What Is Semi-Retirement And Why Is It A Growing Trend?

Jul 12, 2018 | 9 months ago | Read Time: 5 minutes | By iKnowledge Team

“I am retired, but not really.”

This is Nisha’s motto. She’s a banker who retired after working a long and satisfying career in her organization. And yet, the thrill of working never left her. So, even though she had no need, she picked up consulting and is enjoying being her own boss.

What is this? Why are more and more people moving towards working even after they’ve “retired”? What is this global phenomenon? It’s a workforce changing concept known as Semi Retirement.

Semi-Retirement, or partial retirement, is the case when someone picks up either a similar job with changed hours, or a different job post their retirement. There are several reasons why a retiree would decide to work again, depending on their income level, lifestyle, and personality.

But what makes semi-retirement such an alluring concept for retirees? What makes people come back to their work lives, after having spent most of their adult life working?

Why has this become a growing trend?

Semi-Retirement wasn’t the buzzword among people a few years back. The dynamic workplace has evolved much faster than traditional human resource understanding, which has led to retirees literally moving towards a second inning. These are some of the reasons why semi-retirement is a growing trend.

Finances and Social Systems:

One of the problems with Indian households, is their dependence on their children to take care of them in their old age. This means that they have negligible amount set aside for their own retirement. Often, this leads to a situation where the retiree is forced to come out of retirement and work, so that there is enough income to provide for himself and his spouse during this time. It is common in India to see elder abuse among senior citizens, and being semi-retired is one way of being independent. In earlier times, providing for parents was a given, whereas today, it cannot be taken for granted that children will sponsor their parents in old age.

Image source: The Mint

 Another point to be examined here is, a lot of people don’t plan actively for their retirement, and hence, are not left with much of a choice when it comes to retirement. To maintain their lifestyle, or to simply ensure their basic needs, they need to work in some job or the other. Across USA, it is a growing trend to have senior citizens work in jobs even after their retirement to ensure they have funds for their survival. A lot of this is attributed to improper retirement planning, and can be rectified by investing in a proper pension plan when diagnosed.

Satisfaction:

People have to work for financial reasons, even when they have retired. But that forms a small portion of the number of workers who are coming back into the workforce for mental satisfaction.

It is now said, that ensuring mental engagement and satisfaction, through any job, or mental activity, is a way to beat diseases such as dementia. Many people join places of work to ensure they are kept active, even if it is not full time. Many qualified senior citizens are working part time in accounting firms or banks, to provide their experience and expertise. Working for short hours, as per the convenience of the retiree helps them feel satisfied with their retirement, and more excited to tackle the free time on their hands. The financial aspect of working notwithstanding, the knowledge that they are making a difference somewhere is often enough to keep the retiree going.

Alternate Career Path:

Many retirees use their retirement as a way to enter career paths they never previously entered for any reason. Starting a business is a way for them to utilize skills they never thought would be valuable. It is not uncommon for many women, to start their own small arts and crafts businesses, selling handmade products, often at exhibitions. Some women start their own blogs, and make videos to make the best of their time and abilities.

Source: Pixabay

Longevity:

Due to increasing lifespans of people, they are now spending a longer time span in retirement. What this means, is that people are spending 20 to 30 years as retirees, as compared to 10 or 15 years as previously thought of. This puts their retirement plan in disarray, but also means that their pension plan is not enough to cover their extended retirement. One of the ways to combat this is by working for longer. Retirement ages in several countries are increasing because people are working longer in their jobs, and not taking retirement at a particular age.

Aegon’s iInvest plan  counters this retirement concern. Under this plan, money can be withdrawn in a phased manner, and the remaining premiums will continue to stay invested until the need arises.  The iInvest plan is a Unit Linked Insurance Plan (ULIP), where some portion of the premium is allocated towards investments and the balance towards life cover. The flexibility of payouts in this policy means there is control in the hands of the policyholder. Suppose their retirement age is lengthening, the premiums can continue to stay invested, thereby earning market returns for longer.

As per the table below, retirement ages in countries like France, Germany, and US is nearly 9 years more than India, (67 years). The median age for retirement in India is 58 years. This shows that people are working longer to compensate for their increased lifespan, and to ensure they have enough for their retirement.

Retirement Insurance Plan

Changing job ecosystem:

Companies are finding a reliable source of employees, and it is not in the youngsters, but in the retired. The growing trend among companies, is to hire senior citizens, those who have already worked in some job before. Retirees are patient, work harder, and bring their years of experience to the job. It also helps companies to control their costs, as retirees do not demand a higher paycheck. Corporate interest in senior citizen job fairs is at a high in India. Many companies in the US, such as UPS (US Post) hire senior citizens to act as drivers, or delivery personnel.

Another aspect of the job ecosystem, is the increase in the gig economy. With several offices shifting to hiring independent freelancers based on projects, a so called “gig” economy has been created. Many senior citizens start their own ventures and work with companies as consultants. Their experience over decades trumps someone starting fresh. Starting a business from scratch means the retiree can be his own boss and control work hours.

As we can see, semi-retirement is a trend that is on an upswing in the coming few years. Given that many people do not have a solid retirement plan in place, semi-retirement seems to be one way to ensure some form of income flows through. However, semi-retirement is no compensation for a proper retirement plan. Investing in a pension plan will make retirement easy, and semi-retirement, something actually involving and interesting.

Advt. No.: IA/July 2018/4189


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