Speaking of Psychology - What does modern retirement look like? With Mo Wang, PhD

Episode Date: March 29, 2023

Forget the stereotype of a good-bye party in the break room followed by endless days on the golf course. Today, workers are staying on the job longer and taking on more “bridge employment,” or post-retirement jobs. Mo Wang, PhD, of the University of Florida, talks about what these shifts mean for modern retirement, how retirement can affect people’s mental and physical health, and what workers – even those who still have many years left in the workforce – can do now to help set themselves up for a happy retirement in the future. Please help us know more about you and what you would like to hear more of from Speaking of Psychology by filling out our 2023 Audience Survey. For transcripts, links and more information, please visit the Speaking of Psychology Homepage. Learn more about your ad choices. Visit megaphone.fm/adchoices

Before we get started today, I'd like to ask you to take a moment to fill out our listener survey. We want to learn more about you and what you think of this podcast. So if you would, please go to our website, www.spereatingof Psychology.org, and look for the link to our listener's survey. We'd really appreciate it. Now on to the episode. What does retirement look like now? Forget the stereotype of a goodbye party in the break room followed by endless days on the golf course

or sitting in front of the TV. Instead of an abrupt and permanent exit from the workforce, today's retirement often unfolds slowly over time as people move in and out of post-retirement jobs. This shift, along with an aging population, is reflected in U.S. workforce demographics. Nearly one quarter of U.S. workers are older than 55, and the Bureau of Labor Statistics predicts

that the number of workers older than 75 will almost double by 2030. So what do these shifts mean for modern retirement? How has the rise of remote work and the gig economy change the way people plan for and experience retirement? How does retirement and post-retirement work affect people's mental, physical, and emotional health? If you're close to retirement yourself,

what questions should you be asking to determine whether it's the right time to cut the cord? And if retirement is still years away for you, you, what should you do now to set yourself up for a happy retirement in the future? Welcome to Speaking of Psychology, the flagship podcast of the American Psychological Association that examines the links between psychological science and everyday life. I'm Kim Mills. My guest today is Dr. Mo Wang, a university distinguished professor at the Warrington College of Business at the University of Florida. He is also the Associate Dean for Research and Strategic

initiatives, chair of the management department, and director of the Human Resource Research Research Center. Dr. Wang is an industrial organizational and developmental psychologist whose work focuses on retirement, as well as older worker employment. He was the editor of the Oxford Handbook of Retirement and is currently editor-in-chief of the journal Work, Aging, and Retirement. Dr. Wang, thank you for joining us today. Oh, thank you very much for having me. I'm really glad to be here. Well, let's start by exploring the idea that I just mentioned in the introduction, which is that for many people, retirement is no longer an abrupt end to their working life, but more like a slow process of transition. There's a term that you and other researchers use for that, which is bridge employment.

How common is bridge employment these days, and what does it look like for most people? Oh, so bridge employment simply just means people after they retire, they still engage in some paid activities, paid work activities. And it's actually pretty common. So in the early, in the 90s and the early 21st century, we see about like half of the retirees during retirement after they finish their career job, they would engage in bridge employment. And actually, before the pandemic, near like 2016 to 2018, we see actually two out of the three

retirees were engaged. in bridging employment before they fully retire. So the general trend is people actually are taking more and more bridging employment opportunities over time. However, pandemic actually made a big difference. So we see actually people who retired during the pandemic years and the actually bridging employment rates. So the coming back to the work kind of probability decreased a little bit.

So that's actually one of the reasons we're experiencing labor force shortage right now. So if those people come back to the pre-pandemic bridge employment activities, then we actually would have more labor force participation in the whole population. So has the rise of the gig economy made it easier for people to find post-retirement jobs? I mean, are more people leaving the corporate world to become? Uber drivers, or is this a case of people needing money? I mean, what are the factors that are at play? Oh, so right now we don't have a very systematic research about gig economy's impact on bridge employment.

And there are some preliminary evidence showing that gig economy does offer autonomy for older retirees if they want to come back to labor force participation. And because gig economy allows people to actually choose when to work and allows people to have a lot of autonomy in terms like how to take the payment and sometimes you also bypass the tax situation. So yeah, so gig economy is generally considered to be easier for all the workers or retirees to come back to the workforce. But a lot of time, people are not really working for the money, right? So especially when people retire and when they start to receive social security benefits, actually pay may not be a very important issue. So a lot of times people want the social environment for working, right?

So they enjoy social relationships at work. Sometimes you may meet like a Uber driver who's a little bit older and who may have retired, but they want to meet new people. So there are a lot of different factors at work here, and the pay is not necessarily the most important one. Is it more common for people to sort of wind down and maybe go to 50% on their current job or maybe come back in a consulting position where they used to work? Well, it mostly happened among people who had higher levels of education, especially for people who had professional jobs. So then in that case, actually, this kind of phased retirement or the same organization bridge employment happens more often.

So basically, people may gradually cutting down their work hours, but still work for the same organization. Or people work for the same organization, but on a less demanding. job roles, like, for example, as you mentioned, advisory roles or consulting roles. But this happens a lot with professional jobs. We don't see it as much for the more labor-intensive jobs. Now, a moment ago, we talked a little bit about the impact of the pandemic on how people are thinking about retirement. And I'm just wondering, are workers who have been able to work remotely more likely to delay retirement? So the research evidence on this is not conclusive yet.

What we know is when organizations offer flexible working arrangement, they are more likely to keep their older workers. So older workers are less likely to retire if the organization allow them to work from home, such as remote work. Or organizations allow them to select the time when they work. do their work. But in general, we don't know whether remote work is keeping people on their jobs or remote work may make people realize how great it is to not be in the office. So there's still some more research need to be done. Now, you and other researchers have studied how retirement affects people's physical and mental health and their well-being. Is retirement generally good for people's health or bad or what does it depend on? What are the factors that go into making a happy,

healthy retirement versus one that isn't so happy or healthy? Well, this is a great question. So actually, we had nationally representative data to look into this issue. And actually, countering the typical belief that retirement may be good or bad, actually, we found for 70 to 75 percent of the retirees, retirement doesn't do a lot to their own. well-being. So people actually, when they retire, they were able to carry on what they experienced before. They actually were able to maintain their well-being status. So retirement doesn't, to majority of people, retirement doesn't actually create a bad situation for their well-being and the retirement does not create a super good situation for their well-being. However, as you said, right, everything depends. So, we found actually for retirees who retire from stressful jobs and very physically demanding jobs, actually retirement is a very good thing. So that's actually about like 5% of the workers.

So when they retire, they actually experience a really good well-being improvement from those stressful jobs. And then we also see about 20 to 25% of workers when they retire. they actually experience some well-being decrease. And that's usually because they may retire from a job that has higher status. They may retire experiencing some financial difficulties. But also, they may have better marital quality. So when they retire, actually, the retirement becomes a very difficult situation for them to manage and adjust. So, yeah, but in general, as I mentioned earlier, like a majority of workers, when they retire, actually, they're able to maintain their well-being situation, and the retirement is not going to have huge impact to their well-being.

What about people who identify so closely with their jobs? What happens to them if you're an attorney and then you walk away and you can't say anymore, I'm a lawyer because you're not really working in the field? what does that do to people's sense of self? That's a very good point. So actually, the work-related identity is very important for a lot of people in professional jobs. So actually, removing them from job or like fully exit their job roles is going to create an negative impact because the work-related identity actually synonymous with their self-identity. So that's why actually bridging employment can help, right?

So if you keep doing some work as you done before retirement, it helps you to ease into this new self-identity of retirement and also help you to adjust to this transition better. Well, speaking of adjusting to the transition, let me ask a question for our younger listeners who may feel like retirement is very far away. What should they be thinking about right now? I mean, other than socking away money, how can they plan today for a good retirement that might be 30 years away? So I would say, like, this is related to the career choice, right? So basically, younger workers, right, so they may need to think carefully about what kind of career they will enjoy the most, right? And right, as I mentioned, right? So if their job is very stressful, then actually they may not enjoy the job that much,

and they may actually not do much bridge employment or not much paid work activities later on. But then we know that is not good for them to keep their time occupied and also not good for maintaining a productive life structure. So actually, find a job that you really enjoy helps a lot. So, yeah, I would argue that younger workers need to know what they like and also need to find meaningful work so that then when the time comes to retire, they can actually transition through with some bridge employment opportunities and then into retirement feeling accomplished for their career life.

What about for people who are closer to retirement? What are the emotional and practical questions they should be asking themselves when they're trying to decide if the time is right to walk away? Oh, so there are several questions they should ask themselves. So first of all, like what they would like to do in retirement, right? So that's activity-related planning. So basically they need to consider like without working, right, how can they be productive? Right. So not everyone actually enjoy being productive, but actually being productive is a human agency. So it gives us a sense of accomplishment. So it's actually pretty helpful if you plan about that.

And then of course you should plan about the leisure activities. Right. So basically know what you like and then how you would enjoy those activities when you retire. Right. So but regardless of what you choose, these activities can help meet needs that were once filled by their work. Right. So like having social interactions and the structured time. So that's the first thing, the activity. The second thing is actually people should think about where they want to live. Right. So because when we enter the later stage of our life, a lot of time we have unique health care needs. We actually probably where we typically live may not be very accessible for those kind of assistance.

So actually think about where to live and can access useful services is very important. And then the third question is how, basically how you want to, who you want to share retirement with. Okay. So basically in retirement, more than just lifestyle changes. Actually, relationships and one sense of self can change as well. So oftentimes we rely on our spouses as a main area of focus like for spending retirement with. But then also there are other relationships, right? So like children, grandchildren, parents, friends, or even like lovely neighbors.

Right. So, yeah, think about who you want to retire with, like spend that time with for retirement planning is very important. Now, you also study older workers and you've looked at what companies can do to attract and retain them. Why is it important for companies and organizations to think about this? What's the benefit of older workers? Oh, the issue is especially in the United States, actually, we know the workforce is aging, right? So, and we're not really enlarging our workforce that much. So keeping older workers on jobs actually help us to fulfill those job positions.

So think about right now, like we have a big inflation situation. And largely this is because of a labor force shortage, right? So there are way more jobs than actually there are supply of labor force. So actually keeping other workers in organizations help meet the labor force demand. But also, other workers often have more experience, work experiences, and they have a lot more knowledge about the organization. So actually, keeping older workers can keep the organizations productivity high and also help passing the useful knowledge to the next generation.

So that's why it's very important to keep older workers on their jobs. What about the notion that older workers not being digital natives are not able to keep up with changes in technology? I mean, mightn't that make them more of a burden than an asset in some workplaces? Well, actually, this is a myth. So basically, we say like older workers, not digital natives. But that's because when they were growing up,

there were no such digital devices. So basically, like a lot of older workers, when they grew up, there were no iPhones, right? There may not even be computers or like PCs. So actually, the key here is not like whether they grew up with the device or not. The key here is whether we offer sufficient training opportunities on using those devices.

Actually, the research actually points to like for older workers, if you give them sufficient time, they actually can go through those training pretty effectively. Actually, they're learning for the digital technology is as efficient as younger workers. So, yeah, so here is a training opportunity issue rather than, you know, whether they grew up with it or not. Well, on behalf of older workers, I thank you. You were quoted in an article last year about Target doing away with its mandatory retirement age for executives. And that used to be pretty common that big corporations had mandatory retirement ages. Does this reflect a broader trend away from mandatory retirement ages in general?

And do you think that's a good thing? Well, first of all, in the United States, because of the ADA law, actually mandatory retirement is generally. generally illegal, right? So only for certain occupations, actually mandatory retirement is legal. And then the CEO job or high-level paid executive job is an exception to the ADA law, which allows the company board to include a mandatory retirement clause in the contract. So then when the CEO turned to 65 or 67, they cannot stay on the job anymore. But we see a trend that this is a lot more companies actually abolishing that kind of clause.

Why? Because actually nowadays older executives, like they probably have way better physical caring, physical condition than probably 50 years ago. And so they are more capable of doing their work. And then also there's a lot more technology assistance that can help people accomplish their work. So actually, I don't see whether there's like arbitrary age that people should retire. So, yeah, so basically I think the trend will keep going as in the U.S. at least, like we already know, we already recognize mandatory retirement is not necessary. And then in Europe, we see actually the mandatory retirement age kept being delayed.

And on the one hand, it reflects that workers are more capable and they can have longer work life. And then on the other hand, of course, there's a social institutional concern, which is if you want to keep a good retirement benefit, people may have to work a little bit longer to recruit those benefits. Now, you mentioned Europe, and there's, of course, a big dispute going on in France right now around raising the retirement age from 62 to 64, which those of us in the U.S., find almost funny, but I mean, there's a reason for it. The reason is that there's a huge infrastructure that pays people pensions and health care when they reach that age. If it were more, maybe this is not a fair question, but I mean, we don't have anything quite similar in the United States. I mean, if we had something like that, would you foresee that people would be likely to retire sooner? For example, suddenly Social Security,

became so flush with cash that they doubled the payout that they were giving everybody. Then when we all leave our jobs. Wow, that's a really interesting point. So I think human nature would dictate that if we have abundant resources, of course, we want to have more autonomy and we may not want to stay on the job much longer, right, especially if the financial resources is available. So but I think the thing is that everything you receive will have to be paid by someone, right? So the retirement system is a pay-as-you-go system, which means the benefit we receive is actually paid by the younger generation. Right. So we need to be very mindful about this, which is actually right now the supportive ratio is about a little bit more than two workers supporting one retiree.

Okay, unless there's a big population growth, like I don't think the retirement benefit will be continuing going better. And the U.S., actually, the support ratio is actually pretty stable in the past 20 years. So there are some countries actually the support ratio keeps going down. It's dangerously low, like, for example, like 1.3 workers supporting one retiree. then everyone actually ended up not having enough benefits. So, yeah, so I would say, like, although we all want to receive more benefits, we need to be mindful, like, not to add too much pressure to the next generation. So in that case, also like the U.S., the big job labor force, like a new addition to the labor force,

is always immigrants. So, yeah, so the Congress and the government should pay attention to the, immigration reform reform and see how we can keep supply good labor force. Now, you worked on a report from the National Academy of Sciences that looked at generational differences in the workforce, and it seems that the upshot was that it's not really helpful to use generational differences as a frame for understanding workers' needs, things like categorizing workers as baby boomers or Gen X or millennials. Why is that not a useful way to think about workers' needs?

Well, so we actually, as a committee, we reviewed the literature in this area. And what we found is actually oftentimes when you categorize workers based on their generations, it just represents a covert way of age discrimination. It could be either discriminating older workers or discriminating younger workers, right? Because when we categorize people into different generations, it allows us to say something like, oh, that's just a baby boomer. Or that's just like an X generation. Right. So what we found was this kind of categorization actually promotes stereotypes.

And also it mainly resulted from imprecise use of the terminology in the popular literature. Okay, so but then it does not really inform effective workforce management decisions. So that's why in the report we actually cautioned the public that to use those language may be more harmful than efficient. And of course, after we review the literature, we also found that scientifically actually a lot of those research cannot really capture the generational differences. that they intend to capture. Methodologically, they are very flawed.

So that's also scientifically a reason we shouldn't take those kind of differences too seriously. Let me ask you a question on a different topic. You also study how employers are using artificial intelligence in the workplace and hiring decisions. And there's a lot of talk about bias in AI, but are you actually hoping to find ways to use AI to improve fairness and hiring? I mean, can you talk about that a little bit? Oh, yeah, yeah, yeah, definitely. So fairness in AI is mainly created as a research topic

because we found that to use artificial intelligence, we're basically asking an algorithm to learn about existing data. However, existing data contains bias, right? So when the artificial intelligence is learning about existing data, you actually learned about the human bias in those, contained in those data. So the result is that when you use artificial intelligence, maybe it's very fast to make a recommendation, or maybe it's very fast to help you make decisions. But it also contains the human bias that actually you have no way to identify.

So for example, like if you're a HR manager, you're trying to decide. whether you want to hire an older worker. So you would caution yourself as, hey, I cannot have age discrimination when I make this decision. However, if you're using AI to make that decision, AI would just rely on whatever data it's learning. And you will know how AI made that decision. So even correcting for it is a little bit harder. So that created this whole need for research on fairness AI. So my recent research has been looking at given the current policy in terms of EEOC has this adverse impact ratio on criteria.

So how do we make sure that our hiring decision is not favoring one category of the population versus another category of the population? So it's a lot about finding out what AI is capable. finding out also how to avoid bias that is embedded in the algorithm. Last question, just to wrap up, what are the big issues that you're working on now? I mean, what would you like to have the answers to that you're studying today? Oh, so I'm recently studying a lot on the age and the technology use. So earlier we talked about this, right, so in terms of digital natives or like digital exclusion. I'm looking at how we actually eliminate the issue of digital exclusion.

And so the research actually right now, what we found is actually digital exclusion often comes in four different ways. One is the hardware exclusion, which is for other people, it's a little bit harder for them to access the most up-to-date the digital technology in terms of devices. Then the second form is actually the software exclusion. So oftentimes it is harder for older workers or other people to track what's the most efficient software to use. And for example, on the phone, like what's the most efficient app to use? So that's the software exclusion. And then the third one is actually more macro, which is exclusion in the form of information. So for example, in terms of information and the infrastructure, right?

So if the government do not actually install those fiber optics equipment for the rural area, then it's very difficult for people living in that area to access information. And also we know, like in some countries, like they have great firewalls that keep all the information out. So that's also a way of exclusion. And then the last type is actually exclusion. due to privacy concerns, right? So this is especially important for older people because oftentimes when we are surfing our internet,

when we use apps, we're not aware that our privacy is being infringed down. Oftentimes we're asked to provide information about ourselves, about our family, and those information can be used in the cyberspace. cyberspace. So yeah, so that's another form of exclusion like basically you creates risk for older people. So yeah, so my recent research is really focusing on how to reduce digital exclusion for older workers and also for older people and to

use, make sure those digital technologies are used for their well-being to create a better life rather than actually creating risks for them. Well, Dr. Wang, this has been really great. I appreciate you're taking the time to talk to us today. Okay. Thank you very much. Thank you for having me. You can find previous episodes of Speaking of Psychology on our website at www.

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If you have comments or ideas for future podcasts, you can email us at speaking of psychology at APA.org. Speaking of psychology is produced by Lee Winerman. Our sound editor is Chris Condyenne. Thank you for listening for the American Psychological Association. I'm Kim Mills.