Does Late Career Nontraditional Work Improve Retirement Security?

Policymakers and the media have expressed concern that nontraditional jobs lack stability and financial security. Indeed, having a nontraditional job Ð defined here as a job without employer health and retirement benefits Ð during the prime saving years of ages 50-61 is associated with less retirement security. But nontraditional jobs need not be Òbad jobsÓ for all workers. Compared to traditional work, they may be a better fit for those in their 60s looking to prolong their careers by offering less stress and more flexibility. This brief, based on a recent study, examines how workers use nontraditional jobs after age 62, relying on data from the Health and Retirement Study linked to administrative earnings. It explores two questions. First, are workers in their early 60s who are underprepared for retirement more likely to use nontraditional jobs? Second, are such jobs a useful alternative to traditional work for those seeking to enhance their retirement security? The discussion proceeds as follows. The first section introduces the data and the sample. The second section describes the analytic approach, which follows three groups of workers with different employment patterns in their 60s. The third section compares the retirement security of these three groups at ages 61-62 and examines the changes they experience in retirement security by ages 67-68. The final section concludes that the workers who start out less prepared for retirement are not more likely to switch to nontraditional work in their mid-60s. But underprepared workers who do switch improve their retirement security as much as those who stay in traditional work. These results suggest that extended careers are financially beneficial, even in jobs without health and retirement benefits.