Kim Mills: What does retirement look like now? Forget the stereotype of a goodbye party in the break room, followed by endless days on the golf course or sitting in front of the TV. Instead of an abrupt and permanent exit from the workforce, today’s retirement often unfolds slowly over time, as people move in and out of post-retirement jobs. This shift, along with an aging population, is reflected in U.S. workforce demographics. Nearly one quarter of U.S. workers are older than 55, and the Bureau of Labor Statistics predicts that the number of workers older than 75 will almost double by 2030.
So what do these shifts mean for modern retirement? How has the rise of remote work and the gig economy changed the way people plan for and experience retirement? How does retirement and post-retirement work affect people’s mental, physical, and emotional health? If you are close to retirement yourself, what questions should you be asking to determine whether it’s the right time to cut the cord? And if retirement is still years away for you, what should you do now to set yourself up for a happy retirement in the future?
Welcome to Speaking of Psychology, the flagship podcast of the American Psychological Association that examines the links between psychological science and everyday life. I’m Kim Mills.
My guest today is Dr. Mo Wang, a university distinguished professor at the Warrington College of Business at the University of Florida. He is also the associate dean for research and strategic initiatives, chair of the management department and director of the Human Resource Research Center. Dr. Wang is an industrial-organizational and developmental psychologist whose work focuses on retirement as well as older worker employment. He was the editor of The Oxford Handbook of Retirement and is currently editor-in-chief of the journal Work, Aging and Retirement.
Dr. Wang, thank you for joining us today.
Mo Wang, PhD: Thank you very much for having me. I’m really glad to be here.
Mills: Well, let’s start by exploring the idea that I just mentioned in the introduction, which is that for many people, retirement is no longer an abrupt end to their working life, but more like a slow process of transition. There’s a term that you and other researchers use for that, which is bridge employment. How common is bridge employment these days and what does it look like for most people?
Wang: So bridge employment simply just means people, after they retire, they still are engaging in some paid activities, paid work activities. And it’s actually pretty common. So in the ’90s and the early 21st century, we see about half of the retirees during retirement, after they finished their career job, they would engage in bridge employment. And actually, before the pandemic, like 2016 to 2018, we see actually 2 out of the 3 retirees were engaged in bridge employment before they fully retire. And so the general trend is people actually taking more and more bridge employment opportunities over time.
However, pandemic actually made a big difference. So we see actually people who retired during the pandemic years, actually the bridge employment rate, so the coming back to the work kind of probability decreased a little bit. So that’s actually one of the reasons we’re experiencing labor force shortage right now. So if those people come back to the pre-pandemic bridge employment activities, then we would have more labor force participation in the whole population.
Mills: So has the rise of the gig economy made it easier for people to find post-retirement jobs? I mean, are more people leaving the corporate world to become Uber drivers? Or is this a case of people needing money? I mean, what are the factors that are at play?
Wang: So right now we don’t have a very systematic research about the gig economy’s impact on bridge employment. And there are some preliminary evidence showing that the gig economy does offer autonomy for older retirees if they want to come back to labor force participation because the gig economy allows people to actually choose when to work and allows people to have a lot of autonomy in terms like how to take the payment, and sometime you also bypass the tax situation.
So yeah, gig economy is generally considered to be easier for older workers or retirees to come back to the workforce. But a lot of times, people are not really working for the money. So especially when people retire and when they start to receive Social Security benefits, actually, pay may not be a very important issue. So a lot of time people want the social environment for working, so they enjoy social relationships at work. Sometime you may meet a Uber driver who’s a little bit older and who may have retired, but they want to meet new people. So there are a lot of different factors at work here, and the pay is not necessarily the most important one.
Mills: Is it more common for people to sort of wind down and maybe go to 50% on their current job or maybe come back in a consulting position where they used to work?
Wang: Well, it mostly happens among people who had higher levels of education, especially for people who had professional jobs. So then in that case, actually this kind of phased retirement or the same organization, bridge employment happens more often. So basically people may gradually cut down their work hours but still work for the same organization, or people work for the same organization, but in less demanding job roles, for example, as you mentioned, advisory roles or consulting roles. But this happens a lot with professional jobs. We don’t see it as much for the more labor-intensive jobs.
Mills: Now, a moment ago we talked a little bit about the impact of the pandemic on how people are thinking about retirement, and I’m just wondering, are workers who have been able to work remotely more likely to delay retirement?
Wang: So the research evidence on this is not conclusive yet. What we know is when organizations offer flexible working arrangement, they are more likely to keep their older workers. So older workers are less likely to retire if the organization allow them to work from home, such as remote work, or organizations allow them to select a time when they do their work. But in general, we don’t know whether remote work is keeping people on their jobs or remote work may make people realize how great it is to not be in the office. So there’s still some more research need to be done.
Mills: Now, you and other researchers have studied how retirement affects people’s physical and mental health and their wellbeing. Is retirement generally good for people’s health or bad? Or what does it depend on? What are the factors that go into making a happy, healthy retirement versus one that isn’t so happy or healthy?
Wang: Well, this is a great question. So actually, we had nationally representative data to look into this issue. And actually countering the typical belief that retirement may be good or bad, we found for 70%–75% of the retirees, retirement doesn’t do a lot to their wellbeing. So people actually, when they retire, they were able to carry on what they experienced before. They were able to maintain their wellbeing status. The majority of people, retirement doesn’t actually create a bad situation for their wellbeing, and retirement does not create a super good situation for their wellbeing. However, as you said, right, everything depends. So we found that actually for retirees who retire from stressful jobs and very physically demanding jobs, retirement is a very good thing. So that’s about 5% of the workers. So when they retire, they actually experience really good wellbeing improvement from those stressful jobs.
And then we also see about 20%–25% of workers, when they retire, they experience some wellbeing decrease. And that’s usually because they may retire from a job that has higher status. They may retire experiencing some financial difficulties. But also they may have a bad marital quality. So when they retire, the retirement becomes a very difficult situation for them to manage and adjust. But in general, as I mentioned earlier, like a majority of workers, when they retire, they’re able to maintain their wellbeing situation, and the retirement is not going to have huge impact to their wellbeing.
Mills: What about people who identify so closely with their jobs? What happens to them? If you’re an attorney and then you walk away and you can’t say anymore, “I’m a lawyer,” because you’re not really working in the field, what does that do to people’s sense of self?
Wang: That’s a very good point. So the work-related identity is very important for a lot of people in professional jobs. So removing them from the job or fully exit their job roles is going to create a negative impact because of the—“work-related” is actually synonymous with their self-identity. So that’s why bridge employment can help. So if you keep doing some work as you’ve done before retirement, it helps you to ease into this new self-identity of retirement and also help you to adjust to this transition better.
Mills: Well, speaking of adjusting to the transition, let me ask a question for our younger listeners who may feel like retirement is very far away. What should they be thinking about right now? I mean, other than socking away money, how can they plan today for a good retirement that might be 30 years away?
Wang: So I would say this is related to the career choice. So basically, younger workers, they may need to think carefully about what kind of career they will enjoy the most. As I mentioned, if their job is very stressful, then they may not enjoy the job that much, and they may actually not do much of bridging employment or not much paid work activities later on. But then we know that is not good for them, to keep their time occupied, and also not good for maintaining a productive life structure. So actually, finding a job that you really enjoy helps a lot. So I would argue that younger workers need to know what they like and also need to find meaningful work so that then when the time comes to retire, they can transition through with some bridge employment opportunities and then into retirement feeling accomplished for their career life.
Mills: What about for people who are closer to retirement? What are the emotional and practical questions they should be asking themselves when they’re trying to decide if the time is right to walk away?
Wang: So there are several questions they should ask themselves. So first of all, what they would like to do in retirement? So that’s activity-related planning. So basically they need to consider, without working, how can they be productive? So not everyone actually enjoys being productive, but being productive is a human agency. So it gives us a sense of accomplishment. So it’s actually pretty helpful if you plan about that. And then of course you should plan about the leisure activities. So basically know what you like and then how you would enjoy those activities when you retire. But regardless of what you choose, these activities can help meet needs that were once filled by their work. So having social interactions and the structured time. So that’s the first thing, the activity.
The second thing is people should think about where they want to live. Because when we enter the later stage of our life, a lot of time we have unique healthcare needs. Where we typically live may not be very accessible for those kind of assistance. So thinking about where to live and access useful services is very important. And then the third question is basically who you want to share retirement with. So basically in retirement, more than just lifestyle changes—relationships and one’s sense of self can change as well. So oftentimes, we rely on our spouses as a main area of focus for spending retirement with. But then also there are other relationships, so children, grandchildren, parents, friends, or even lovely neighbors. So yeah, think about who you want to retire with, spend that time with for retirement planning is very important.
Mills: Now, you also study older workers, and you’ve looked at what companies can do to attract and retain them. Why is it important for companies and organizations to think about this? What’s the benefit of older workers?
Wang: The issue is, especially in the United States, we know the workforce is aging. And we’re not really enlarging our workforce that much. So keeping older workers on jobs actually helps us to fulfill those job positions. So think about right now we have a big inflation situation, and largely this is because of a labor force shortage. So there were way more jobs than actually there were supply of labor force. So keeping older workers in organizations helps meet the labor force demand. But also, older workers often had more experience, work experiences, and they have a lot more knowledge about the organization. So keeping older workers can keep the organization’s productivity high and also help passing the useful knowledge to the next generation. So that’s why it’s very important to keep older workers on their jobs.
Mills: What about the notion that older workers, not being digital natives, are not able to keep up with changes in technology? I mean, might that make them more of a burden than an asset in some workplaces?
Wang: Well, actually, this is a myth. So basically we say older workers are not digital natives, but that’s because when they were growing up, there were no such digital devices. So basically, a lot of older workers when they grew up, there were no iPhones. There may not even be computers or PCs. So the key here is not whether they grew up with the device or not. The key here is whether we offer sufficient training opportunities on using those devices. The research actually points to, for older workers, if you give them sufficient time, they actually can go through those trainings pretty effectively. Their learning for the digital technology is as efficient as younger workers. So yeah, here it’s a training opportunity issue rather than whether they grew up with it or not.
Mills: Well, on behalf of older workers, I thank you. You were quoted in an article last year about Target doing away with its mandatory retirement age for executives, and that used to be pretty common that big corporations had mandatory retirement ages. Does this reflect a broader trend away from mandatory retirement ages in general? And do you think that’s a good thing?
Wang: Well, first off, in the United States because of the ADA law, actually, mandatory retirement is generally illegal. So only for certain occupations, actually, mandatory retirement is legal. And then the CEO job or high-level paid executive job is an exception to that ADA law, which allows the company board to include a mandatory retirement clause in the contract. So then when the CEO turns 65 or 67, they cannot stay on the job anymore.
But we see a trend that a lot more companies actually are abolishing that kind of clause. Why? Because actually, nowadays older executives, they probably have way better physical caring, physical condition, than probably 50 years ago. And so they’re more capable of doing their work. And then also there’s a lot more technology assistance that can help people accomplish their work. So actually, I don’t see whether there’s arbitrary age that people should retire. So basically, I think the trend will keep going as—in the U.S. at least, we already recognize mandatory retirement is not necessary. And then in Europe, we see actually the mandatory retirement age kept being delayed. And on the one hand, it reflects that workers are more capable and they can have longer work life. And then on the other hand, of course, there’s a social institutional concern, which is if you want to keep a good retirement benefit, people may have to work a little bit longer to recruit those benefits.
Mills: You mentioned Europe, and there’s of course a big dispute going on in France right now around raising the retirement age from 62 to 64, which those of us in the U.S. find almost funny. But there’s a reason for it there. The reason is that there’s a huge infrastructure that pays people pensions and healthcare when they reach that age. Maybe this is not a fair question, but we don’t have anything quite similar in the United States. I mean, if we had something like that, would you foresee that people would be likelier to retire sooner? For example, if suddenly Social Security became so flush with cash that they doubled the payout that they were giving everybody, then would we all leave our jobs?
Wang: Wow, that’s a really interesting point. So I think human nature would dictate that if we have abundant resources, of course we want to have more autonomy and we may not want to stay on the job much longer, especially if the financial resources is available. But I think the thing is that everything you receive will have to be paid by someone. So the retirement system is a pay as you go system, which means the benefit we receive is actually paid by the younger generation. So we need to be very mindful about this, which is actually right now the supportive ratio is about a little bit more than two workers supporting one retiree.
Unless there’s a big population growth, I don’t think the retirement benefit will be continuing going better. And the U.S. actually, the support ratio is actually pretty stable in the past 20 years. So there are some countries, the support ratio keeps going down. It’s dangerously low, for example, 1.3 workers supporting one retiree, then everyone ended up not having enough benefits. So I would say although we all want to receive more benefits, we need to be mindful not to add too much pressure to the next generation. So in that case, also U.S., the big job labor force, a new addition to the labor force is always immigrants. So the Congress and the government should pay attention to the immigration reformation and to see how we can keep suppling a good labor force.
Mills: Now, you worked on a report from the National Academy of Sciences that looked at generational differences in the workforce, and it seems that the upshot was that it’s not really helpful to use generational differences as a frame for understanding workers’ needs, things like categorizing workers as Baby Boomers or Gen X or Millennials. Why is that not a useful way to think about workers’ needs?
Wang: Actually, as a committee, we reviewed the literature in this area. And what we found is oftentimes when you categorize workers based on their generations, it just represents a covert way of age discrimination. It could be either discriminating against older workers or discriminating against younger workers, right? Because when we categorize people into different generations, it allows us to say something like, “Oh, that’s just a Baby Boomer. Oh, that’s just X Generation.” So what we found was this kind of categorization actually promotes stereotypes. And also, it mainly resulted from imprecise use of the terminology in the popular literature. But then it does not really inform effective workforce management decisions. So that’s why in the report, we actually cautioned the public that to use those language maybe more harmful than efficient. And of course, after we reviewed the literature, we also found that scientifically, a lot of the research cannot really capture the generational differences that they intend to capture. Methodologically, they are very flawed. So that’s also scientifically a reason we shouldn’t take those kind of differences too seriously.
Mills: Let me ask you a question on a different topic. You also study how employers are using artificial intelligence in the workplace and hiring decisions. And there’s a lot of talk about bias in AI, but are you actually hoping to find ways to use AI to improve fairness in hiring? I mean, can you talk about that a little bit?
Wang: Oh, yeah, yeah. Yeah, definitely. So fairness in AI is mainly created as a research topic because we found that to use artificial intelligence, we’re basically asking algorithms to learn about existing data. However, existing data contains bias. So when the artificial intelligence is learning about existing data, it actually learned about the human bias in those data. So what the result is that when you use artificial intelligence, maybe it’s very fast to make recommendation or maybe it’s very fast to help you make decisions, but it also contains the human bias that you have no way to identify.
So for example, if you’re an HR manager, you’re trying to decide whether you want to hire an older worker. So you would caution yourself as, “Hey, I cannot have age discrimination when I make this decision.” However, if you are using AI to make that decision, AI would just rely on whatever data it’s learning, and you will know how AI made that decision. So correcting for it is a little bit harder. So that created this whole need for research on fairness AI. And my recent research has been looking at, given the current policy in terms of—how do we make sure that our hiring decision is not favoring one category of the population versus another category of the population? So it’s a lot about finding out what AI is capable and finding out also how to avoid bias that is embedded in the algorithm.
Mills: Last question, just to wrap up, what are the big issues that you’re working on now? I mean, what would you like to have the answers to that you’re studying today?
Wang: So I’m recently studying a lot on age and technologies. So earlier we talked about this. So in terms of digital natives or digital exclusion. So I’m looking at how we actually eliminate the issue of digital exclusion. And so on the research right now, what we found is digital exclusion often comes in four different ways. One is the hardware exclusion, which is for older people, it’s a little bit harder for them to access the most up-to-date digital technology in terms of devices. And then the second form is the software exclusion. So oftentimes, it is harder for older workers or older people to track what’s the most efficient software to use. And for example, on the phone, what’s the most efficient app to use? So that’s the software exclusion.
And then the third one is actually more macro, which is exclusion in the form of information. So for example, in terms of information and the infrastructure. So if the government do not actually install those, the fiber optics equipment for the rural area, then it’s very difficult for people living in that area to access information. And also we know in some countries they have great firewalls that keep all the information out. So that’s also a way of exclusion. And the last type is exclusion due to privacy concerns. So this is especially important for older people because oftentimes when we are surfing our internet, when we use apps, we’re not aware that our privacy is being infringed on. Oftentimes, we’re asked to provide information about ourselves, about our family, and those information can be used in the cyberspace.
So yeah, that’s another form of exclusion. Basically, it creates risk for older people. So my recent research is really focusing on how to reduce digital exclusion for older workers and also for older people, and to make sure those digital technologies are used for their wellbeing to create a better life rather than creating risks for them.
Mills: Well, Dr. Wang, this has been really great. I appreciate your taking the time to talk to us today.
Wang: Okay, thank you very much. Thank you for having me.
Mills: You can find previous episodes of Speaking of Psychology on our website at www.speakingofpsychology.org or on Apple, Stitcher, YouTube, or wherever you get your podcasts. And if you like what you’ve heard, please leave us a review. And again, we’d like to hear from you about what you think of this podcast and what you’d like to hear more of from us. So please go to our website, www.speakingofpsychology.org, and look for a link to the listener survey. If you have comments or ideas for future podcasts, you can email us at [email protected]. Speaking of Psychology is produced by Lea Winerman. Our sound editor is Chris Condayan.
Thank you for listening. For the American Psychological Association, I’m Kim Mills.