Should You Undo Your Retirement and Go Back to Work? These Questions Might Give You the Answer.

The tightening labor market and flexible work options in the contract economy appear to make re-entry into the job market an attractive prospect for retirees. And many people are doing it.

But behavioral economics tells us that it’s much more likely that retirees will return to the workforce, if only they weren’t constrained by cognitive blind spots. These blind spots cause them to overlook the possibility of returning to the workforce — even if working part-time at least makes them more satisfied and financially better off.

Are you one of those people? The following self-assessments can help you gauge how vulnerable you are to these blind spots, and whether you should consider returning to the job market and trying a part-time job.

The value of free time

Let’s start with a pair of consumer behavior questions, modeled on research by behavioral economist Ofer Azar, that measure your willingness to trade your time for other discounts. together:

You found a pen you like for $3. You hear that it’s being sold in another store, 20 minutes away. How much cheaper would the pen be if you drove to another store?

  1. 50 cents cheaper
  2. Cheaper $1
  3. Less than $2
  4. I won’t drive if it’s free

You found a good shirt for $30. You hear that it’s being sold in another store, 20 minutes away. How much cheaper would that shirt be if you drove to the other store?

  1. $5 cheaper
  2. $10 cheaper
  3. $20 cheaper
  4. I won’t make the drive even if it’s free

The size of the discount you’re willing to pay can help determine how you value your time. For example, if you’re willing to drive 20 minutes to save $2 on a pen, you’d value your time around $6 an hour. That’s less than half the minimum wage in most states. If you’re willing to drive 20 minutes to save $10 on a shirt, you’d value your time at about $30 an hour. That seems like a lot. But consider that, for example, the typical hourly rate for a dog walker on my neighborhood pet service site Rover is $40 an hour.

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Would you consider returning to work at least part-time? Why or why not? Join the conversation below.

Time is an asset. Unfortunately, underestimating your time can also make you less likely to work, because you haven’t considered the ways your time can become a source of income. Retirees who undervalue their time should consider ways that part-time work can translate into real income. Instead of taking multiple 20-minute trips to save $30, you might prefer to go for a walk with a dog that makes $40. You’re $10 ahead and you get some exercise.

The power of semiretirement

This is a follow-up set of questions, drawn from psychologist Atsushi Oshio’s research on dichotomous thinking. To what extent do you agree with the following statements?

There are only winners and losers in this world.

  1. Strongly disagree
  2. Disagree
  3. neutral
  4. Agree
  5. Totally agree

I want to make a clear distinction between what is safe and what is dangerous.

  1. Strongly disagree
  2. Disagree
  3. neutral
  4. Agree
  5. Totally agree

Information must be identified as true or false.

  1. Strongly disagree
  2. Disagree
  3. neutral
  4. Agree
  5. Totally agree

These questions are designed to measure your “binary bias,” which is your tendency to see the world in black and white terms. In the 20th century, retirement was primarily a binary option: You either work full time or you don’t work at all. Part-time job opportunities for retirees are very limited. Now, the gig economy offers older adults a wide range of work options, both in terms of jobs and the number of hours you can work.

Unfortunately, too many older individuals are still stuck in a 20th-century working mindset. If you answered “Agree” or “Strongly agree” to the questions above, bias. Your binaries may cause you to pass up part-time job opportunities that can increase both your income and your overall wellbeing. For retirees looking to overcome this bias, it can be helpful to start small: Find a paid activity that you only need to do once a week or an hour or two per week. day. By starting this way, you’re more likely to stop seeing activity as an all-or-nothing option.

Increase and decrease

Percentage change in the civilian workforce, by age

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Test drive your retirement car

Here’s the final question, drawn from psychological research on our assumptions about happiness.

Imagine someone who is similar in age and personality to you. Do you think this person would be more satisfied with their life if they lived in the Midwest or California?

  1. Midwest
  2. California
  3. Alike

This question measures how sensitive you are to the “concentration illusion,” which is your tendency to overemphasize the obvious differences between your present and future lives. People might assume that, if they moved to a sunny climate like California, they would be much happier. No more shoveling snow.

Such an assumption seems reasonable. However, research by behavioral scientists shows that our predictions of future happiness are often wrong. In a survey of nearly 2000 college students by David Schkade and Nobel laureate Daniel Kahneman, they found that college students in the Midwest and California were equally satisfied with their lives, despite Most believe that students in California will be more satisfied. The weather in California is actually better. It’s just that good weather doesn’t make us happy.

New retirees sometimes make similar discoveries about their own happiness. After all, some people realize that leisurely days aren’t ideal. They miss routines and close friendships at work. So if you think someone like you would be more satisfied in California, you should carefully update your retirement plan based on what really makes you happy.

To discover what makes you happy, you may want to try new types or jobs. For example, many retired police officers work part-time as security guards. But they might be happier with an entirely different gig that isn’t tied to their past career — nor the expectations and emotions attached to it. Instead, they might try to tutor students or run an Airbnb.

Taken together, these questions can help retirees think more effectively about whether to return to the workforce in some way. It used to be extremely difficult to test drive different types of jobs in retirement. In general, they are limited to the type of work they have done before, based on their previous knowledge and work experience. Retirees can now experiment with contract economics assignments to suit their preferences.

Of course, some retirees will continue to enjoy the old-fashioned retirement, in which they leave the world of work entirely behind. But many will benefit from embracing the available job opportunities.

George Fraser, managing director at Fraser Group at RBG, contributed to this article. Dr. Benartzi (@shlomobenartzi) is a professor and co-leader of the behavioral decision-making team at the UCLA Anderson School of Management and a regular contributor to Journal Reports. Email him at Report@wsj.com.

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https://www.wsj.com/articles/should-you-undo-your-retirement-11652829123?mod=rss_markets_main Should You Undo Your Retirement and Go Back to Work? These Questions Might Give You the Answer.

Edmund DeMarche

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