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Coming out of retirement won’t be that easy to do

We hear a lot about how unprepared American workers are for retirement, but their bosses may be just as flat-footed.

Questioning about 1,000 U.S. companies and 5,111 adults this year, Harris Interactive found a gap between what employers think older workers want and what they actually do want in their second careers.

And those differences will affect how workers plan their financial lives after their first careers are over, experts said.

Financial advisers say early retirees often dream of a second career in a completely new field, for example, only to have those caviar dreams dashed by financial reality.

Steve Moode, 64, of Chicago retired two years ago from a corporate human resources position, but realized he still had plenty of energy to work. Some soul-searching and a few sessions with an outplacement firm sparked a few ideas for jumping into a completely new field. He considered starting over in advertising or food service.

"Then I realized I’d have to start at ground zero" in both salary and position in either of those ventures, Moode said. Instead, he leveraged his corporate experience and took a job as director of employee benefits at the University of Illinois Medical Center. The job is full-time, but is less demanding than his corporate career was, he said.


"I’m at a stage where I could stop working now and be comfortable, but I’ve still got a lot of energy," he said. He receives health insurance through his new employer and occasionally worries about whether he has accumulated enough wealth for the long haul if he steps out of the workforce for good.

Though staying within his professional comfort zone worked for Moode, employers in general have not responded to individuals’ "overwhelming desire" to pursue a different line of work in their second careers, according to the Harris study, which was performed for client Merrill Lynch.

In the survey, 71 percent of adults said the ideal retirement would be to work in some capacity. And two-thirds of adults who expect to do some type of work would prefer to try a new line of work, the study found.

But employers won’t necessarily be ready for the career shifting.

Of the companies surveyed, 84 percent expect their older workers will simply shift to part-time schedules after the traditional retirement age of 65, while just 17 percent of individuals who plan to work in retirement said that was their goal. A higher number–38 percent–said they preferred cycling between work and leisure in a more erratic pattern.

Of course, seniors may still face an uphill hiring battle for any type of work, despite all the talk about labor shortages as Baby Boomers age. A quarter of adults older than 60 who reported wanting to work said they had difficulty finding jobs. Among those having trouble, 80 percent believed their age was the reason.

Meanwhile, fewer than one-fourth of employers–24 percent–said they are on track in their preparations for the large number of Boomers reaching retirement age.

Along with the high number of people who say they want to change their line of work, employers are in danger of losing highly skilled professionals, the survey found.

Thirty-five percent of employers are concerned about a brain drain as their highly skilled workers age, but companies direct more resources to attracting younger talent than retaining older people, the study found.

Incremental change is beginning, said Cynthia Hayes, a vice president for Merrill Lynch’s retirement group, pointing to a rising number of employers offering high-deductible health savings accounts that can appeal to some older workers as they bridge the gap between early retirement and Medicare.

She also said more employers are offering investment advice inside their retirement plans to help workers cope with all the choices as they move away from traditional pensions.

Down the road, look for more employers to offer annuity products inside their retirement plans, said Paul Pasteris, senior vice president for New York Life Insurance Co.

"We think there will be an emergence of guaranteed products inside 401(k) plans," he said. Annuities with more flexible provisions–such as inflation protection and emergency cash-outs–are becoming popular among individuals, he said, so the workplace market isn’t far behind.

For Moode, a peace-of-mind step he took before leaping into retirement was to pay off his mortgage. But like a lot of his fellow retirees, Moode still has some doubts about how long his portfolio will carry him.

"I have friends who like that tax deduction, but I feel more comfortable having the mortgage paid off," said Moode, a former priest whose career took several different directions even before retirement. The low debt load now will allow him to take more career risks or even consider complete retirement, where he doesn’t work at all for pay, in a few years.

"I’m not a multimillionaire," Moode said. "I still get apprehensive and I worry if I’ll have enough, and that’s part of what keeps me working."