Encore Careers: Opportunities and Challenges in Bridging the Retirement Income Gap

The Asset Building Program hosted an event Thursday, March 29th to investigate the concept of “encore careers” as a potential way to bridge the retirement income gap. Civic Ventures, a non-profit focused on workforce issues for Baby Boomers, conceptualizes encore careers as “work that combines personal meaning and social impact with continued income in the second half of life.” As Michael Calabrese introduced the event, he identified the appeal of such careers for this demographic: many boomers are at risk of not being able to maintain their pre-retirement standard of living due to a $6.6 trillion retirement income deficit. Savings alone typically cannot cover income needs throughout retirement. For those that are physically able, entering a new career may be a viable alternative to dropping out of the workforce entirely.

Former Senator Harris Wofford spoke and called for more inventive thinking from legislators on this issue. As someone who began his stint in the Senate at age 65, Wofford encouraged policymakers to appeal to the desire of aging Americans to contribute to their communities through concrete policies. Concepts like the Serve America Act, AmeriCorps program, and GI Bill are politically popular ideas with applicability for the retirement-age set. Wofford suggested that if we view people as “agents for action” instead of victims, we will see people rise to make contributions to society.    

David Bank, Vice President of Civic Ventures, spoke next about the trajectory of the encore careers concept. He sees this idea as an “experiment in social construction” as people re-envision what retirement is. With an estimated nine million Americans already engaged in encore careers, there is potential, he feels, for this phenomenon to grow, particularly if aided by supportive policies. While lower-income people may not have the assets needed to transition into an encore career, people across the income spectrum express interest in combining “purpose and paycheck.” Bank argued that even modest levels of continued income can have a dramatic impact on a person’s lifetime financial security, by providing additional years of earned income and delaying Social Security claims even by just a few years. Beyond individual benefits, Bank sees positive outcomes of encore careers at the societal level from the increased spending power of older adults, corresponding boost to GDP, and the alleviation of the burden on the Social Security Trust Fund.  Ultimately, Bank sees encore careers as a win-win that should be taken seriously as the U.S. grapples with the needs of an aging population.

Four panelists responded in turn, commenting on the various pitfalls and opportunities presented by encore careers. Phil Longman, a Senior Research Fellow at New America, took a hard look at the encore careers concept, expressing skepticism that the idea could work at scale. He notes that the health of the boomer generation is largely class based: despite hearing that we’re in the midst of a “longevity revolution,” the reality is that life expectancy for the bottom half of income earners has not changed since the 1970s. Furthermore, the stereotype that Boomers are uniformly wealthy falls apart too. 70% of Baby Boomers do not have college degrees, which raises the question: what encore careers are open to those who lack higher education? Finally, Mr. Longman argued that opportunities for entrepreneurship among the “encore” set are limited by increasing consolidation and outsourcing among the suppliers for many large firms, a key insight of New America’s Markets, Enterprise and Resiliency Initiative.

Nancy Altman, Co-Director of Strengthen Social Security, offered her thoughts next. She pointed out that the existing Social Security system is well-designed to provide economic security but is also supportive of encore careers. While 62 is the earliest individuals can begin claiming benefits, delaying until 70 provides a slight increase in benefits that equalizes the delay. She explains that the concept is therefore neutral: it doesn’t penalize any particular retirement age, nor does it encourage or subsidize one. Additionally, Social Security is unique in that it is portable as workers switch jobs – this helps people making a career switch in their later years. The real downside, she notes, is that benefits are low – for many people, they aren’t enough to live on.

Stephen Goss, Chief Actuary with the Social Security Administration, spoke next, stating that our system should encourage those who can to work. He pointed out the effect of people 62 and older working 10% longer than is currently projected: the ripple effect would fix about 5% of the shortfall in Social Security. Ultimately, he sees encore careers as a way to help people work longer, which in turn helps the Social Security system, and our society, to stay strong.

Finally, Debbie Banda from AARP Massachusetts, offered her perspective. She agreed with Phil Longman that there is some danger of the encore career movement being seeing as “elite” by those who don’t have the luxury to transition into a job at a later date. However, she does see encore careers as one potential way to transform the way we work in the U.S. She articulated many of the challenges older workers face: they face age discrimination in their job pursuits and may not be viewed as a sound investment. However, she says that many employers find older workers to be reliable, committed, and experienced – in turn for flexibility, professional development, and a chance to mentor younger workers, older workers may present an opportunity for businesses.

The panel took questions from the audience on a range of issues. The panelists looked at the largest sources of social purpose jobs that might fit into the encore career model, identifying teaching and health care as promising arenas. The audience and panelists also grappled with the challenges posed by widespread high unemployment and the labor market competition and shifting dynamics introduced by an influx of older workers. Several audience members self-identified as people who sought to find encore careers and their stories provided rich examples of some of the challenges this idea poses.