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

Many retirees have blind spots that could prevent them from seeing why it might make sense to get back to work, at least part time.
Shlomo Benartzi

A tight labor market and flexible work options in the gig economy would seem to make re-entering the job market an enticing prospect for retirees. And many are doing just that.

But behavioral economics tells us that there are likely a lot more retirees who would return to the workforce, if only they weren’t held back by cognitive blind spots. These blind spots cause them to ignore the possibility of returning to the workforce—even if working at least part time would make them more satisfied and financially better off.

Are you one of those people? The following self-assessments can help you measure your own vulnerability to these blind spots, and whether you should consider returning to the labor market and try a part-time job.

The value of spare time

Let’s start with a pair of questions on consumer behavior, adapted from research by the behavioral economist Ofer Azar, that measures your willingness to trade time for various discounts:

You found a pen you like for $3. You hear that it is on sale at another store, 20 minutes away. How much cheaper would the pen have to be for you to drive to the other store?

  1. 50 cents cheaper
  2. $1 cheaper
  3. $2 cheaper
  4. I wouldn’t make the drive if it was free

You found a shirt you like for $30. You hear that it is on sale at another store, 20 minutes away. How much cheaper would the shirt have to be for you to drive to the other store?

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

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

Time is an asset. Unfortunately, undervaluing your time might also make you less likely to work, since you fail to consider the ways that your time could become a source of income. Retirees who undervalue their time should consider ways that part-time work can translate into real income. Instead of making multiple 20-minute trips to save $30, you might enjoy taking a long walk with a dog that earns you $40. You’re $10 ahead, and you get some exercise.

The power of semiretirement

Here’s the next set of questions, which are drawn from research on dichotomous thinking by psychologist Atsushi Oshio. 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. Strongly agree

I want to clearly distinguish between what is safe and what is dangerous.

  1. Strongly disagree
  2. Disagree
  3. Neutral
  4. Agree
  5. Strongly agree

Information should be defined as either true or false.

  1. Strongly disagree
  2. Disagree
  3. Neutral
  4. Agree
  5. Strongly agree

These questions are designed to measure your “binary bias,” which is the tendency to see the world in black-and-white terms. In the 20th century, retirement was mostly a binary choice: You worked full time or you didn’t work at all. There were limited opportunities for retirees to work part time. Now, the gig economy offers older individuals a range of work options, in terms of both the work itself and the number of hours you can work.

Unfortunately, too many older individuals are still stuck in the 20th-century work mind-set. If you answered “Agree” or “Strongly agree” to the questions above, your binary bias might lead you to neglect part-time work opportunities that can boost both your income and your overall well-being. For retirees looking to overcome this bias, it might be helpful to start off small: Look for a paid activity that you only need to do once a week, or an hour or two a day. By starting off this way, you are more likely to stop viewing working as an all-or-nothing option.

Test-driving your retirement

Here is the last question, which draws from psychological research on our assumptions about happiness.

Imagine someone similar to you in age and personality. 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. Same

This question measures your susceptibility to the “focusing illusion,” which is the tendency to overweight obvious differences between your present and future life. People may assume that, if they moved to a sunny climate like California’s, they would be much happier. No more shoveling snow.  

Such an assumption might seem reasonable. However, research by behavioral scientists suggests that our predictions of future happiness are often wrong. In a survey of nearly 2000 undergraduates 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 the fact that a majority assumed students in California would be more satisfied. The weather in California really is better. It is just that good weather doesn’t make us happy.

New retirees sometimes make a similar discovery about their own happiness. Some people realize that days filled with leisure time aren’t ideal, after all. They miss the routine and camaraderie of work. So if you thought someone like you would be more satisfied in California, you should take extra care to update your retirement plans based on what actually makes you happy.

To discover what makes you happy, you might want to try new kinds or work. Many retired police officers, for instance, work part time as security guards. But they might be happier with a completely different gig that is not tethered to their past career—and the expectations and feelings that are tied to it. They could instead try, say, tutoring students or managing an Airbnb.

Taken together, these questions can help retirees think more effectively about whether to return to the workforce in some fashion. In the past, it was extremely difficult for people to test-drive different kinds of work in retirement. They were generally limited to the kind of job they’d had before, based on their previous work knowledge and experience. Now, retirees can experiment with gig-economy tasks tailored to their interests.

Of course, some retirees will still continue to enjoy an old-fashioned retirement, in which they leave the world of work fully behind. But many will benefit from embracing the work opportunities that are now available.

George Fraser, managing director at the Fraser Group at RBG, contributed to this article.

The Wall Street Journal