When I tell people, particularly older people, that I’m a freelance journalist, I can tell by the look on their face that many are thinking the same thing, though few are bold enough to say it: “What about retirement?”
I have to admit that question used to give me a lot of anxiety. The reality is that I don’t have a retirement plan, no 401(k), pension plan, or employer-matched contributions. But I’ve come to the conclusion that I don’t care—or at least I don’t need to.
Since the term “retirement” was popularized in the U.S. in the mid-1800s, it’s become part of a trade-off that most now accept as the natural progression of life. If you work your butt off for 50 years or so, you should have enough money to never work again by the time you reach old age.
Work is no longer a race to the finish line
But there are a few problems with that proposition, at least from the perspective of a millennial freelance writer. Firstly, like many of my generation, I love what I do, and I could never imagine not doing it. I don’t believe that I’ll be working 40 hours per week when I’m 70 years old, but I definitely don’t intend to work zero.
And I’m not alone. Most millennials don’t consider their work a painful and difficult race to the finish line the way their parents and grandparents did, often choosing meaning and passion over a larger paycheck when making career decisions.
In recent years the workplace has also become a much more human-centric and desirable place to be, with greater flexibility and work-life integration. While I’m sure many of my generation are still eagerly anticipating the day when they can cease working once and for all, I imagine there are also many like myself who aren’t salivating at the thought of retirement.
Work has become fluid
Finding work well into old age, however, wasn’t always an option, as employers weren’t always keen to hire those nearing or past retirement age. Today, however, freelancing has enabled anyone with marketable skills an opportunity to earn an income, regardless of age.
When I began freelancing in 2013 I had to learn how to run a business, where to find customers, how to manage my books, and how to remain compliant with all relevant tax laws. Over the past seven years, however, I’ve seen an explosion in tools and technologies that have made what were once the most difficult and undesirable parts of running a freelance business almost entirely irrelevant.
There is now a range of digital services that can manage a freelancer’s books, connect them with customers, organize their tax filings, and ensure that the only thing they need to know how to do is the thing they’ve been trained to do. As a result, just about anyone can sell their talents on the open market, and it turns out today’s retirees are among the biggest cohorts taking advantage of that opportunity.
Today’s retirees are already redefining retirement
The concept of working past the point of financial necessity may seem foreign to some, but it’s already a proven trend amongst today’s retirees, who are increasingly keeping one foot in the job market after the age of 65. Roughly 20% of Americans over the age of 65 are either working or looking for work, according to a study by United Income, more than double the proportion recorded in 1985, and not because they need the money.
According to freelance marketplace Upwork’s annual Freelancing in America study, the older you are the more likely you are to be working out of personal choice rather than financial necessity.
“For all those who are aged 55 and up, 62% do it more by choice than necessity; for those who are age 65 plus, 73% do it by choice,” says Shoshana Deutschkron, vice president of communications at Upwork. Deutschkron adds that of the 57 million Americans who freelanced in the past year, roughly 20% are over the age of 65. “A big part of work is self-actualization and fulfillment. It gives you purpose, and I think a lot of people still want that later in their life,” she says.
Older workers have a lot to offer
Just as retirees are choosing to participate in the labor force longer, Deutschkron explains that employers are more open to hiring older workers on a freelance or contract basis. “Older professionals have been through more experiences, they get that pattern recognition, and they therefore have more value to offer to their clients who need to know what has happened in the past in order to navigate through today’s challenges,” she says.
Following this trend 20, 30, or 40 years into the future, one can imagine how the lines between working life and retirement life will only continue to blur, and perhaps even disappear entirely.
“I think that the future of ‘retirement’ is that traditional retirement will no longer be as desirable, because people are able to find work they’re passionate about, and continue to do it as long as they want to much more effectively,” says Deutschkron.
Headwinds and tailwinds
When it comes to the millennial retirement question, my generation has a lot of advantages over its predecessors, as well as a lot of disadvantages. According to a recent paper published by researchers at Johns Hopkins University and the Brookings Institute, millennials enjoy higher levels of educational attainment, technological savvy, and more flexible working arrangements. Additionally, we will likely be able to work longer thanks to advances in healthcare.
On the other hand, a sharp drop in pension plans and employer-matched contributions have required them to take more responsibility for their own retirement savings, despite having more overall debt than any previous generation.
“They’re also coming of age during the 2008 recession,” says Jason Fichtner, a senior lecturer at Johns Hopkins’ Department of Economics and Finance and one of the paper’s authors. “It’s 10 years behind us, but people who got jobs afterward started at a lower salary than they would have had, and that’s going to potentially give them a level shift down in their level of income for the rest of their life.”
Fichtner breaks these various factors down into headwinds and tailwinds, adding that the overall picture doesn’t necessarily spell disaster for millennials, but it also doesn’t paint a very rosy picture.
“On the plus side they’re smarter, more innovative, more productive, will probably have better health, which will allow them to work longer. And that ability to work longer will allow them to save more for when they do retire,” he says. “But the downside is retirement won’t be at 65.”
The one-legged stool
While many millennials will have the luxury of choosing to work despite not needing the money, economists fear others will become the victim of looming retirement crises. The traditional “three-legged stool of retirement“—where the financial burden is shared between the individual, the employer, and the government—is looking a lot more wobbly, with individuals carrying a much greater share of the weight.
According to a recent study by Wells Fargo, 64% of retirees today are funding their retirement through Social Security, and 22% through a pension plan, with only 5% depending on a 401(k) and/or IRA. By comparison, only 13% of millennials expect to pay for their retirement with Social Security, and only 12% are relying on a pension plan, with another 45% expecting to fund retirement through a 401(k) or IRA.
“What this means is more and more there is a responsibility for the individual millennial to fund his or her retirement,” explains Fredrik Axsater, an executive vice president and head of the Institutional Client Group at Wells Fargo Asset Management, as well as one of the study’s authors. “The outlook in general is positive—roughly four out of five millennials expect retirement to be a positive new chapter in their life—but there are also a number of warning signs and concerns out there.”
Axsater agrees that millennials will likely participate in the workforce for longer, more often by choice than financial necessity, but he fears there are very few safety nets in place to catch them if they fall.
“I am hopeful it will work for the majority of people, but I also think there needs to be greater support for the ‘what if’ scenario,” he says. “That includes topics like what happens if you are no longer employed or cannot work for health reasons? What if your partner can’t work? Or if something happens with Social Security or the economy?”
Axsater explains that the more you have saved for retirement, the better prepared you will be for those worst-case scenarios, but building that savings is increasingly incumbent on the individual. He believes that millennials will be able to continue participating in the workforce for longer, and that there will be much less of a distinction between pre- and post-retirement life. But he still fears they’re not saving enough to safeguard against worst-case scenarios.
Personally, while I plan to continue to save as much as I can for old age, I feel no need to plan for retirement, as I don’t believe I’ll ever retire. That’s not because of changing economic conditions, government, and employment support (or lack thereof) or because of an inability to retire; I simply love what I do, and I have no interest in stopping just because I’ve reached a certain age.