If you thought retirement is for people who have stopped working – think again.

Latest research by wealth management and financial planners Merrill Lynch says modern retirement is more like another career stage.

They have produced a report, Work in Retirement: Myths and Motivations, showing that many people now work past age 65 – some out of necessity and some because they enjoy working.

The report will be of particular interest to working carers who often NEED to be in the workforce for longer than most people to counterbalance the financial cost of caring for a loved one and yet are the very people who should be supported to retire early, as their caring duties often equate to having two full-time jobs.

The report shows that the stark reality for many baby boomers is that their dreams of a leisurely retirement have flown out the window.

Merrill says the new retirement has four phases.

  • Phase 1 ‘Pre-Retirement’ you start preparing yourself to launch a new career/income-producing strategy.
  • Phase 2 ‘Career Intermission’ a short time to relax, recharge and retool once you have ‘retired’ from your current job.
  • Phase 3 ‘Re-engagement’ or more of what we used to call ‘work’ as you start your new line of income-producing work.
  • Phase 4 – wait for it – yes, it is finally ‘Leisure’ which most resembles what we used to call ‘retirement’. This phase starts in your mid-70s and ends when you die.

This idea of a career intermission is interesting as many recently retired people never get to enjoy this phase. They are more often unprepared and frightened for their future. Many immediately start looking for a job or some other way to generate income.

Although this was an American study, it is of similar relevance to Australians. Plenty of studies show most Australians who turn 65 have nowhere near the amount of money they would need to stop working. Social security benefits provide only minimal comfort.

The report found that nearly half (47 per cent) of today’s retirees say they either have worked or plan to work during their retirement. But an even greater percentage (72 per cent) of pre-retirees aged 50+ say they actually WANT to keep working after they retire, and in the near future it will become increasingly unusual for retirees not to work.

Merrill says this new phenomenon is driven by four forces:

• Increasing life expectancy, which has produced a retirement that can last 20 years or more.

• Elimination of pensions for most workers, shifting the burden for funding retirement from employers to retirees.

• Economic uncertainty, which has been a wake-up call for many people that it is not financially sustainable to retire without some employment income.

• Re-visioning of later life, as new generations seek greater purpose, stimulation, social engagement, and fulfilment in retirement.

While some are delaying retirement, a growing number of people are continuing to work after they retire.

Because this is largely uncharted territory, pre-retirees who anticipate working in retirement are confronted with many questions and uncer­tainties: Will I be able to find work in my later years? If so, for how long? How can I balance work with other things I want to do? What kind of work might I be able to do? Will I enjoy it? Will it help me be more financially secure? What can I do now to best prepare for working during my retirement years?

NB: The report Work in Retirement: Myths and Motivations was produced by Merrill Lynch in conjunction with Age Wave. See full report here