The average American retires at 62 years old (as per the 2024 MassMutual Retirement Happiness Study), but not everyone follows the same path. In fact, there’s a rising trend in Americans working past retirement age, a definitive shift from the traditional way to spend your golden years.
The reasons for this are multifaceted.
For one thing, people are living longer than ever before. According to Peterson-KFF, the average U.S. life expectancy at birth is 78.4 years (up nearly 5 years from only a few decades ago). The number of Americans living to at least 100 years old has also risen in recent years.
Longer lifespans could mean more years in retirement, but not always. For many Americans, living longer means working longer. Our research found that 51% of those who’ve reached the standard retirement age plan to work indefinitely.
This isn’t too surprising considering the cost of living is on the rise. Many seniors struggle with financial insecurity or fear of outliving their retirement savings. This is especially concerning for those with significant healthcare costs in retirement or other financial obligations.
But finances aren’t the only reason why people are working past retirement age. Some seniors simply want to stay active longer and 40% of our survey respondents said they’d continue working even if their financial needs were met. Continuing to work, even part-time, can do wonders for those wanting to stay mentally and physically healthy, engaged, and active in their community.
As the concept of retirement continues to evolve, it’s important to understand that working longer isn’t necessarily a sign of an underlying problem. More and more retiree-age individuals are making the choice to continue working past retirement age.
We surveyed 1,000 Americans aged 65-99 who are still working part or full time to learn more about what’s driving them to break the stigma and work past the standard retirement age. Here’s what we found.
Working Keeps Seniors Moving: 60% Want to Keep Working to Stay Mentally and Physically Active
Staying active and connected is important to many seniors. In many cases, working past retirement age is the best way to maintain those important connections and routines. In fact, 88% of respondents feel that working contributes positively to their mental health.
Many studies have been done on retirement’s impact on physical and mental health, but results vary.
Some research suggests that retirement, whether it’s voluntary or regulatory, can be beneficial to one’s mental health. However, its impact on physical or general health is still inconclusive. There are a lot of factors that could affect mental health, including finances and physical health, which may create a stressful environment when coupled with retirement.
Another study found that retirement can have an adverse impact on physical and mental health. Research suggests a 58% reduction in the reporting of good physical health after retirement, as well as a 4.5% greater chance of having depression-related symptoms. This is largely due to social network changes post-retirement, and losing out on those social connections that work provides.
Whether or not they continue working, most seniors (71%) express a desire to stay in their home until the end of their lives. These individuals also have plans for aging at home. However, 21% of those respondents want to stay at home but aren’t sure they can afford it, adding another layer to staying active and being able to stay where they want in the future.
The New Reality: 48% of Surveyed Americans are Working Past Retirement for Financial Necessity
While we see that living longer has definite upsides — like more time with loved ones and the opportunity to pursue personal goals or hobbies, it also comes with more stressors. And while our respondents want to stay active, there’s another side to working past retirement age. A longer lifespan means lasting financial obligations, and many older Americans struggle with financial insecurity. In fact, almost half of survey respondents (48%) said they continue working past retirement age due to financial necessity.
Our survey also found that just 34% of people feel financially prepared for retirement. Another 32% do not feel prepared at all, while 34% only feel somewhat prepared. Along with this, 85% of respondents said that financial considerations somewhat or strongly influenced their decision to work past the standard retirement age.
Not least among working Americans’ concerns is inflation. From 1973 to 2023, the consumer price index (CPI) rose 586%. As everyday goods and services become more expensive, many people find it necessary to work longer to bolster their retirement savings and handle other financial obligations. For retirees who expect to live on a fixed income, inflation and its effect on their finances also lead to greater financial insecurity.
With the cost of living on the rise, many older Americans find themselves asking: Do I have enough for retirement? For many, the answer is no.
According to the U.S. Government Accountability Office (GAO), roughly half of older U.S. households (age 55 and up) have no retirement savings in an IRA or a defined contribution (DC) plan. Our survey also found that more than half (56%) of respondents fear outliving their retirement savings.
Poverty amongst older individuals is another major concern. In 2021, the U.S. Census Bureau found that 8% of people ages 65 and up live in poverty. Most of these individuals (63%) lived alone and received income from various government programs like Social Security.
A significant number of older retirees (90% of seniors) rely on Social Security to make ends meet. According to the Social Security Administration, roughly 68 million Americans receive Social Security (which they can start receiving as soon as they turn 62). But with an average monthly benefit amount of $1,975, this isn’t always enough to cover the bills.
According to the Pew Research Center, nearly 1 in 5 (19%) adults ages 65 and older are still working either full-time or part-time. For many older Americans, keeping a steady job is a way to help them get their finances to where they should be — whether that’s to combat rising costs, increase their retirement savings, or prepare for other financial obligations like healthcare costs in retirement.
Of course, not everyone works full-time or due to financial necessity. Most of our survey respondents (62%) said they prefer part-time work. For some, keeping a steady job is simply a way to stay physically healthy and mentally stimulated while also having more time for their hobbies.
31% of Respondents Anticipate Working at Least 3-5 Years After Retirement
According to our findings, 58% of respondents plan to work at least 5 more years before leaving the workforce. This puts the youngest respondent at 70 years of age before they’ll consider retirement.
Financial insecurity and related concerns are a driving reason for this decision, but they’re only part of the bigger picture. Some people continue to work because they’re not quite ready to quit. Others find their job gives them a sense of purpose or helps them feel valued or mentally engaged.
These are the other most commonly cited financial, emotional, and societal reasons why people are going to put retirement on hold — even if that work is on a part-time basis.
Financial Influences: 61% Remain Working to Supplement Retirement Savings
For many seniors, there’s uncertainty over whether their savings and investments will be enough to get them through their retirement years. The concern around not having enough in their retirement savings has led many older Americans (61%) to keep working part-time as a way to supplement those savings.
Along with this, the rising cost of living is a primary factor for over half (59%) of older Americans to continue working past their planned retirement age. Interestingly, despite record-high inflation during the pandemic, only 31% of respondents said the economic upset from that period factored into changing their retirement plans.
Healthcare and medical expenses are one of the fastest ways to burn through retirement savings. In 2023 alone, U.S. healthcare spending increased by 7.5% — or about $14,570 per person. That’s a significant chunk out of anyone’s retirement savings, which could be why 37% of survey respondents said they’re continuing to work to pay for those expenses.
Debt is another prevalent issue for many working Americans. Experian’s 2024 Consumer Credit Review found that the average total debt balance is $105,056 per person (including all consumer debts). For 33% of seniors, the goal of working longer is to tackle their debts before retiring.
Other key financial reasons why seniors continue working include:
- To maintain a certain lifestyle (39%)
- To cover basic living expenses (28%)
Retirement, in many cases, is just not feasible for many seniors. While financial reasons vary, working past the standard retirement age has become more the norm than the exception, though society’s stigma around not retiring at 65 still exists.
It’s an Emotional Decision: 44% of Respondents Feel Uncertainty When Thinking About Retiring Fully
While financial insecurity or fear of outliving retirement savings drives many people to keep working later in life, it’s not always the most prevalent concern.
Retirement can have a significant emotional and psychological impact. For the majority of people surveyed (68%), work gives them a sense of purpose, especially in a society that’s heavily focused on tying work to productivity. More than half of older Americans (55%) also say they feel valued because of their jobs.
Many seniors aren’t sure what they’ll do with their free time or even what their ideal retirement would look like. Leaving behind a satisfying job without a plan can result in an existential crisis or, at the very least, a sense of aimlessness.
This isn’t always the case, however. One study found that these concerns with retirement seem to be largely dependent on the individual’s socioeconomic status and their job satisfaction. For some, particularly socioeconomically disadvantaged individuals, retirement is an opportunity for renewed purpose.
Still, choosing to retire is a largely emotional decision. Among our respondents, uncertainty (44%) is a leading emotion with the thought of retiring, as is excitement (38%), relief (31%), and hopefulness (30%).
Some seniors shared that boredom is another concern as they want to stay active. The majority (74%) of seniors said working helps them stay mentally engaged, which is a key factor for those who are concerned about cognitive issues down the road. Unfortunately, the rates of dementia and other cognitive challenges continue to rise, with nearly 7 million Americans affected now, and a projected 12.7 million by 2050.
The fear of not having a job to stay mentally stimulated is not unfounded and could be a reason why many seniors are extending their work past the standard retirement age. However, for those who are retiring soon, there are options for maintaining an active retirement lifestyle. This includes joining a class, learning a new hobby, traveling, or even taking on a part-time or consultancy gig (with the added benefit of bolstering finances).
For those who do want to retire and enjoy their golden years without working, it’s important to start planning as soon as possible so you can enjoy. For many, retirement is the reward for many years of working and the main thoughts are around how to enjoy it. This may be spending time with family, traveling or trying a new hobby. While there can be benefits to not retiring, there are plenty of reasons to enjoy your golden years and retire when you’re ready.
Looking Towards the Future: Who Would Work Longer to Support Loved Ones
Some people enjoy working, or they remain actively employed for their own financial reasons. Others want to keep working past retirement age to support their loved ones. In fact, 66% of survey respondents shared that they would continue working longer than planned if they needed to support a loved one.
Around 1 in 5 (21%) respondents are currently financially supporting or supplementing their children or family members outside their household. This can affect their own finances and lead to financial insecurity. Meanwhile, 69% of respondents have family, but aren’t financially supported by them.
For some, working longer has several additional financial benefits for themselves and their families.
Roughly half (39%) of survey respondents are worried about potentially losing government benefits like Social Security or Medicare. This can affect their own decision to keep working longer, as well as lead to more stress and anxiety when looking at retirement accounts.
Retirement Planning Needs to be at the Forefront of Financial Planning
The majority of people (51%) ages 65 and up plan to work indefinitely, even if it’s on a part-time basis. This is in part due to financial insecurity or a fear of outliving retirement savings, but for some seniors, it’s also a way to remain healthy, engaged, and active. For many, working past retirement age is also an opportunity to bolster their savings and potentially have enough to leave behind to their loved ones.
Whether you have a specific retirement age in mind, or you expect to continue working longer (either out of necessity or personal preference), having a retirement plan is crucial to achieving your goals. It’s never too late to make a plan, but the sooner you start, the better your chances of retiring on your terms.
For many seniors, retirement may seem scary or may even not be on your mind yet, but having a plan, even if that plan is to continue to work part-time or volunteer to stay cognitively and physically healthy and active is a necessity. Enjoy your best years and make sure you have a plan in place for your golden years, whether that’s spending your days retired on a beach or breaking the stigma and working well past the standard retirement age.
The retirement planners at Asset Preservation Wealth & Tax can help you ensure that your retirement matches your goals. With proper planning, you can have a happy retirement whenever that time comes!
