Are your clients ready to retire? The answer likely depends in part on where — and how — they work.
Among American workers age 55 and up, those who worked remotely at least one day a week were 14.4% less likely to retire by the following year compared to in-person employees, according to new research from the Center for Retirement Research. Even after controlling for demographic, familial and job characteristics, that difference between the two groups holds.
“Remote work remains elevated relative to pre-pandemic levels and, for at least some workers, appears to be here to stay. Given the lack of savings of many Americans, so too is the need to work longer,” Geoffrey Sanzenbacher, a research fellow at the Center for Retirement Research, wrote in the report. “The good news from this brief then is that remote work seems to facilitate, not impede, longer careers.”
Although the scale of remote work has fallen from its pandemic-era high, remote and hybrid jobs still compose a much larger share of the job market than before the pandemic.
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In 2019, just 6% to 8% of workdays were completed remotely. That figure surged more than threefold in early 2020 as the pandemic began. While it dropped significantly by late 2021, the proportion of remote workdays has stabilized at more than double the pre-pandemic rate, research shows.
Previous research has found that the rise of remote work has helped late-career workers with disabilities work later in life. New research suggests those same effects extend to older workers as a whole.
Softening a scary transition
Financial advisors say they’ve seen the impact of remote work on their clients who decide to delay their retirement.
“For several clients where their employer wanted to keep them, the employer offered either a hybrid schedule or a pure ‘work from home’ model,” said Ryan Perry, a financial advisor at Falcon Wealth Planning in Ontario, California. “In both cases, clients really liked the option, and they did end up working longer than they otherwise would.”
For advisors looking to strengthen their clients’ retirement plans, the benefits of delaying retirement through remote work are clear.
“Obviously, each additional year a client works is going to be an additional year of income, so their overall financial situation becomes even stronger and is less taxing on the financial plan, plus clients can continue to contribute to their work retirement plans,” Perry said.
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Leyla Morgillo, a financial advisor at Madison Financial Planning Group in Syracuse, New York, said that many of her clients have adopted remote work as a means of easing the financial transition into retirement.
“It’s scary to just stop getting a paycheck, right? So, the recurring theme tends to be that the clients are very reluctant to have that paycheck go completely away,” Morgillo said. “And so they like that idea of working at least somewhat, because it gives them that level of comfort.”
Still, financial advisors need to be clear with clients considering a transition to remote or hybrid work about whether they need to continue working at all, Perry said.
“I would not want a client thinking they have to keep showing up to work when in fact they have the funds to retire right now, so that needs to be communicated clearly,” he said. “If clients want to keep working, that’s fine, but they should be made aware it is not financially necessary.”
Working for more than the money
Earning additional income from remote or hybrid work never hurts a client’s retirement plan, but Morgillo said the benefit to their overall financial picture is often relatively small, especially after reaching the age to receive their maximum Social Security benefits. Still, other incentives, like maintaining a workplace health plan and staying mentally engaged, can draw retirees to continue working even when their finances no longer necessitate it.
“The biggest benefit for some clients is being able to stay on their health insurance for the employer, depending on their medical situation,” Morgillo said. “Sometimes that coverage can be much better than what they would have on Medicare.”
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For older workers who have been in an industry for decades, retiring can also undermine their sense of self, Morgillo said.
“I think for a lot of people, their identity oftentimes is really tied pretty closely to their work. So, it can be really hard to just give that up altogether,” Morgillo said. “Some people just don’t want to let go, right? They love it. It’s what they’re used to. It brings them joy, or, you know, they’re just very passionate about it. They want to keep their mind engaged,” she added.
Lauren Lindsay, a Houston-based financial advisor at Paragon Private Wealth Management, said that continuing to work can have clear mental benefits for retirees, who remain sharper and more engaged through their jobs. Researchers have found that retiring is associated with an increased risk of cognitive decline.
While postponing retirement through remote work can help delay that possibility, advisors say it’s important to talk to clients about other activities — like volunteering or mentoring — that can help them stay engaged beyond work.
An overemphasis on work can lead to financially secure clients unnecessarily putting off their retirement goals, Lindsay said.
“The thing we are all limited with is time,” she said. “Don’t delay your life goals to keep working longer unless there is a need to.”
