Many older Americans have arrived at the same conclusion as Van Atten – even if that means their retirement suffers for it. They’re forgoing traditional, full-time work settings to instead work contingently or consult in career fields like accounting, journalism, IT and health care. An AARP survey, “Understanding a Changing Older Workforce: An Examination of Workers Ages 40-Plus,” found that 79% of older workers have flexible work hours as a requirement. More than a quarter, 27%, of those surveyed are doing freelance or gig work. The percentage is even higher with 32% of workers 40-49 choosing contingent roles, according to the report.
“During the pandemic, many people took time to reexamine their personal goals and how their job fits into their life,” said Carly Roszkowski, vice president of AARP’s Financial Resilience programming. “Given the high level of burnout that so many older workers experienced during the pandemic, especially those who are caregivers, it should come as no surprise that work-life balance has emerged as not just a priority but a requirement.”
Preparation and privilege
Many older Americans also note that seeking more meaningful work led to their decision, said David John, a senior policy advisor for AARP’s Public Policy Institute. Leaving behind structured 401K plans, paid time off and other benefits of full-time work does create some difficulty for retirement planning.
“A contingent worker doesn’t have the luxury to invest into a workplace retirement system like a traditional worker would,” John told The Atlanta Journal-Constitution. “You have a variable income, where there’s not a consistent stream of revenue to pull from.”
A common mistake contingent workers make is reporting fewer earnings in their taxes to save on their quarterly and/or annual tax bill, John said. In the long run, reporting less income will lead to receiving fewer Social Security benefits in retirement.
“Absent the opportunity to save like traditional workers, Social Security becomes the bigger part of income for nontraditional and contingent workers,” John said. “They save at first, but they end up losing in the end.”
Contract workers do have options to prepare for retirement like setting up their own IRA, simplified employee pension (SEP) or Solo 401(k), John said. To get the most out of any of these options, the investment efforts must commence well before retirement.
Most who make the choice to end their traditional careers don’t do so without a windfall, Van Atten said. She points to family inheritance, real estate ownership, and other retirement savings as her financial windfall.
“People don’t talk about what it really takes to do this,” she said. “I reached a place in my life where I owned real estate. I turned that into rental property. I do come from a place of privilege to be able to do that. I would not be living in Los Angeles if I only had freelance to cover it. ... It’s just the reality.”
Marrying mission with money
Dr. Arthur Lee, a community health advocate, admits he only has considered fueling his retirement fund in retrospect as a nontraditional worker. The Nashville father of three spent more than 20 years working as a family doctor and medical director. He ended his traditional career in medicine to begin advocating for HIV patients and others in need of health education and advocacy.
Lee, 73, continues to do volunteer and contract work for community health agencies, but he has not set up an official retirement for himself.
“Money is what you make it. I do wish I would have been more wise about money, but I’m still grateful I can be passionate about my mission,” Lee told The Atlanta Journal-Constitution. “Doing well is really about doing good, in a real sense.”
If an official retirement fund is not in place, it’s important to “follow the money,” John of AARP advises. Older nontraditional workers should keep a record of their expenses via an app or write it down. Making that a habit can be the first step toward building up savings.
“That kind of record tells you what you’re spending, what your priorities are,” he said. “Once you know what you’re spending, you can start looking at what your resources are for retirement savings.”
Taking on high-paying consulting roles can also help support retirement savings, said James Taylor, senior regional director of Robert Half in Atlanta. The human resource consulting firm, which connects thousands of workers with temporary and permanent roles each year, has more than 370 locations worldwide.
“Without a doubt, we’re seeing an increase in the number of retirees or near-retirees doing consulting or contract work,” Taylor said. “These individuals are finding they can supplement retirement with consulting roles, and they’re getting much greater compensation and flexibility by doing so.”
Van Atten’s decadeslong editing career has led to receiving higher compensation as a freelancer and consultant. Her strategy has been connecting with former employers and only seeking major clients that can pay higher fees for her work. She said she has experienced more rewards than challenges by choosing nontraditional work at this phase of her life.
“You design your own work day — you get to choose when you work, how hard you work and on what,” she said. “At this stage of my career, I wouldn’t trade freelancing for anything.”