You may not need as much money for retirement as you think

The image of retirement as leisure is powerful. Think of advertisements about retirement. The pictures usually involve golf, biking, an RV trip, perhaps a cruise. Retirement means full-time leisure — not working.

You wouldn't know from looking at the ads how many older workers are staying attached to the job market. For instance, the labor force participation rate of men 60 and older has risen nearly one-third from a low of 26 percent in 1996 to 35 percent, according to economists Barry Bosworth and Gary Burtless of the Brookings Institution.

The comparable rate for women is an increase from 15 to 25 percent.

A quarter of new business ventures in 2016 were started by the 55- to 64-year-old age group, up from some 15 percent two decades ago.

Thing is, the basic retirement savings model is also based on the expectation of full-time leisure. "The 'traditional' approach to retirement is relatively straightforward: save and invest as much as you can, for as long as you can, starting as early as you can, to accumulate enough retirement savings that you no longer need to work, and instead can enjoy a life of leisure," Michael Kitces, director of research at Pinnacle Advisory Group, wrote in a recent blog post.

It's a misleading model if more retirement age people choose a blend of work and leisure, a portfolio of activities that includes bringing in an income through part-time work, flexible employment, self-employment or an encore career. Similarly, what are the savings lesson for the younger generation that can expect to work well into the retirement years?

For one thing, many savers nearing the retirement years may be better off than they think. Consider this calculation: Let's say you earn $20,000 in part-time income in your semiretirement. That's the equivalent of a 4 percent withdrawal rate from a $500,000 portfolio. The 4 percent number is a baseline personal finance rule-of-thumb.

"In the context of today's prospective retirees in particular, for those who may be able to engage in 'semiretirement' and still partly work, the results suggest that many may be unnecessarily stressing about their ability to save for a 'retirement,'" Kitces wrote.

For another, the trend toward multiple careers and an embrace of a mix of work and leisure suggest savers should put a greater emphasis on accumulating the kind of savings that can help fund multiple transitions throughout a career. It's worth thinking about.

Chris Farrell is senior economics contributor, "Marketplace," commentator, Minnesota Public Radio.