Work, Forever: Why Interning at 60 Is the New Retirement Plan

Nancy Diao works part time, for a small stipend, at a Bay Area education nonprofit. But at 60, Diao isn't your average intern. She's a former executive who will spend her fellowship year at Breakthrough Collaborative serving as acting chief operating and chief financial officer.

Diao didn't feel ready to retire when she left Wells Fargo last year. "I had a hard time saying 'I'm retired,' because I'm not, mentally," she says. She didn't want to return to banking, though; she wanted to find meaningful work that would still allow her to spend time with her two young grandchildren.

Millions of baby boomers, like Diao, don't want or can't afford to check out of the workforce at age 65. And many are seeking a transition into work that has a social impact. The San Francisco-based Encore.org helps older workers make that transition by pairing them with nonprofits in need of their private-sector expertise for a fellowship year. It's an arrangement that fits the needs of all participants, and it has broader ramifications: As the population ages, keeping older workers in the workforce could boost the economy, alleviate retirement insecurity, and ease strain on the social-safety net.

In 2009, President Obama signed a law that--inspired by Encore.org's model--allowed for the creation of federal fellowships for those 55 or older in every state. Funding has yet to be appropriated for the program, but that hasn't stopped Encore.org from creating a 20-city network that placed 200 fellows last year. The organization estimates that 31 million Americans ages 44 to 70 want to find work with a bigger social impact.

The era of long, vacation-style retirements is over, says Marc Freedman, CEO and founder of Encore.org. "That ideal is no longer attainable for individuals, and it's not sustainable for society. Who can afford a balloon payment for 30 years of leisure?" he asks. Federal survey data show that most full-time workers actually retire in stages--switching to part-time work, or dipping in and out of the labor market as they age.

Older Americans are also collecting their Social Security checks later and working at rates not seen since the 1960s. In the mid-1990s, less than a third of people age 55 and over were either actively employed or looking for work. Today, the share is 40 percent, according to the St. Louis Federal Reserve.

Lengthening life spans and changing lifestyles account for part of the shift. Americans who hit age 65 can expect to live another 20 years. Often, their family responsibilities are still ongoing: In 2012, one-third of baby boomers had both an elderly parent and a financially dependent child, according to the Pew Research Center.

Changing pension plans are also part of the story. Fewer workers are enrolled in defined-benefit pension plans, which guarantee monthly payments after retirement, and more are enrolled in 401(k) plans that grow with salary contributions. "There's a much bigger payoff to staying in the workforce," says Richard Johnson, director of the program on retirement policy at the Urban Institute. "As you keep working, you're really improving your retirement security, because you're able to add to your nest egg."

With the average fellow earning $25,000 for a year of 1,000 hours of work, Encore.org's fellowships aren't supposed to be family-supporting jobs but are intended to help older workers move to the next stage of their working lives."The fellowship is serving a lot of purposes of a person's transition," says Leslye Louie, national director of the Encore Fellowship Network. "It could be going from the for-profit sector to the nonprofit sector, it could be going from full-time work to part-time work, it could be moving from one part of the United States to another."

Anyone can apply for Encore fellowships, but the majority of fellows so far have spent their careers in the private sector and have been able use that experience to help build the capacity of nonprofit organizations, drawing on expertise in areas like marketing or performance management. Organizations affiliated with Encore.org's fellowship network vet candidates and set up interviews with employers. Stipends are generally provided by nonprofit partners, although some fellows are supported by former employers or by foundations. Many fellows go on to take full-time or part-time nonprofit jobs.

Just like fellowships for recent college grads, Encore fellowships help workers get their foot in the door. It is generally harder for older workers to find new jobs than younger workers, and a bad economy has exacerbated the trend. In 2011, the average job seeker over age 55 was spending 35 weeks looking for a job, compared to 26 weeks for younger job seekers, according to federal statistics. Age discrimination continues to be a problem older workers face. Some employers assume--falsely-- that more-experienced workers are more expensive, harder to manage, and less committed to their jobs, says Peter Cappelli of the Wharton School at the University of Pennsylvania.

For Breakthrough Collaborative, bringing on Diao as an encore fellow was a perfect solution to a pressing problem. The organization needed high-level expertise to help manage a big expansion to new sites and new cities but couldn't afford to bring on a CFO at an executive-level salary, says Laura Zahn, the nonprofit's chief academic officer. Diao's yearlong position will cost the organization just $35,000, and should see it through the critical expansion period.

Since Diao's fellowship began this summer, she has worked on eliminating administrative inefficiencies and getting the organization more affordable office space. "I have a lot of experience, so when I look at something, I can say, well this makes sense, this doesn't make sense," she says. Her colleagues think she's working miracles. When Zahn originally looked at Breakthrough's existing lease earlier this year, she thought extricating the organization from it would be a nightmare. But then Diao got on the phone with the leasing agent and put to use her years of negotiating with and managing people. "Something that could have been either contentious or impossible became an opportunity," Zahn says, who has learned that Diao's soft skills in dealing with people are as useful as the hard skills she brings to the organization. The learning cuts both ways; Diao's new colleagues are teaching her about Facebook, Twitter, and Microsoft Excel.

Having Diao around has also had a calming influence on Breakthrough's staff, who are almost entirely in their 20s and 30s, Zahn says. "What I love about Encore is this bringing together of generations," she says. In one of their first conversations, Zahn told Diao: "You're two years away from my mom's age, and my mom is my best friend! I love having your wisdom and expertise." Diao's age wasn't a problem. It was an asset.