One of the overlooked aspects of the retirement crisis is that retirement is an invention, one that has to be reinvented to suit new generations. What we think of as traditional retirement was codified in the 1930s when the Social Security Administration set normal retirement age at 65.
Today, we are living longer and are healthier than people in the 1930s. And while the retirement industry and government regulators are trying to build new structures that makes sense for today’s reality, millions of people approaching retirement age are responding by inventing a new phase in life, a transition period between their career and full retirement.
In his book, The Big Shift, Marc Freedman calls this transition period an encore career, a later-in-life second career that is often in a new field. He calls them a second act of life that delivers “passion, purpose and a paycheck.” In addition to personal satisfaction, encore careers can help improve an individual’s retirement finances by delaying the need to drawdown retirement savings – and even allowing more time to add to them.
We recently met with Marc for his insights into what he describes as a social movement.
How is an encore career different from what we currently think of as retirement?
In many ways, it’s the opposite of retirement. Rather than exiting the work force and going off into seclusion, people are re-engaging. They’re choosing a second act that draws on their interests, their accumulated skills. For many people, their Encore career turns out to be the career that they most want to be remembered for.
How widespread are encore careers?
We did a survey that found 9 million people were in encore careers, but 31 million more said it was a priority to move in the same direction. So when you bring those two numbers together, 40 million people are part of this movement.
Why is it happening now?
I think we’re catching up to reality. The old model really was that you were going to live to about 70 to 75. You left work at 65, and you got a well-deserved rest at the end. But you can’t stretch that model to lives that are lasting 85, 90 or 100 years.