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Jobs that lack health and retirement benefits, aka nontraditional jobs, can end up costing older workers by reducing what they have for retirement income.
That's among the findings in a brief from the Center for Retirement Research at Boston College, which says that as older workers increasingly find themselves in jobs that lack benefits, they could actually be endangering their retirement if they stay in such jobs too long.
While such nontraditional jobs can be a useful source of income and enable older workers to stay on the job longer, postponing having to draw on existing retirement savings and perhaps even being able to save additional funds, the problem arises when those workers spend too much time in jobs that lack benefits.
According to the report, not only are 20 percent of workers ages 50–62 employed in such nontraditional jobs—no retirement or health benefits—but only 26 percent of workers ages 50–62 are consistently in traditional jobs with benefits—something the report terms "the 'ideal' sequence of late-career employment, a traditional job with benefits consistently from ages 50–62."
And that plays into how much those workers will have at retirement. Those who are able to tick with traditional employment until they retire make out the best financially, while those nontraditional jobs take a financial toll even on those who use them as a stopgap measure or as an extension of working for short periods of time.
Older workers who get shunted into nontraditional work and aren't able to move back to employment with benefits pay the largest financial penalty—and it's substantially larger than that experienced by those who only work now and then at nontraditional jobs.
Says the report, "Workers who do mostly traditional work and use nontraditional jobs only sparingly have 6 percent less retirement income at age 62 than those who work traditional jobs consistently. On the other hand, those who use nontraditional jobs frequently have 26 percent less retirement income than those who work traditional jobs consistently."
The report concludes that nontraditional jobs without benefits can be used as a bridge to retirement, or as a temporary solution before finding a job with benefits. But consistent nontraditional work puts workers at a disadvantage in saving for retirement.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
