While changing employers at a later career stage involves risks, older workers who change jobs voluntarily are significantly more likely to remain in the labor force until reaching age 65 than workers who stay with the same employer until retirement, regardless of their educational level, according to a study recently released by the Center for Retirement Research at Boston College.
Published in February 2017, the study brief, “How Job Changes Affect Retirement Timing by Socioeconomic Status,” was written by Geoffrey T. Sanzenbacher, Steven A. Sass, and Christopher M. Gillis. The authors noted that the question of whether a late-stage job change lengthens or shortens a worker’s career is important because workers generally need to remain in the labor force longer than they have in the past to gain a secure retirement. The study also pointed out that this issue is especially acute for workers with less education, who face an elevated risk of having an inadequate retirement income, in part because they tend to retire early.
The authors observed that since workers presumably change employers to improve their well-being, moving to a job that they consider better could lead them to work longer. The researchers also noted, however, that moving to a new job could reduce workers’ job security, because tenure protects older workers against involuntary job loss, and workers who change jobs risk a bad match. Thus, changing jobs could be associated with an increased risk of a layoff or an early labor force exit.
The brief presents an analysis of how voluntary job changes made by workers in their fifties affected their retirement timing, and of how these patterns differed by socioeconomic status, as measured by educational attainment. The analysis was based on data for the 1992-2012 period from the Health and Retirement Study (HRS), a biennial survey that follows respondents when they first enter the survey at ages 51-61 until they reach age 65.
The final estimates indicated that voluntarily changing jobs was associated with a statistically significant increase (9.1 percentage points) in the likelihood of remaining in the labor force until age 65, with this effect being slightly larger among workers with at least some college (10.9 percentage points) than among less educated workers (7.5 percentage points). The authors described this effect as large, given that only 44% of all workers in the sample were still in the labor force at age 65.
The findings further indicated that certain characteristics were associated with staying in the labor force longer, such as having a mortgage to pay off or having a later planned retirement age. The analysis also showed, however, that other characteristics were associated with earlier retirement, including having a long tenure at a job with a defined benefit pension, having more adverse health conditions, or having initially held a blue-collar job.
From Benefit Trends Newsletter, Volume 60, Issue 5
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