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Future of Work
6 minute read

Redefining Retirement: The Benefits of Freelancing After 60

Modern freelancing is easier and more rewarding than older workers may think. Toptal’s chief economist breaks down the advantages of freelancing in semiretirement.

For many professionals who are at or nearing traditional retirement age, the idea of freelancing conjures a “lifestyle” in which long hours are spent trying, often fruitlessly, to attain, serve, and bill clients, with only a fraction of those hours dedicated to actual, meaningful work.

As a result, freelancing is often overlooked as a viable bridge between career and full retirement, to the detriment of individuals, organizations, and the economy as a whole.

Modern freelancing involves fewer points of friction and a lighter administrative lift than what many workers in the baby-boom generation might perceive. For example, Toptal and other contingent talent networks handle the burden of sourcing and billing clients on behalf of freelancers, enabling skilled professionals to focus on the work they love, not administrivia.

In addition to greater fulfillment and better health, ongoing engagement in meaningful work during a person’s later years offers considerable financial benefits, allowing more time for investments to mature and Social Security benefits to accrue. Experienced professionals whose full-time work years are winding down would be wise to consider how freelancing could help them reach personal and professional goals.

Related: The Ultimate Freelancing Guide

The Case for a Gradual Workforce Exit

The idea of “retirement” as it is currently understood is outdated.

In the US, retirement policies emerged amid the two great upheavals of the Industrial Revolution and the Great Depression, culminating in the Social Security Act of 1935, which was intended “to help those who have reached the age of retirement to give up their jobs and thus give to the younger generation greater opportunities for work,” President Franklin Roosevelt said at the time. Roosevelt’s language and that of many other participants in the surrounding debates made it clear that they saw senior citizens as a problem to be solved and a blocker to youth employment.

Today, many companies place a higher value on the experience, reliability, and institutional knowledge older workers bring. And many baby boomers intend to continue working well past traditional retirement age, sometimes out of necessity but often by choice.

Viewing work and retirement as two distinct stages of life is problematic. People too often delay spending time with family, traveling, living abroad, and other “wish list” desires until late in life. Retirement, in the traditional sense, might provide more opportunity for these experiences, but depending on the nature of a person’s job, the loss of structure, routine, and professional connection can also result in loneliness and a lack of fulfillment.

Often, because so much of a person’s identity is wrapped up in their work, closing the book on that chapter of life can feel like a loss akin to death. Perhaps partly for that reason, 44% of millennials, 33% of Gen Xers, and 36% of baby boomers plan to seek work in retirement years, according to a 2021 report by the National Institute on Retirement Security. In a 2021 Harris Poll of American workers, 79% of baby boomers said they want to transition to semiretirement rather than disengage from work entirely.

Recognition of this trend has become so widespread—and talent shortages have become so acute—that forward-looking firms like Microsoft and Marriott are creating programs to support and retain mature workers. Some employers are starting to offer semiretirement opportunities—but the movement is not as broad as it needs to be to accommodate all of the experienced workers who aren’t quite ready to retire.

Despite the benefits of continuing to work later in life, most organizations do not yet offer flexible and part-time work options in lieu of retirement, a missed opportunity for both employees and employers.

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Freelancing eliminates the false choice of whether to work full time or not at all. People can essentially leapfrog into a life that closely resembles those long-awaited “retirement years” while avoiding the sense of loss that often accompanies giving up work entirely. Even when working beyond traditional retirement age is born of necessity rather than desire, freelancing can increase the chances that such work can be done remotely, with more flexible hours, and in alignment with workers’ interests.

This not only benefits workers but also organizations and the economy as a whole, as these professionals continue to contribute skills and knowledge acquired over decades.

The Financial Effects of Freelancing Later in Life

For those nearing or at traditional retirement age, freelancing provides a means to avoid the daunting question of whether or not to leave the workforce. As the following sample scenario illustrates, part-time freelancing imparts compounding financial benefits that far exceed direct earnings, including higher Social Security payments and investment income—to the tune of nearly $400,000 over 15 years.

Consider our hypothetical employee Tania, a US-based graphic designer who just turned 62, the minimum age to receive Social Security benefits. Tania wants to retire from her full-time job. She holds $1 million in investments—401(k), IRA, and brokerage accounts—and plans to convert these into interest-bearing assets and begin the standard withdrawal of ~4% per year. This preserves—but does not grow—her portfolio and provides her with $40,000 per year. Social Security payments are based on income history and other factors, but let’s assume, based on a hypothetical $50,000 annual salary at retirement, that she would receive $12,000 per year, for a combined annual income of $52,000.

But what if Tania chooses to freelance part time in semiretirement—working 40 hours per month at $70 per hour, earning $33,600 per year—and delays drawing Social Security until age 70?

  • Tania’s Social Security payments will increase by 8% each year she waits to draw them. Delaying the activation of these benefits until age 70 locks in the highest possible payment.
  • By freelancing, it is entirely possible that Tania can also keep half of her $1 million in investments in the financial markets, rather than converting it all to income-generating assets. If we assume an 8% average annual return for eight more years, the $500,000 that remains invested balloons to $925,465.
  • Moving her larger nest egg into income-generating assets upon turning 70 will yield a perpetual annual investment income of more than $57,000 versus the $40,000 she would get if she fully withdrew from the workforce at 62.
  • Add to that Tania’s higher Social Security earnings for “late retirement,” and her combined annual income after age 70 jumps to $76,903.

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These calculations ignore matters such as taxes and inflation, but the point remains: The tremendous upside of freelancing comes from the additional time investments spend in the market and the larger Social Security payments you receive by delaying the start date. The true power of compounding returns occurs at the end, with each final marginal year more powerful than those that preceded it.

Related: The True Personal Economics of Going Freelance

Freelancing through a talent network offers mature workers flexibility, community, and income to pursue goals and hobbies. Demand for high-skill freelancers, particularly those with experience in tech or creative fields, remains elevated. Age discrimination, while illegal, does happen in hiring for full-time roles. When outsourcing projects or hiring consultants, however, managers often look for seasoned professionals who can reliably execute high-quality work.

My hope is that societal notions of “retirement” shift such that continued workforce engagement in a person’s later years becomes the norm rather than the exception.

Personally, I intend to work with entrepreneurs and advocate for the expanded use of global talent as long as possible, as doing so provides me a sense of purpose. Unburdened by the false choice of full-time work or full retirement, professionals should weigh all of their options during their later years. Continuing to work on a limited basis for some period of time could be just what we need to redefine retirement and light up our brains into our 90s and even beyond.