Downturns Fuel Bridge Jobs, Retirement

Posted Wednesday, April 30th, 2014| Comments (2) rule
The following is reprinted with permission from Squared Away Blog.
Kimberly Blanton
Boston College Center for Retirement Research


Older workers may have every intention of deciding when they’ll retire, but economic conditions can undermine their well-laid plans.

A new study investigating whether macroeconomic events “leave workers with less control over their retirement timing” found that various transitions from career jobs into retirement sharply accelerated during periods when more Americans, including more older workers, were losing their jobs.

The researchers analyzed whether periods of rising unemployment over the past 50 years have affected three specific retirement transitions made by older workers: 1) from full-time work to “bridge jobs,” which pay less; 2) from bridge jobs to full retirement; and 3) from full-time work to full retirement.

These transitions were tracked based on changes in individuals’ employment earnings documented in U.S. Social Security Administration data from 1960 through 2010. An individual was considered to have shifted to a bridge job after he experienced at least a 50 percent decline in his earnings with an existing or new employer – the earnings floor on this group was $5,000 per year. When earnings fell below $5,000, the worker was considered fully retired.

The researchers said that they focused on white men between the ages of 55 and 75, because their labor force participation patterns were more stable during the period studied than those of women and minorities.

They found that a 1-percentage-point rise in the U.S. unemployment rate increased the number of men moving each year from full-time work to bridge jobs by 7 percent.

Rising unemployment also pushed more men into full retirement. A 1-percentage-point rise in the unemployment rate increased the number of men who retired – either from full-time work or from a bridge job – by 5 percent each.

When they investigated whether the retirement timing of high-income Americans might be less vulnerable to economic conditions, they found very little difference among various groups on the income ladder.

Even when individuals carefully prepare for their retirement, a downturn can quickly disrupt their plans.


Full disclosure: The research cited in this post was funded by a grant from the U.S. Social Security Administration (SSA) through the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the blog’s author and do not represent the opinions or policy of SSA or any agency of the federal government.

2 responses to “Downturns Fuel Bridge Jobs, Retirement”

  1. Sry says:

    This is one of those pieces of lesaolitign that will have a far reaching impact on society (some good some bad) for a long time. The impact is going to be cumulative over the years. In the next 12 months you will have some of those people who were due to retire this year staying in employment. In reality, I suspect, many will have already made their retirement plans so most will still retire when expected. As time goes by a larger percentage of people reaching the current retirement age will decide to stay on and of course the average age of post retirement age’ employees will increase. In a year’s time you will have men aged 66 still working, but in 5 years time you will have some men of 70 still not wanting to retire. It is at this stage that the things will start to bite. There will be more cases of older employees wanting to continue to work but in some cases not up to the job they were doing a decade before. On the plus side so many businesses lose ingrained knowledge by way of compulsory retirement and ways in which the value of those older employees can be tapped and appreciated will be a challenge for industry. From the employees point of view many will welcome the ability to continue to earn into later life. Such earnings can be both a need (with pension provision in crisis) and a welcome opportunity to spend that additional money which boosts the economy. Lets not forget that disposable income tends to increase with age as things like mortgages get paid off or at lest are less of a burden then when starting out. So, interesting time ahead which always brings plenty of opportunities for those with an open mind.

  2. Dawid says:

    Guys & gals,From my observations here, you cnoant simply plan your retirement funds with just a fixed amount like $2000 per month, and then sitting on it. Your retirement funds must allow that $2000 per month to increase with inflation e.g. if inflation is 3% over the next 12 months, then starting in Jan 2011 you will need to draw $2060 per month, and so on.Neither can you be so conservative or gung-ho (I don’t know what is the right word) to say that you will accumulate sufficient retirement funds to give you $4000 per month (IN TODAY’S DOLLARS), even though you need only $2000 (IN TODAY’S DOLLARS), just becoz to cater for future inflation. Coz this means you need to over-save in order to double the size of your retirement funding.Most people already have trouble saving 300 X (monthly expenses). You want to accumulate 600 X (monthly expenses)? The trick is to be able to structure your retirement funds to provide income and also with good chance of capital appreciation to allow inflation increments.Please take note that all the talking we’ve done so far about needing $XXXX for retirement is in TODAY’s dollars i.e. as if you are retiring NOW. If your projected retirement is 20 yrs later and you calculate you are spending $2000 per month NOW (minus away the mortgage), then in 20 yrs time assuming average 3% inflation, you will be needing $3612 per month — and this is just in the FIRST YEAR. Next year you need to increase upwards for inflation (just like pay increment).Go and ask any insurance agent or financial consultant how to tackle the above. They will tell you invest in ILPs, hot UTs, endowments, even wholelife insurance. Ha ha.