Keeping It Going: As They Redefine Retirement, the Self-Employed Offer a Glimpse of the Future

By Michael Hodin

The world is in the midst of an historic demographic transformation — never before have there been so many of us over age 60, and this number will double to 2 billion by 2050 — and the world of work is changing with it. As employers and policymakers worldwide grapple with how to plan for the workforce of the future, they would do well to look to the self-employed for clues. People who work for themselves have more flexibility to determine how they want to work and when they want to retire — and they offer important insights to the rest of us.

A recent report from the Transamerica Center for Retirement Studies (TCRS), “Self-Employed: Defying and Redefining Retirement,” found that a majority of the self-employed are planning to work well past traditional retirement age, with 62% responding that they plan to work after they retire — and a full 28% saying that they don’t plan to retire at all. These staggering numbers from the self-employed population signal a seismic shift in how we think of our later years. By staying in the workforce longer and retiring later, the self-employed are giving us a preview of what the future of work could and should look like: full of happier, healthier, and more productive older adults making valuable contributions to society and the economy. And, if one looks at the healthcare data, there is a growing and powerful link between activity — including work — and healthier aging. A win-win-win if ever there was one.

In fact, goals of healthier aging are central to this trend. When asked, 83% of respondents cited a desire to stay healthy as they age as a reason for why they were working longer, 10% more than those who cited financial reasons for doing so. When a majority of the self-employed attribute their longer working lives to a desire to “be active” and keep “my brain alert,” it becomes clear that more and more of us intuitively understand the positive connection between work and health. We’ve come quite a distance from the Dickensian images of the century before last.

We also know from the data that working provides older adults with a clear sense of purpose and social connection, protecting against feelings of isolation and depression, which recent studies show have the same impact on mortality as smoking 15 cigarettes a day. And brain health is a key component as well — a 2014 study of half a million retired self-employed workers found that dementia was significantly less common among those who retired later than those who retired earlier — and that health symptoms lessen when older adults are encouraged to work. And so, these benefits are lasting and self-sustaining: working longer keeps you healthy and being healthy keeps you working longer.

Following on the Silver Economy Forum earlier this month as part of the launch of the Finnish EU Presidency, where “aging” is the theme; the Japanese focus on aging for their G20 leadership; and the World Health Organization set to launch the Decade of Healthy Ageing next May, the timing couldn’t be better to connect healthy aging strategies with longer, more productive working lives. Taken together, this moment of convergence at the global policy level — from Helsinki to Osaka to Geneva — calls for action from the highest level of national leadership down to the community and employer level to more fully leverage the many contributions of older adults. The trends that we are seeing among the self-employed are showing us exactly what more and more older adults want and are capable of in their 60s, 70s, and beyond.

The self-employed are also providing us with important “market research” on the need for sustainable models and innovative financial products to finance retirement for those who want to and are ready. According to the Transamerica report, the self-employed anticipate diverse sources of income when they do retire: 70% expect income from Social Security and 54% from other savings and investments. This is nothing short of a call to action for all of us.

What we are seeing today is a clear need to rethink outdated notions of retirement that no longer reflect what people want and create a new social contract. The trends among the self-employed are both a bellwether and an opportunity for those who are paying attention. It will take collaboration on a global scale — among all levels of business, government, and society — to radically rethink retirement savings and employment structures, and health and care to support the ability and desire of older adults to remain active, healthy, and productive members of society. We don’t need to wait for the Decade of Health Ageing to launch to understand that the future of work starts now.

No wonder the CEO of Aegon, Alex Wynaendts, is calling for nothing less than a new social contract. As the leader of the organization with the data, Mr. Wynaendts knows. The rest of us can now learn.

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