The Transition From ‘Golden Years’ to ‘Encore Careers’: a Book Preview

Following are excerpts from Encore: Finding Work That Matters in the Second Half of Life,

a book by Marc Freedman, founder of Civic Ventures, a San Francisco nonprofit organization. The book will be published this week by PublicAffairs.

For more than 50 years, we have treated older adults much the way we have treated farmers: Just as we pay farmers not to grow crops, we’ve made it worthwhile for people to stop working. Essentially, we have said: If you agree to leave your job at 65, and earlier if at all possible, we’ll provide financial incentives and security, we’ll provide pathways and support to leave, and we’ll dress it all in a definition of success that centers on leisure and recreation, on the dream of the Golden Years.

That implicit contract, which stretches back to the Depression, was animated by a belief that individuals sought freedom from work, and that we were all better off if they left the productive sphere.

Now the opposite is true. Study after study shows that individuals want to, hope to, and need to continue working at the age when previous generations retired.

And we need them to as well, as labor and talent shortages crimp key sectors such as education, health care, nonprofits, public employment, and even the clergy, all of which could reap an experience dividend from the enormous human-capital investments that were made in the boomer generation. Our fiscal health requires longer working lives, and our physical and mental health may benefit as well.

A new deal is needed. The great challenge for the American economy and for American society over the next half century, for individual happiness and generational solidarity, for labor market efficiency and fiscal solvency, will be to develop a new social compact that inverts the old arrangement that pushed and pulled people out of the labor market.

Imagine this new package: If you sign up for a significant new stage of work, and if you invest in and prepare for this phase, society will meet you halfway. We’ll help clear away the barriers and obstacles that make continued work difficult and complicated. We’ll develop better pathways to a significant second career.

We’ll help you find engagement that truly uses your skills, experience, and know-how, and we’ll focus on opportunities where your assets are genuinely needed. We’ll even build in a break to help you catch your breath and retool for what’s next, and we’ll make work flexible enough to adapt to life’s realities.

This new compact offers the opportunity to get work right, in a way most people don’t have a chance to in midlife. In short, people will have a chance at an encore career, a body of work that offers continued income, identity, social connection, and the promise of purpose and significance in the second half of life.

Realizing this vision will take more than promising pilot programs and fiddling around the edges of policy change. The magnitude of what is occurring is so great, the consequences so vast, and the obstacles sufficiently significant that only big thinking and bold action will do the trick. It will further require acting quickly. Although the new norm for the period opening up between midlife and retirement is currently up for grabs, it won’t remain that way for long, as myriad interests rush in with their own designs on the boomer population.

Such a new social compact will require a comprehensive set of changes, in attitudes as much as in policies, in imagination as much as in investments.

Think encore. The new stage of life is something uniquely new, not a rerun. Sixty isn’t the new 40, or the new 30. It’s the new 60. The key question for individuals entering this stage is: What do you want to do now that you’ve grown up?

The persistence of a “retirement” mind-set even among those who claim to be reinventing it has hampered the development of new approaches and opportunities.

We need to be liberated from artificial notions such as “retirement age” and the oxymoronic concept “working in retirement.” We need to be liberated, too, from such dreary and bloodless phrases as “older workers” and “mature workers.”

This is not a call for euphemisms, but rather for precision and accuracy.

The truth is that the vast majority of individuals in this stage of life are neither retired nor anything approximating old — and these trends will only accelerate in the coming years.

It’s time to create a new category of thinking and a new language: the encore phase and the encore career. The sooner we recognize that we are entering fresh territory, shaping a new stage of life and work between the middle years and true retirement and old age, the more quickly progress will come in grasping the possibilities of this new period.

The expanded time horizon of the encore career changes everything. Planning for a 10-, 20-, or 30-year stage of life is different, qualitatively as well as quantitatively, from planning for a five-year retirement. As that notion takes hold broadly, all sorts of customs and institutions will undergo similar qualitative change.

Individuals approaching this phase face an identity crisis as they struggle for a vision and the words to describe their current situation. Just as important, potential employers need to understand the encore career, to realize that these individuals are neither passing through nor phasing out but rather embarking on a new body of work for a time span long enough to make investing in them worth the effort.

Clear the debris. Many of the policies developed in earlier decades to usher workers out of the work force remain on the books, providing perverse disincentives that contradict the new social goal of encouraging people to keep working in ways that use their experience and are personally fulfilling. We need to get rid of them, along with outmoded conceptions that devalue talent and experience — what might be called the “retirement subsidy.”

For many people in their mid-60s, not working pays almost as much as working, the result of a set of “taxes” on work in this stage that are levied on top of traditional income and other taxes. Taking all factors into consideration, one study found the implicit tax on a representative worker rises from 14 percent at age 55 to 50 percent at age 70.

Removing disincentives for working retirees, such as reduced Social Security and other retirement benefits, would encourage individuals at this juncture to improve their own financial security as well as the nation’s economic health.

Sweeten the pot. Carrots tend to be more appealing than sticks. We should give workers earlier, not later, access to tax-advantaged savings, corporate pensions, and benefits such as health care. Additional financial flexibility to launch an encore career or renegotiate a current one would make working longer about choice, not punishment.

To date, most of the changes in the equation around longer working lives have taken the form of sticks rather than carrots. Cutbacks in retiree pension and health benefits raise the “cost” of retirement and serve to keep people working longer.

But incentives may work even better than disincentives.

For example, under current law, individuals can increase their monthly income for life simply by postponing the date at which they claim Social Security payments for three years after their “normal” retirement age. Future payments increase by 8 percent a year for up to three years, producing a lifetime monthly bonus of up to 24 percent. A study by the Federal Reserve found that the bonus has been effective in spurring people to work longer. Extending it beyond three years could make it even more effective.

Still, it is essential to underscore that we need more than discrete incentives. We need a powerful package that backs up a new vision for work — for employers, employees, and policy makers.

Expand health coverage. Coverage for children has been the most common beachhead for advocates seeking to incrementally decrease the ranks of the uninsured. But aging boomers can tag along on the movement.

Fear of losing coverage keeps many workers tethered to jobs they are otherwise ready to leave, inhibiting their ability to launch encore careers. According to the Kaiser Family Foundation, those over 50 but not yet eligible for Medicare at 65 face the hardest time getting affordable individual health insurance because of age-related premiums and restrictions on preexisting conditions.

At the same time, higher health-care costs for older workers represent a direct disincentive for hiring. The costs of providing health coverage for workers over 55 can be as much as twice the cost for workers younger than 44.

The point is not lost on employers.

More than a break. It’s time for a national sabbatical for individuals completing the first half of midlife work and beginning to contemplate their encore phase.

To start, many Americans entering the second half of life are exhausted. Even if they aren’t working in “extreme jobs” requiring 70 or 80 hours a week, the combined weight of already long hours on the job and the duties of parenting leave women, and quite a few men, panting by the time they hit their early to mid-50s.

This is not the best state from which to launch an encore career — and beyond the exhaustion, there is the simple fact that few have had much time to think about what to do next, much less try on different roles. Yet that question looms large as the middle years far outlast the length of most first careers.

Individuals need the chance both to think about “what’s next” and to try on various possibilities, ideally through internship-like experience akin to the way medical students rotate through various specialties. Equally important, there’s the need to catch up developmentally.

Introducing the Encore Fellows. National service programs have traditionally been focused on young people. It’s time to stop overlooking the biggest source of people ready to ask what they can do for their country.

Let’s support a broad cross-section of talented individuals in their desire to serve their communities and the nation by creating flexible, practical Encore Fellowships.

Those selected as Encore Fellows would be given vouchers to enable them to approach nonprofit groups or public agencies for an internship. The vouchers would underwrite a stipend for the Encore Fellow while also providing funds to the organization for training.

The program could start as a federal pilot program for as few as 1,000 Encore Fellows in early years, but the real goal should be 100,000 or more. We would expect the Encore Fellows model to be copied and extended by state and local governments, community and national foundations, and critically, private-sector employers who see a sound business case for helping employees nearing retirement transition to nonprofit or public-sector jobs.

Highest education. We are poised for an encore revolution in higher education. Thirty years ago, institutions such as Elderhostel in America and the University of the Third Age in the United Kingdom broke down the notion that higher education was just for the young. However, these efforts focused mostly on self-development and learning for its own sake, in many ways pursuing a higher form of the leisure ethic assumed to accompany retirement.

But what about adapting higher education for those who need retooling to launch the next phase of their working lives? Most individuals are forced to jump through the same hoops as an 18-year-old or a 22-year-old.

But devoting four years to school at age 58 is a much bigger commitment than it was 40 years earlier — and often an unnecessary one.

How could we enable all of these educational opportunities to happen on a grand scale, and with a focus on helping individuals prepare for jobs where they are most needed? One possibility is a reverse GI Bill. The GI Bill was built on the basic concept of rewarding service with educational opportunity.

It was one of the great policy achievements of the 20th century. For people who have completed their midlife careers and now want to move into work or service in the nonprofit sector, education, health care, or other important fields facing labor shortages, a reverse GI Bill could provide similar benefits.

Many people who want to move into these high-need professions will require a period of training or education. Some might need to obtain a credential or degree. The student-loan approach may not be practical for people in their middle years. A reverse GI Bill, patterned after ROTC and Public Health Service Corps approaches, would help midlife individuals pay for education and training; the beneficiaries would then repay the educational support through a period of service in a needed profession. One year of education or training could be repaid through one or two years of service or work.

Government funding could be greatly enhanced through investments by individuals themselves in their encore careers.

These investments could be promoted through simple reforms, for example, by expanding the approved uses of tax-advantaged individual retirement accounts and 401k’s to include such necessary transition costs as education, training, or health coverage.

Revamp the workplace. A few simple innovations will go a long way toward meeting the needs of individuals who want to have the greatest impact but are unwilling to continue to turn their lives completely over to work.

Job sharing, telecommuting, extended vacation time, and a raft of other nifty ideas can be as adeptly applied to encore careers as to retail “bridge jobs.”

There are immense opportunities for new and flexible roles in the nonprofit world. Although most nonprofits have a CEO and a CFO, they are often particularly thin in skill positions in marketing, human resources, legal counseling, and communications. At the same time, an unprecedented number of women and men, including an extraordinary number of M.B.A.’s, with precisely these skills are approaching the end of their midlife careers in the corporate sector.

Many are seeking new purpose and greater flexibility in the next phase of their working lives, while desiring to use the skills they have acquired over many decades. Why not consider helping them transition into the nonprofit sector, through inventing not only new pathways but new flexible management roles? The result might be not only more-fulfilled workers but a social sector that is far more effective.

Invest in innovation. Twenty years ago under the first Bush administration, a quasi-public commission pumped over $50-million a year into efforts such as City Year and Teach for America, turning small pilot programs into national institutions, which in turn have helped change the definition of success for young people coming out of college. The same effort could be made today with innovative pilot programs aimed at changing the definition of success for people coming out of midlife careers.

For example, what if nonprofits like Teach for America, which already has an infrastructure for introducing young people to public education, adapted to this new audience?

Indeed, there is evidence that new investment might lure many of the most creative social-sector organizations into this arena.

It’s even worth considering ways to encourage individuals to invest in the encore careers of their peers. Consider this possibility: Affluent individuals able to forgo Social Security checks for a year or more could choose to redirect all or part of their benefits to a social-investment fund that could be, for example, dedicated to deploying the time and talents of aging boomers on challenges facing youth.

The encore bill. A coherent and ambitious package of policies to clear the path to new engagement and contribution for America’s largest generation could be the nation’s first great social achievement of the 21st century.

The payoff from such a package would likely more than recoup its costs. It would have to be an omnibus, including new incentives, the removal of barriers, support for innovation, adaptation of existing institutions, and most fundamentally, a new approach to public policy for this stage of life.

We’ll need to think big. In the aftermath of World War II, we faced the prospect of millions of Americans returning from the war, many of them from abroad. The challenge was to reintegrate these individuals into productive new roles.

Failure to do so would not only have constituted a betrayal of their service to the country but an extraordinary loss of human talent — and a potential source of great social dislocation. In response, we created the GI Bill, and the result was an economic and social windfall, including greater social mobility.

Today, we face the prospect of tens of millions of boomers moving through their 50s and into their 60s. Some are crossing from military life to civilian roles, much like their predecessors after World War II. For most, it’s a divide in the life cycle, a move from well-established terrain to a new phase of life and work that remains poorly defined but will last for decades. If they fail to navigate this transition successfully, if they are left at loose ends, underemployed, lacking purpose, feeling diminished and betrayed, the results could be disastrous for the economy, for society, and for individuals.

Although public policy will not single-handedly shape the outcome of this challenge, it can play an important role.

In the absence of a thoughtful policy agenda, many will still find their footing in the new stage. But those who do will likely be the most affluent, educated, and connected, buying their way out of the difficulties.

Moving into fields as diverse as nursing and the ministry, some choosing the path of social entrepreneurship, these individuals often feel they are alone, even out of step, making choices that are merely individual in nature.

In choosing the encore path, these innovators are electing to be at the vanguard of something much larger and more significant. They are choosing to lead, to create the future. By breaking through to new roles they are like the women of the last generation who defied convention and opened doors for the many millions coming quickly on their heels.

The stakes are every bit as great today. The opportunity is rising and the time is right. The future is calling.

What are we waiting for?

— Reprinted with permission of PublicAffairs, a member of the Perseus Book Group © 2007.