Make way for the working retiree

People nearing retirement are in for busy times, but it won’t just be making exotic travel plans or sinking holes-in-one. Instead, some will be re-entering the workplace, either full-time or part-time, and even reclaiming their old offices.

Peter Drake, vice-president, retirement and investment solutions for Fidelity Investments in Toronto, says despite proprietary research indicating that 56% of employed Canadians surveyed over the age of 45 plan to retire before turning 65, statistics show 8% of Canadians over the age of 65 are still in the labour force, either working or looking for work — up two percentage points since 2001.

“You’re probably looking at the most rapidly growing part of the labour force,” said Drake at a retirement seminar last Friday at the Advocis national conference in Victoria.

Drake has first-hand experience — he retired three years ago from a career at TD, only to be wooed back by his former employer with a part-time consulting contract. He did that for a year-and-a-half, and then took another part-time consulting job in financial services, juggling that with other independent projects.

But by the end of last year he found his foray into semi-retirement had lost its lustre. Drake said he felt “miserable” and “underutilized,” and was less then impressed with the isolation of his re-vamped retirement career. So he decided to return to work full-time.

For Drake it was really the only appealing option aside from altruistic pursuits and hobbies. “I’ve done a lot of volunteer work and that didn’t really grab me,” he explained, adding that one can only ride a bicycle or paddle a canoe for so long before craving something new.

Now in his early 60s, Drake is one of Fidelity’s new recruits, spending his time travelling the country, talking retirement and loving the busy pace. “It was a job that I thought had my name written all over it. I was just delighted to have the opportunity.”

But not everyone approaching their senior years chooses to go back to work as a panacea for boredom. The fact is some of them have to; they just won’t have the income to survive otherwise. Fidelity’s research indicates that aside from company pensions, other earned income, and investment income, a Canadian couple aged 65-plus with an income of $85,000 would potentially be responsible for funding approximately 80% of their retirement income.

Drake suggests this fact will contribute to a growing number of seniors who will be re-entering the workforce, as will policies adopted by many firms in the 1990s encouraging early retirement. The fear at that time was that by not lowering the retirement age younger individuals wouldn’t get a chance at the more responsible jobs.

“It just shows you that people don’t look ahead,” notes Drake. “Well now guess what? The populations are aging the world over, and apparently not a lot of those young people got hired anyway, probably partly because downsizing was the flavour of the month for a number of years. So now you have people that are out of the work force, you don’t have the people to replace them and what do you do? You go back and you try and persuade them to come back.”

It’s interesting, he adds, that despite the looming retirement income and labour shortage stats, 59% of retirees still don’t think they will need an advisor once they retire. He begs to differ. For advisors, working with employed seniors could pose new challenges.

Some working retirees will want to work just long enough to shore up their prior accumulation of assets, while most of them will work a minimum of five or 10 years, requiring new strategies for the initial injection of that retirement income. If clients do earn a fair bit of income due to workforce re-entry, that may justify a more aggressive asset allocation strategy, Drake adds.