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Aging Baby Boomers Providing and Utilizing On-Demand Economy Services

Older Americans are increasing turning to the on-demand economy for both work and access to services.

The New York Times article Baby Boomers Look to Senior Concierge Services to Raise Income nicely covers where these two intersect - older Americans earning money by helping other older Americans. 

Key quote:

Elder concierge, as the industry is known, is a way for the semi- and fully retired to continue to work, and, from a business standpoint, the opportunities look as if they will keep growing. Around 10,000 people turn 65 every day in the United States, and by 2030, there will be 72 million people over 65 nationwide.

Elder concierges provide a wide range of services.

Everything from "driving older clients to doctor’s appointments, playing cards, running errands or just acting as an extra set of eyes and ears for family members who aren’t able to be around but worry about their older relatives being isolated and alone."

Another interesting quote comes from Nancy LeaMond, AARP’s executive vice president and chief advocacy officer:

“Everyone assumed the on-demand economy was a millennial thing. But it is really a boomer thing.”

Ms. LeaMond noted that while people like the extra cash, they also appreciate the “extra engagement.”

AARP sees the advantages of working the on-demand economy for aging boomers. They even have a partnership with Uber.

The data from the 2017 Intuit On-Demand Economy (ODE) study certainly supports the view that boomers are active in the ODE. 

About 25% of all ODE workers are aged 52 or older. This equals about 1 million Americans. 

The top reason older Americans are working in the on-demand economy is to supplement their income. But it's not just about income.

Of those 55 and over, 32 percent cited “like being around interesting people” as a motivating factor, compared with only 15 percent for the population at large. And 35 percent of those over 55 cited “doing what I love” as a reason.

For aging boomers working in the ODE, it's about staying engaged, doing work they enjoy and/or is meaningful to them and supplementing their income.

For aging boomers and seniors accessing ODE services, it's about aging in place and having easy access to support services. 

The ODE is win-win for aging boomers and for the relatives and friends helping with their care. 

The Multstage Life and Self-Employment in the On-Demand Economy

Recent research by future of work expert Lynda Gratton suggests due to longer life spans the traditional life stages - education, work and retirement - no longer work.

Instead, we are going to restructure our lives and careers into a multistage life where we transition between education, traditional employment, semi-retirement and full retirement multiple times. 

The chart below, from her MIT Sloan Review article The Corporate Implications of Longer Lives, illustrates this shift. 

A key part of this new mix is periods of self-employment will become more common, especially for those who are older. 

The reason for this shift, of course, is humans are living longer, healthier lives. Key quote:

Rising life expectancy means the level of savings required to provide a reasonable income for retirement at age 65 is becoming increasingly infeasible for most people. We predict that, given the average level of savings in advanced economies, many people currently in their mid-40s are likely to need to work into their early to mid-70s; many currently in their 20s (many of whom could live to be over 100) will be working into their late 70s, and even into their 80s.

This shift is already happening. The workforce participation rate for Americans 65 and older is at an all time high (about 20%). Also, Americans over the age of 55 have the highest rate of self-employment of any age cohort.

This is partially due to age discrimination. But older Americans also like the freedom and flexibility that come with being self-employed.

Many also want to work part-time and control their schedule. This is one reason why older Americans are working in the on-demand economy (ODE), partnering with firms like Lyft, Upwork and other online talent marketplaces. 

According to the results of the recent Intuit On-Demand Workforce Study, about 25% of ODE workers are aged 52 and older.

More interesting is 1/3rd of the people aged 55+ working in the ODE report being retired.

Despite saying they are retired, they continue to work part-time because they want to or need to. These people are already fitting into Gratton's definition of a multistage life. 

We'll have more on older and retired ODE workers in the near future. But a quick preview is we expect a lot more older Americans will work in the on-demand economy in the coming years.

Our Baby Boomer section has additional articles on this and related topics.

It's Tough Being Old in Silicon Valley

My last corporate job was running marketing for a Silicon Valley tech firm. This was long ago during the Internet boom of the late 1990s and early 2000s.

I turned 40 during this job and one of my coworkers jokingly pointed out that I may have been the firm's oldest employee. 

After a bit checking, I discovered at age 40 I was the sixth oldest out of roughly 900 employees.

Welcome to Silicon Valley. 

Bloomberg's It's Tough Being Over 40 in Silicon Valley nicely captures the youth ethos of the valley. Key quote:

"Older workers are trying lawsuits, classes, makeovers—even surgery—to keep working."

Age discrimination and a preference for younger workers has always been part of the Silicon Valley - and the tech industry in general. 

Tech firms and industry participants often don't even try to hide this.

The Observer's When It Comes to Age Bias, Tech Companies Don’t Even Bother to Lie covers how one tech company's CEO talked about not hiring older people in a New York Times interview.

Other examples include Mark Zuckerberg famously saying "young people are just smarter" and, one of my favorites, A list VC Vinod Khosa saying “People under 35 are the people who make change happen. People over 45 basically die in terms of new ideas.”

Of course there's copious amounts of research showing these comments/beliefs are not true. But despite that, ageism, if anything, appears to be becoming even more prevalent in the tech industry.

Our interest in this, of course, is that age discrimination leads to greater levels of self-employment. The reason is simple. Often for older tech workers ageism means self-employment is their best option, and can even be their only option. 

And since there are a lot of aging boomers and Gen Xers in tech, expect to see growing numbers of them ending up self-employed.

For Many Boomers, Work is the New Retirement

Transamerica's Center for Retirement Studies recently released the results from their 17th annual U.S. retirement survey. 

As with prior years, it's full of interesting data on the retirement preparations and plans of Americans of all ages. 

Most interesting to us is their section on Baby Boomers. This group is currently entering retirement age in large numbers (roughly 10,000 turn 65 every day) and the oldest members turn 70 this year.

Because of this, Baby Boomers are providing insights on how retirement is changing.

The big change is around work. More specifically the fact that more Americans are choosing to work past the age of 65.

This, of course, is not new news.

We cover this topic extensively in our baby boomer section and have even gone as far as saying we're tired of it (we are). 

But it's an important societal issue and one of the drivers of the growth of independent workers, so we'll continue to cover it.

The data from the Transamerica study on Baby Boomers is in the study chart below (click to enlarge). 

To us the key data point is that two thirds of baby boomers plan to or already are working past the age of 65.

This explains why a record number of Americans aged 65 and older are still in the workforce. It also explains why we are forecasting that growing numbers of aging boomers will become independent workers and small business owners (again, see our baby boomer section for more on this). 

Related to this, the JP Morgan Chase Institute study Past 65 and Still Working: Big Data Insights on Senior Citizens’ Financial Lives shows that about 400,000 Americans over the age of 65 are working via online platform companies like Uber and Airbnb. 

This echos the Intuit On-Demand Economy study, which found 25% of those working via online platform companies are aged 52 or older. A big appeal of these platforms is they provide a very easy and flexible way to work part-time, something older workers value highly. 

It's quite clear at this point growing numbers of older Americans are going to stay in the workforce. It's also clear that many of these older Americans will choose independent work. 

Ageism Means More Self-Employed

The Washington Post's Baby boomers are taking on ageism — and losing covers something we hear about often in our research - age discrimination.

We hear about it mostly from baby boomers who tell us it's one of the reasons they became self-employed. 

The reality is companies on average prefer younger workers over older ones. Because of this, age discrimination has become a major challenge for baby boomers.

Key quote from the article:

Often needing to stay in jobs longer than they anticipated to shore up savings depleted during the Great Recession, or simply wanting to remain active further into their lengthening life spans, they’re coming up against a strong preference in America for youthful “energy” and “innovation.”

Age discrimination is common across most industries which, of course, is a problem for the growing numbers of aging boomers who want or need to to continue working. 

We cover the trend of older Americans staying the in workforce extensively in our baby boomer section. For those looking for a shorter version, the recent New York Times article Of Retirement Age, but Remaining in the Work Force nicely summarizes the topic.

Key quote on the growth of older workers:

In May 2000, 12.8 percent of those older than 65 held a job. By this May, the number had climbed substantially, to 18.8 percent.

The combination of older people wanting or needing to work coupled with age discrimination means more older workers are choosing self-employment.

Not only does this avoid age discrimination, it also provides much more flexibility - something most older workers want. 

The Kauffman Foundation's annual Entrepreneurship Index nicely shows the shift to entrepreneurship and self-employment by older Americans. Click to enlarge their chart below.

Expect the trend towards older entrepreneurship to continue, and not just in the U.S. but globally. This is due in large part to demographics. The world is getting older and by 2030 there will be 56 countries where there are more people 65 and older than under the age of 15.

Declining Investment Returns Means More Independent Workers

While not initially obvious, investment returns have an impact on the number of independent workers.

The reason is retirement, or more precisely the financial ability people have to retire. If future investment returns are low, fewer people will have the financial resources to retire or they will have to work longer before they retire.

One of the reasons we are forecasting increasing numbers of independent workers is a growing number of people are working past the traditional retirement age.

Some are doing this by choice, others out of financial necessity. But either way, older workers tend to want higher levels of work/life flexibility and control than younger workers. This makes independent work attractive.

Age discrimination also makes finding a traditional job harder, making independent work often the best, or even only, option.

Because of these reasons, working Americans aged 60+ have the highest self-employment rate of any age cohort, with about 25% reporting being self-employed. This is substantially higher than the overall self-employment rate of 10%.

So anything that results in more older Americans staying in the workforce also results in more independent workers.

Declining investment returns is an example.

According to McKinsey's New talent tensions in an era of lower investment returns, we're entering "an era of overall investment returns that are substantially lower than those of the past 30 years."

As the article chart below shows, McKinsey is forecasting that the average annual equity returns over the next 20 years will be between 1.5 and 4.0 percentage points lower than they were in the past 30 years.

Fixed-income returns are forecast to be lower by 3% to 5%. 

This has huge implications on retirement savings. Key quote from the article:

A two-percentage-point difference in average returns over an extended period means that in order to live as well in retirement as would have been possible with higher returns, a 30-year-old today would have to either work seven years longer or almost double her savings rate.

Based on the current financial condition and savings of most Americans, I think it's safe to say relatively few will be doubling their retirement savings rate.

Instead, they're going to have to work longer and this means more independent workers. 

BTW, McKinsey's not the only one suggesting future returns will be lower.

In recent weeks Blackrock (the world's largest money management firm), Singapore's sovereign wealth fund and others have also said they expect lower investment returns going forward. 

Many Americans having already figured this out, which is one reason why more are planning on working longer. 

See our Baby Boomer and Demographic sections for more on this topic.

Consulteering - A New Approach to Retirement

Work a Little, Play a Little: A New Retirement Strategy from the New York Times covers the  growing trend towards people working part-time in retirement.

As we reported last week, record numbers of Americans are working past 65. They are doing so for a variety of reasons, including financial need, wanting to stay engaged and simply enjoying work. 

The article focuses on a retired educator who has put together a portfolio of activities to meet his goal of “balancing a life of leisure with a life of purpose ...”. He calls this approach consulteering, which he describes as: 

"... my trifecta,” he said. “Paid work, giving back and relaxation."

Volunteering and spending time with family covers most of the giving back and relaxation. He also works part-time. The key is time management. Key quote:

The biggest challenge is time management. The management comes in how many gigs I will take on and how much volunteering we can realistically do.”

The article suggests more people will choose this path. We agree.

One reason is more people will need to do so. Simply put, many older Americans are not financially prepared for retirement and will need to work.

Additionally, many older Americans are pushed out of their jobs before they are ready to retire. Key quote from the article:

"A sizable 60 percent of retirees surveyed last year by the nonprofit Transamerica Center for Retirement Studies said they were pushed out of their jobs before age 65, largely for reasons out of their control, according to Catherine Collinson, president of T.C.R.S."

Others will choose to work part-time in retirement to stay and engaged. And, of course, many older Americans will continue working simply because they like it.

As we mentioned last week, older Americans have the highest rate of self-employment of all age cohorts. Age discrimination plays a part in this, but many older workers also prefer the flexibility and control independent work provides.

With 85 million baby boomers moving into their retirement years, you can see why we think the number of independent workers will continue to grow.

Record Number of Americans Working Past 65

Bloomberg's I'll Never Retire covers the trend towards people working past the traditional retirement age - or at least the recent traditional retirement age.

As the article chart below shows, the percentage of Americans aged 65 and older who are still in the workforce is at an all-time high.

The shift towards older Americans staying in the workforce is not new. As is clear from the chart, it started in the mid-90s. The reasons for people working longer are also not new and fairly straight forward.

About half, according to the article, mention a financial need to work and/or needing access to benefits. About one third said the primary reason was they enjoy work and/or want to stay engaged.

Older workers are, of course, much more likely to be independent workers (self-employed, contractors, etc.) than younger workers. So this is one of the key trends that is helping to drive the growth of the independent workforce.

Because of this, we've long covered this trend and even went as far as saying we were getting tired of it several years ago.

But with the oldest Boomers reaching 70 this year, we will no doubt be spending more time on this in the coming months.

See our Baby Boomer section for more on this.

Millennials Pass Gen X as Largest Generation in the U.S. Workforce

Pew Research's Millennials surpass Gen X'ers as the largest generation in the U.S. labor force reports that in Q1 of 2015 Millennials surpassed Generation X to become the largest share of the American workforce.

The report chart below shows the generational shifts in the U.S. workforce over the past two decades.

 

An interesting sidelight to the report is Pew's definitions of age cohorts. Somewhat surprisingly there are no official demographic cohort definitions, so different groups use different definitions. Pew's are to the right.

Most everyone uses the same definitions for the older generations, but there are differences in how people define Gen X and Millennials.

For example, Pew ends the Millennial generation in 1997(see chart on right).

We define Millennials as those born from 1981 to 2000.

In most cases differences of a few years one way or another won't really matter or change the results of most surveys.

But it does make a difference in generational size. Obviously, the total size of Gen Y is larger by our definition than Pew's.  

So while it's not a big deal overall, it's worthwhile to check the definitions when you see sizing data by generation.

For example, we recently saw a report that defined Gen Y as those born from 1980 to 2007. The report focused quite a bit on how big Gen Y is relative to other generations.

Had we not known they defined the generation much more broadly than most, we might have misinterpreted their data.

The Myths About Working in Retirement

A good study from Merrill Lynch on working in retirement is nicely covered in the Fast Company article The Real Reasons More People are Working in Retirement.  

The study covers in detail what they call the 4 Myths of working in retirement. According to the study summary, these are:

Myth 1: Retirement means the end of work. Reality: Over seven in 10 pre-retirees say they want to work in retirement. In the near future, it will be increasingly unusual for retirees not to work.

Myth 2: Retirement is a time of decline. Reality: A new generation of working retirees is pioneering a more engaged and active retirement—the New Retirement Workscape—which is comprised of four different phases: (1) Pre-Retirement, (2) Career Intermission, (3) Reengagement and (4) Leisure.

Myth 3: People primarily work in retirement because they need the money. Reality: This research reveals four types of working retirees: Driven Achievers, Caring Contributors, Life Balancers and Earnest Earners. While some work primarily for the money, many others are motivated by important nonfinancial reasons.

Myth 4: New career ambitions are for young people. Reality: Nearly three out of five retirees launch into a new line of work, and working retirees are three times more likely than pre-retirees to be entrepreneurs.

These findings are very consistent with our work looking at Baby Boomer and Mature (aged 68+) independent workers.   

We cover this topic in more detail in various articles in our Baby Boomer category.