An active life followed by an idle retirement is becoming less and less representative of how many older adults behave.

Because of population ageing, the age structure of the labour force is expected to keep shifting substantially, with potentially dire consequences on pension systems.

Source: United Nations, World Population Prospects: The 2017 Revision. Calculations by the AXA Group Foresight Department

For example, a recent OECD study found that to stabilize pension systems (in terms of dependency ratio – that is, to ensure the same ratio of retired over working individuals[1]) would require increasing the retirement age by 8.4 years. However, splitting one’s life between active life spent working and idle life spent retired is becoming less and less representative of how many older adults behave.

Is unretirement the next step in today’s ageing societies?

The decision to retire is often reversed. As shown by a 2015 RAND survey, 39% of American workers over the age of 65 had previously retired before going back to work and 56% of retirees aged 50 and older said they would consider unretiring. A similar study in England found that 25% of Britons reversed their decision to retire and started working again (about half of whom did so in the first five years of retirement). One of the key drivers of the decision to stay employed at old age stems from finding meaning in work (in the second study, researchers found that the decision to unretire was not linked to greater financial need[2], but was more common among men and highly educated individuals).

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Older adults, not so idle after all?

Research shows that even when older adults are out of the workforce, they still contribute heavily to the economy. A study by Harvard researchers showed that employment (in purple) represents only half of the economic contribution of adults 60 years old and older in Europe. By volunteering (in green), or caring for grandchildren (in blue), older adults generate significant value (about 5000 euros per individual on average) though they do so informally (this activity is not reported by official economic statistics). One key determinant of the amount of contributions, whether formal (purple) or informal (green, red and blue), was good health, as acute health shocks were associated with decreases in both types of contribution. As a consequence, both the workforce and the population of volunteers are expected to age (In Japan, for example, many of the volunteers taking care of the elderly in nursing homes are retired workers themselves).

Why does it matter?

Remaining active increases social interactions and overall happiness, which in turn improves health. Helping older workers find meaning in work or other activities, such as volunteering, is thus vital to ensure they remain in good health.

Furthermore, Policy-makers could promote un-retirement to reduce stress on pension systems. For example, in 2012, Romania launched its “Un-retirement Initiative for Teachers and University Professors”, which aimed to allow unretirement in order to ensure that the skills and knowledge of this workforce were transferred to the next generation of workers.

Moreover, because of unretirement, tomorrow’s workforce is expected to be more diverse, with older workers bringing different perspectives from their younger counterparts.

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Finally, shifting towards a lifelong learning process is all the more vital, to equip older workers willing to keep working with all the necessary skills to do so. As a result, unretirement also highlights how people’s lives are less and less organized linearly (study – work – retire) and how it now becomes harder to group people by demographics (hence the latest neologism invented to characterize today’s individuals, the Perennials).

[1] The Old Age Dependency ratio used in the study is computed as: Number of individuals older than 64 years old / Number of individuals aged 20 -64 years old
[2] It was not correlated with both a self-assessment of financial insecurity and income quintiles.