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Retirement, interrupted: Why those over 55 are a fast-growing segment of the workforce
Retirement, interrupted: Why those over 55 are a fast-growing segment of the workforce
Joan Madden-Ceballos, a 65-year-old health care administrator, has a working life in California many would envy. Her work is flexible, fulfilling, and something she enjoys going back to day after day. "I'm a baby boomer, so work is sort of ingrained in our lives," she told Vox.
While it may sound unusual for some to work past what many consider the "golden years" of retirement, Madden-Ceballos is among the increasing number of Americans who have stuck around the workforce longer as they age, according to federal data. Per 2023 data from the Bureau of Labor Statistics, more than 1 in 5 workers are 55 or older. Three in 20 working Americans are aged 55 to 64, while roughly 7 in 100 are older than 64.
From 2003 to 2023, there was a sizable jump in people 55 and older still in the workforce—nearly a 74% increase—but there were also profound jumps in those working who are 65 and older. The number of workers aged 65 to 74 jumped 139%, and those 75 and older increased by 113%.
Health Centers Near Me explored data from the Bureau of Labor Statistics to examine why the aging workforce in the United States is working past the typical retirement age.
With longer lives and better health, seniors are choosing to work
There are a few reasons why many seniors are choosing to work past their retirement age.
Older Americans today are living longer and maintaining their physical independence longer. According to Centers for Disease Control and Prevention estimates, the average 65-year-old was expected to live another 18.9 years in 2022, compared to just 17.6 years in 2000. A 2023 study of 5.4 million older Americans published in the International Journal of Environmental Research and Public Health also found that across 10 years, the number of people 65 and over with functional limitations had decreased significantly.
Work may be a way to stay active in society for some older Americans. Workers aged 50 and older told researchers their jobs have had a positive effect on their physical and mental health, according to the 2024 University of Michigan National Poll on Healthy Aging. Nearly half said that work gave them a sense of purpose and kept their brains sharp. This reality is even more consistent for workers aged 65 and older, with 9 in 10 saying that working helped their overall well-being.
The nature of jobs has also changed. Nicole Maestas, professor of economics and health care policy at the Harvard Medical School, noted that "many people have less physically demanding jobs in today's information economy, so for some, it is easier to continue working."
A survey of 2,000 individuals aged 50 to 79 published by the National Bureau of Economic Research also found that job characteristics affect people's decision to retire. According to researchers, nearly a third would likely keep working past 70 if their job offered flexible hours compared to just a sixth without that option. Job stress, the physical and mental demands of the job, telecommuting options, or commuting times were other factors that played into that decision.
Still, a sense of purpose and job characteristics are only part of the picture. When asked why workers aged 50 and older might keep working, the top reasons the University of Michigan poll respondents gave were related to finances. Nearly 4 in 5 (78%) workers said financial stability is what keeps them clocking in, followed by saving for retirement and access to health insurance.
Some older Americans can't afford to stop working
On multiple surveys, people reported a bleak savings picture and perspective on retirement. For a 2024 AARP survey, 2 in 3 adults older than 50 reported not having enough savings to be "financially secure" in retirement. In 2023, 2 in 5 respondents told Gallup they expected "to live comfortably in retirement," down from 3 in 5 in 2002.
Numerous factors could be driving this sentiment.
People could be working longer because a dollar does not stretch as far as it used to. Wages have stagnated, while the cost of goods, measured by the Consumer Price Index, has steadily increased. Renting or buying a home costs thousands of dollars more today than decades ago. Gen Z dollars could buy only about 86% of what baby boomers could in their 20s, according to Consumer Affairs.
A few decades ago, pensions were also more common. Employers managed the money for their employees' pensions, known as defined benefits plans, and paid employees for life after retirement. It was a guaranteed income benefit that typically started at a specific age, like 62, incentivizing older workers to plan for retirement. Benefit pensions became less common because of the unpredictable cost to employers.
Why older Americans are working longer
By the 1980s, defined contribution plans like 401(k)s became more widespread. These plans typically lack age-specific requirements, found Courtney Coile, a researcher in the economics of aging and health at Wellesley College, leading to a six-month increase in the average retirement age. A quarter of those return to work within six years in part- or full-time jobs.
Researchers from the Georgetown Center for Retirement Initiatives also found that while current estimates use older generations with pensions as a basis for forecasts, newer retirees tended to draw down their savings at much faster rates, fueled in part because of longer life expectancies that increased the need for more funds to pay for health care and long-term necessities. Consequently, new retirees may exhaust their 401(k) assets by 85 years of age, likely outliving their savings.
Some older Americans may not even have enough to begin with. The Government Accountability Office found in 2024 that half of households did not have any retirement savings as of 2022, and a third of households with a worker 55 or older did not have any retirement or defined benefit plan set by an employer to fall back on.
People may be working longer to delay pulling Social Security benefits, even increasing their monthly payments. Yet the existing financial safety net for older Americans is fraying. Social Security may run out of money in less than a decade. The additional source of income for older workers, driven by a lifetime of workers' wages, is projected to be insolvent by 2033 without congressional action, stated the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds in its 2024 annual report. Social Security and Medicare alone are insufficient for people to make ends meet. Half of older adults living alone, as well as 1 in 5 older couples, "lack the financial resources required to pay for basic needs," according to a 2022 study led by three gerontologists from the University of Massachusetts Boston.
"There's a myth that Social Security and Medicare miraculously take care of all of people's needs in older age," Ramsey Alwin, president and chief executive of the National Council on Aging, told KFF Health News. "The reality is they don't, and far too many people are one crisis away from economic insecurity."
