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How Working Longer Pays Off for Retirees

Christine Benz

Christine Benz: Hi, I'm Christine Benz for Can retirees improve their standard of living by working longer or working part time? Here to explore that question with me is Mark Miller. Mark is a retirement specialist and also the author of "The Hard Times Guide to Retirement Security." Mark, congratulations on the book, and thanks so much for being here.

Mark Miller: Thank you. Thanks for the invitation to come in.

Benz: Now, Mark, your book is very holistic, and that's one reason I really like it. You talk about all aspects of retirement planning, including the fact that for a lot of today's retirees, working longer or continuing to work in some capacity is going to be part of the formula that they use. Talk about the benefits of retirees working longer and how that can help improve their standard of living.

Miller: Christine, it sounds like a contradiction terms, right? Retirement and keep working. I hear a lot from readers who say, "Oh, with this recession I'll never be able to retire. I'll have to work until the end." The perspective I have in the book is that's not the case. When we talk about working longer, we're not talking about working forever for most people. There's a lot of evidence suggesting that extending your working life, even a handful of years, can be really, really beneficial financially.

Then it also has some great benefits in terms of health, and state of mind, and all kinds of emotional well being. But just to focus on the money side, there are really several things to think about. One is Social Security.

As probably most of our listeners know, you can file for Social Security when you turn 62. That's the initial age that you are eligible. But the full retirement age for most people coming up to retirement now is about 66. The way that Social Security is structured, you get much more in annual benefits if you wait until your full retirement age.

If you have a reasonable expectation of living long, that increase in the amount that you take home annually will really boost your retirement security over the long haul. When I use the term retirement security, that's how I'm defining it. I'm thinking about it not this year or next, but over a life that might go on another 20, 25 years in retirement.

There's a lot of evidence to suggest that with rising longevity, many of us will be fortunate enough to live long, so you have to be thinking about how do you ensure income over that long haul, so Social Security's a big piece of it.

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A second important part is that every year you're working is a year you can continue to contribute to a retirement account and you're not drawing down from that account. Those three things together are the triple whammy effect that can really produce dramatic increases once you do enter retirement and the amount of money you'll have coming in every year.

It's a very powerful way to catch up, restore some sense of retirement security for people who have taken big hits in the market. That's actually one last point worth mentioning is that the longer you wait to take money out of a retirement account, that's more time that it sits in it and has a chance to grow and recover.

Benz: You've got some great illustrations in the book about what deferring Social Security can mean to, say, a couple who's thinking about retiring at 62 versus waiting a few years. It's very impactful.

Miller: It's really big. You're talking about increases in Social Security benefits on the order of 20, 25 percent. Then when you factor in these other pieces with retirement investing and saving, the increases are even more dramatic, upwards of 40 percent in some cases. So it's very powerful.

Benz: Let's discuss some of the challenges, though, for people who want to stay in the workforce. There are obviously some compelling reasons why you'd want to do it, but what are the drawbacks and what are the real challenges for people who are trying to stay in?

Miller: The interesting thing is that even before the economy crashed in '08, every survey that I ever saw of Boomers suggested that many Baby Boomers really didn't intend to do traditional retirement anyway. That's why I call my website Retirement Revised. It's this idea of rethinking the notion of traditional retirement. Three quarters of Boomers, when asked, would say "I don't really plan to retire," but it didn't necessarily mean they intended to keep doing what they had been doing, going along in one role that they'd been with in one company for a long time. It's more launching second careers, branching out, trying something different. It could be part time work; part time work can qualify as well.

The challenges, of course, are we're in a really rough economy in terms of employment. There's a lot of age discrimination in the workplace, not only in terms of getting in the door for an interview can be really tough when you're over 50. There's evidence quantifying that. I think it's true that there's age discrimination in terms of the retention side of employment, too.

The corporate environment is not friendly to older workers, I'll just state that flatly. It's not to say that there's no opportunity to do it, but I think the odds are less.

One of the big mistakes people make when they're looking for work in their 50s, particularly in this kind of economy, is the idea of "I'm going to get a job that's just like the one I had."

The odds are actually fairly low for most people 50 and up that they're going to just go out and replicate the job that they had. It's looking at changing and finding a new role, a new kind of work to do.

Benz: You've got some concrete pointers on not just that, but on interviewing and specific job hunting tips, so a lot of helpful stuff there in the book.

Miller: While I just got finished pointing my finger at employers with the issue of age discrimination, I think older job candidates are at fault too of some things. Often, number one, overplaying experience. Now this sounds like an odd thing to say when experience is important for any candidate hunting for a job. But experience can play in an interview, especially if you're interviewing with somebody a couple decades younger than you, as arrogance, kind of an "I know it all."

I describe in the book the consultative interview, trying to go into a job interview, listening to what the needs of the employer are, and then trying to match up what your skills are that are relevant to what the challenges are that the prospective employer has, rather than just going in and going on about all your great experience. It can really be a turn off.

Another big issue is technological readiness. A lot of us think we're on top of technology, but say if you worked in one kind of environment in your previous work, and maybe it's an environment that uses technology that's not the most cutting edge.

You may think you're on top of things because you know a version of Windows that's two versions ago, and you know Microsoft Office. But do you know social media? Do you know Twitter? Do you know cloud computing? Do you know mobile computing?

Do an honest assessment of yourself, in terms of whether you are really ready for the workplace of today, and if not, get some upgrading going on in terms of your skills. Maybe even find a younger person who could do reverse mentoring to bring you up to speed. There are some things that people can do to make themselves a good candidate.

Benz: Thank you, Mark. Those are a lot of helpful tips, and certainly there are a lot more in your book. We appreciate you sharing them with us.

Miller: Thanks, Christine.

Benz: Thanks for watching. I'm Christine Benz for