Baby boomers are redefining a life stage – that working in retirement can be more fulfilling, stimulating and financially viable for themselves and their families, according to a new Merrill Lynch study.

Baby Boomers are redefining a life stage – that working in retirement can be more fulfilling, stimulating and financially viable for themselves and their families, according to a new Merrill Lynch study that raises significant considerations for those working in the wealth management space.

Based on a US survey of around 7,000 individuals, the Work in Retirement: Myths and Motivations study explored common beliefs about work during retirement – a phenomenon driven by longer life expectancy, the elimination of most employee pensions, financial needs and the "re-imagining" of later life.

With already half of current retirees having worked or planning to work during their retirement years, it will become increasingly common for people to seek work during this stage of their lives, Merrill said. Indeed, it was found nearly three out of four (72 per cent) pre-retirees over the age of 50 said their ideal retirement will include working.

The news comes at a time when some 10,000 Baby Boomers are turning 65 years old every day. Entitlements are also shrinking, family inter-dependencies are multiplying, and economic uncertainty is widespread. 

Lack of communication

The issue is particularly relevant given the estimated $41 trillion expected to be transferred from one generation to the next through 2052 - the largest wealth transfer in US history.

Bill Hunter, director of personal retirement strategy and solutions for Bank of America Merrill Lynch, told Family Wealth Report: “Our research uncovered that 85 per cent of pre-retirees have not discussed their retirement work plans with their financial advisor. Given the financial implications of working during later life, including how much and when you should withdraw from your savings and how remaining in or re-entering the workforce may affect entitlements, such as Social Security and Medicare, this is a topic that needs to be more prevalent in advisors’ conversations with their clients.” 

“By embracing these new realities and attitudes toward work in retirement, everyone from policy makers to employers and the financial industry will be better equipped to help people pursue their goals,” said Andy Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch.

Yet according to recent research from Fidelity, an overhwhelming 91 per cent of advisors currently offering retirement plans such as 401(k)s and 403(b)s are only accommodating the business as part of their broader wealth management offering. The firm believes this presents numerous challenges, with many so-called “accommodators” reporting that it is difficult to keep up with fiduciary rules, build scale and grow relationships.

Merrill's study was conducted in partnership with Age Wave. Among the affluent respondents, 2,678 had assets between $250,000 and $5 million and 151 had assets of $5 million or more.