40 min. podcast

Help clients unravel their great unretirement

The world of work continues to evolve and some retirees who are concerned about rising inflation and volatile markets – or simply want to find a greater sense of purpose — are unretiring and returning to work. 

Workplace futurist Kerry Hannon talked with Mary Beth Franklin on the InvestmentNews podcast, Retirement Repair Shop, about what’s driving retirees back to the workforce and how you can help your clients navigate these uncertain times.

Gain more insight from this conversation about changing roles, financial impacts and emerging opportunities.

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No matter how well planned, even the most visible retirement doesn’t always stick. Michael Jordan. George Foreman. Cher. Even Elton John announced his retirement – in 1977.  While your clients who return to the workforce may not stay for 52 years and well over 4,000 shows, the rising trend to unretire may be a good opener for a conversation about how they’d like to spend their time later in life. 

What’s behind the trend?

The Social Security Act of 1935 set a standard of retiring at age 65 at a time when life expectancy for men was 58 years and 62 years for women. The average 65-year-old man today can expect to live to age 83 and women can expect to live to 86. As not just longevity but general good health improves for many, “the idea of building savings (to last) 30 years is crazy,” says Kerry Hannon, workplace futurist and author of 14 books on the subject. “Many are returning to work to have something to do, have somewhere to socialize, and an option to regain a sense of usefulness.”

Current market challenges such as inflation and market volatility are other reasons retirees return to earning an income. Retirees on a fixed income are finding budgets stretched due to inflation. Other clients may be finding they aren’t comfortable spending funds within the current state of market volatility.

Other trends that exploded during the pandemic are further impacting retirees’ choices. “Remote work is here to stay,” says Kerry Hannon. “Prior to 2020, working remotely was considered a privilege. Now it’s an option that makes it easier for people to work from anywhere, anytime.” Without long commutes, some retirees find it easier to stay employed as lower stress and less physical toll makes it easier to manage health issues. 

Critical decisions to consider

Whatever decisions your clients are considering around retirement, you play a critical role in helping determine an appropriate Social Security payout strategy. Deciding to take Social Security payments before Full Retirement Age (either age 66 or 67 depending on when you’re born) has significant impact. Taking benefits as early as 62 may make sense, but there are earning limits if someone decides to return to work. While Social Security offers options to reverse the decision, those options often mean paying back funds that have been received. This could result in a large single payback amount or an accounting hassle that lasts for a few years. 

Clients considering taking Social Security at age 62 need to understand there is a permanent reduction in benefits when claimed before the Full Retirement Age. Conversely, delaying benefits as late as age 70 can increase monthly benefits by 8% per year of delay. If someone with a Full Retirement Age of 66 waits four years to claim Social Security, the benefit amount will be 32% higher at age 70 than it would be at age 66.

Preparing for the conversation

It’s never too early to ask clients about their goals, what’s affecting their decisions and what having more in retirement looks like to them. “Ask about their dreams. Then ask about what retirement income is required to make the dream possible,” says Karry Hannon. “Help clients not just see their vision, but really own it.  Don’t limit the conversation to how they’ll earn income but talk about how they want to make an impact.”

With your guidance, clients can build a strong financial plan for retirement – or unretirement – as life changes. “A financial plan opens doors to what you want out of life,” says Hannan. “Working in tandem with a financial professional is key to making dreams come true.”

This information is brought to you by Athene – where innovative annuity solutions are powered by unconventional thinking.