefine retirement, employers may not be ready for this paradigm shift. A separate national survey of employers demonstrated that almost one third of employers have not considered the impact of baby boomers leaving the workforce or wanting to return on different terms (Merrill Lynch, 2006). Merrill Lynch (2006) considered these results a wake-up call for individuals and employers and suggested that individuals thinking about retirement do so early, often, and in proactive ways: "Individuals may become the catalyst for changes in benefit and personnel policies by selling their retirement career ideas to their current and prospective employers" (p. 10). It is clear that multiple retirement trajectories exist for the baby boom generation.


In some cases, older workers may choose to continue working in their current job past the age at which their predecessors once retired. Since 2002, the average age of actual (not expected) retirement has risen from 59 to 62 (Riffkin, 2014). This choice could be driven by many social and economic factors. For example, average life expectancy estimates are now 76.3 for men and 81.1 for women (Hoyert & Xu, 2012). Financial losses incurred during the recent recession and concerns related to not having enough money to live comfortably in retirement have caused some older workers to remain working (Ensinger, 2010). Also, some older workers may have no choice but to remain employed because the full-benefit retirement age for Social Security has gradually increased. Traditionally, workers could collect full benefits at age 65. For workers born between 1943 and 1954, the full-benefit age is now 66; it will rise to 67 for workers born after 1960 (Social Security Administration, n.d.).


Another career trajectory, retirement, is much more complicated. The term retirement has been used to refer to a person's "withdrawal from an organizational position or career path of considerable duration ... taken with the intention of reduced psychological commitment to work thereafter" (Feldman, 1994, p. 287). Although this definition might fit for some older workers, it fails to account for the 14.3 million older workers who intend to pursue work after retirement (Bass, 2005) or those who feel forced to retire early as a result of downsizing, early buyouts, or company closings. Harper and Shoffner (2004) referred to retirement as the act of older workers leaving employment that they had held for a significant period of time and receiving some sort of due retirement benefit. Similarly, van Solinge and Henkens (2008) defined retirement as "having ended one's career job and receiving a pension (or other retirement package) from one's former employer" (p. 423). These definitions also fit for some older workers, but they do not seem to capture the 64% of workers who look forward to a phased retirement in which they will shift from full-time employment to part-time employment (Powell, 2014). The intentions of these older workers speak to retirement as a process and not just as one decision with one result made at one particular point in time.

Bridge Employment

The term bridge employment has been used to describe transitional work that occurs between full-time employment in a career and complete labor force withdrawal (Wang, Zhan, Liu, & Schultz, 2008). Bridge employment can take many forms (e.g., part time, temporary, seasonal) but is typically of a shorter duration (Feldman, 1994). Bridge employment provides retirees with...

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