Work after Retirement from Career Jobs Robert L. Clark, Robert G. Hammond, Melinda Sandler Morrill, Aditi Pathak Department of Economics Poole College of Management North Carolina State University

Need to Work Longer and Quotes from Our Host Increasing life expectancy is placing a strain on the ability of individuals, firms, and governments to finance desired standards of living in retirement. The basic economic problem is that “we have a couple attempting to finance at least a 30-year retirement with a 40-year career. It won’t work” 2

Need to Work Longer and Quotes from Our Host “The attempt to do the impossible (financing 30-year retirements with 40-year careers), is an important factor in the current economic strains being felt everywhere from the countries of Europe to cities of California and the midwest. ” Therefore, one of the most important policy needs is to adjust “economic institutions to dramatically longer lifetimes” 3

Leadership of Sloan Foundation The Sloan Foundation is shaping economic research on working longer and paths to retirement. “Americans are working later in life, delaying retirement for a variety of reasons. While some continue working by choice, others need to remain in the workforce for financial reasons.” 4

Leadership of Sloan Foundation Need for new research with a different focus: “relatively little is known about employment patterns, obstacles to employment, or the ensuing economic impact.” 5

Older men and women are working longer as life expectancy rises Labor force participation rates of older workers are rising But this does not necessarily mean that workers are retiring later from their career jobs 6 Working Longer

7 Labor Force Participation rates of older individuals are rising: Men %60.5% 65 and older16.1%23.6% Women %50.4% 65 and older 8.3%14.4% Working Longer

Public Employees Many public employees retire from their career job in their 50s So modifying John’s statement for public workers, public employees are trying to finance a 40 year retirement with 30 years of working Unless they follow another path into retirement! 8

Current Research Project Examine the worklife transitions of public employees and illustrate their paths to permanent withdrawal from the LF Three year grant from Sloan Foundation Activities include three surveys of older workers and retirees Surveys linked to administrative records Informational nudges 9

Transiting into Retirement: Public Sector Workers 10 Public sector workers tend to: *have lower turnover and longer career *be covered by defined benefit plans *be included in retiree health plans Are public employees more likely to extend their worklife by seeking new jobs after retirement?

Retirement from Career Job Many public pension plans allow individuals to retire with unreduced benefits in their 50s/60s after 25 or 30 years of work Previous studies have shown that younger retirees are more likely to seek re-employment after retirement Relatively generous pension and retiree health benefits allow career retirees to consider a wide range of post-retirement employment options 11

Retirement is a process not an event Individuals can consider a range of employment possibilities after retiring from a career job – Phased retirement – Return to same employer after a break in service Work part-time or full-time – Seek employment with new firms Bridge jobs Self-employment – Leave labor force and then re-enter LF 12

Early or Normal Retirement: Terminate employment, initiate benefits Career employment Same Employer, Break in Service, Full/Part-Time Return-to-work Different Employer / Self-Employment, Full/Part-Time Bridge Job No paid work (Leisure, Caregiving, Convalescence) Quasi-Retirement Permanent withdrawal from the labor force Same Employer, No Break in Service Phased Retirement

Public Employees in North Carolina Our analysis is based on two surveys: – Survey of older workers – Survey of recent retirees Both surveys are merged with administrative records provided by the North Carolina Retirement System 14

Older Workers in North Carolina Survey was sent to employees aged who were working full-time in 2014 Respondents included teachers and state employees along with local government employees Teachers and state employees in one pension plan, local employees in a separate but similar plan Teachers and state employees included in the state health plan in retirement, some local governments provide retiree health insurance to their retirees 15

Older Workers 71% female, reflecting the usual gender distribution of state and local employees Mostly married and mostly white reflecting the population of the state Relatively highly educated sample with one third having advanced degrees Average annual salary of $56,000 39% are school employees and 39% are state employees 16

Retirement Expectations 17 Age at Survey and Above Percent Percent of respondents

Work after Retirement Plans 18 Do Not Plan to Work After Retirement Plan to Work After Retirement Expected Retirement Age Full-timePart-time Percent and above Percent of Respondents

Why Retirees Do not Plan on Working 19 Expected Retirement Age No Need to Work Poor Health No Longer Working Will Not Be Able to Find Work Other Percent and above Percent of all respondents

Table 5 Retirement Expectation of Workers 20 Expected Retirement Age Expect to Return to Work Age at survey0.493*** (0.020) Expected retirement age *** (0.004) Male0.705***0.083*** (0.200)(0.030) Married (0.637)(0.095) Black (0.282)(0.042) Other race (0.519)(0.078) Less than Bachelor’s degree * (0.242)(0.036) Master’s degree (0.234)(0.035) Professional degree ** (0.416)(0.062) Self-reported health good (0.388)(0.058)

21 Expected Retirement Age Expect to Return to Work Married*Spouse relative age-0.002**0.000 (0.001)(0.000) Married* Spouse health good * (0.271)(0.041) Married*Spouse currently working ** (0.217)(0.032) Table 5 Retirement Expectation of Workers

22 Expected Retirement Age Expect to Return to Work LGERS (0.244)(0.037) K-12 teacher/administrator-1.039***0.006 (0.245)(0.037) Police/ Firefighter-2.818***0.027 (0.585)(0.088) University/College faculty0.683** (0.287)(0.043) Annual Salary (10K) (0.045)(0.007) Tenure-0.213***0.002 (0.010)(0.002) High financial knowledge-0.352* (0.181)(0.027) Table 5 Retirement Expectation of Workers

Retirement Plans: Key Findings 1.About 2/3 of employees in their 50s expect to by age 62 a.teachers, police and fire anticipate retiring at younger ages than general public employees b.men expect to retire later c.individuals with more years of tenure anticipate an earlier retirement d.employees with greater self-reported financial knowledge expect to retire earlier 23

Retirement Plans: Key Findings 2. Almost 75% of older workers expect to work after retiring from public employment a. younger retirees and men are more likely to plan to work after retirement b. spouse in good health, less likely to plan on working in retirement c. spouse working, more likely to plan on working in retirement d. employees with higher levels of education more likely to plan on working in retirement 24

Retirees from State and Local Jobs in North Carolina Survey sent to half of all retirees with address, about 30,000 individuals Survey sent to individuals who retired between January 1, 2009 and December 31, 2014 Retiree sample similar to worker sample: – 68% female, 71% married,85% white, almost 40% with advanced degrees, over 40% former school employees Retiree characteristics: – 69% currently working, average retirement benefit of $27,000 25

Retirees from State and Local Jobs in North Carolina 26 Not Currently Working Retirees Are Currently Working Age at Retirement from Public Employment Same State or Local Government Other State or Local Government Private Sector Percent Less than and above Percent of Respondents

Expectations for Returning to Work: Individuals not Currently Working 27 UnlikelyLikelyUndecided Age at retirement Percent Less than and above Percent of Respondents

28 Currently Working: Full Sample Working in the Public Sector: Only Workers Age-0.023***0.003 (0.002)(0.003) Male0.107***-0.082** (0.016)(0.033) Married-0.101** (0.050)(0.093) Black (0.024)(0.052) Other race (0.049)(0.099) Less than Bachelor’s degree-0.265**0.637 (0.125)(0.495) Master’s degree-0.036** (0.018)(0.038) Professional degree * (0.017)(0.035) Self-reported health good0.106***-0.138** (0.031)(0.059) Work Status of Retirees

Currently Working: Full Sample Working in the Public Sector: Only Workers Annual benefit amount(10K) *** (0.004)(0.008) Retirement account balances >250K-0.047*** (0.016)(0.035) High Financial knowledge (0.014)(0.029) Receiving LGERS benefit *** (0.019)(0.040) Married*Spouse relative age (0.002)(0.003) Married*Spouse health good-0.073***0.034 (0.020)(0.043) Married*Spouse currently working0.152*** (0.015)(0.032) 1-2 children (0.018)(0.036) 3 or more children0.044***0.089** (0.017)(0.035) Caregiving-0.038*** (0.014)(0.029) 29 Work Status of Retirees

30 Plan to Re-enter LF Age-0.017*** (0.002) Male0.056*** (0.018) Married (0.057) Black0.118*** (0.026) Other race0.008 (0.053) Less than Bachelor’s degree (0.117) Master’s degree (0.019) Professional degree0.031* (0.019) Self-reported health good0.111*** (0.035) Planning to Return to Work

Plan to Re-enter LF Annual benefit amount(10K) (0.021) Retirement account balances >250K (0.004) High Financial knowledge *** (0.017) Receiving LGERS benefit *** (0.015) Married*Spouse relative age (0.002) Married*Spouse health good *** (0.021) Married*Spouse currently working 0.093*** (0.017) 1-2 children (0.019) 3 or more children (0.018) Caregiving 0.027* (0.015) 31 Planning to Return to Work

Employment by Retirees: Key Findings 1.About 30% of retirees are currently working; half of these returned to work in the public sector a. older and married retirees less likely to be working b. respondent in good health are more likely to be working 32

Employment by Retirees: Key Findings c. retirees with spouse in good health less likely to be working; if spouse is working, respondent more likely to be employed d. more children and greater hours of caregiving lowers likelihood of working 33

Employment by Retirees: Key Findings e. Men, individuals with higher levels of education, and those in good health are less likely to return to work in the public sector 34

Employment by Retirees: Key Findings 2. Among those currently not working, 21% think it is likely that they will return to the LF and another 17% are uncertain of their future plans a. men and respondents in good health are more likely to plan to re-enter the LF b. spouse’s health and work status along with caregiving influence plans to return to work 35

Further Analysis Soon a survey 3 that will follow workers from survey 1; sample will be refreshed with additional respondents Analysis of annuity choices of retiring workers Further examination of retirement process using survey data and administrative records 36