This has truly been a year of transition, with the last of the baby boomer generation turning 55 in 2019. Because of the aging population in the United States, overall participation in the labor force is naturally expected to decline as more people retire. Having said that, more older Americans are working than in years past — and this trend is also anticipated for the future.
Here are some specifics: According to the United States Department of Labor, 30.2% of people ages 65 to 74 are expected to be in the workforce in the year 2026. Compare that to 1996, and you’ll see an increase of nearly 13%, up from 17.5%.
By looking at older Americans who are at least 75 years old, it’s expected that 10.8% of them will be working in 2026, compared to 4.7% in 1996. Yes, these are projections, but it’s a good overall snapshot of the realities of work for our country.
In fact, people age 65 and older make up the fastest-growing group of workers in the country — and, for the first time in 57 years, 20% of retirement-age workers are still in the workforce. This is twice the amount when compared to early 1985. Interestingly enough, the biggest increase in employment is taking place among older Americans with a college education.
So, why is this happening?
According to Bloomberg.com, “Rickety social safety nets, inadequate retirement savings plans and sky-high healthcare costs are all conspiring to make the concept of leaving the workforce something to be more feared than desired.
If you look at workers in the bottom 50% of income, the typical person doesn’t have any retirement savings. By looking at the middle 40%, there is a median amount of savings of $60,000. When looking at the top 10% of workers, income-wise, the median amount of retirement savings is $200,000.
This does not include the value of real estate owned or other tangible assets. It also does not take any future inheritance dollars into account. Nevertheless, even people with the higher incomes are, on average, “woefully under-saved,” given that a “typical college-educated professional” would need more than $1 million or $2 million to comfortably retire.
More Challenging Realities of Work
Still, other reasons for later retirement include how few private-sector employees have the types of pensions that many people could rely upon in the past. Instead, it’s more common to have a 401(k) plan — and during the last recession, 401(k) accounts lost, on average, nearly a third of their value. This created financial problems for many people who were anticipating retirement.
Here’s another challenge: One survey found that nearly half of older Americans have used part of their retirement savings to help their grown children. This is happening, at least in part, because of the significant student loan debt of adult children.
Not all people who work beyond traditional retirement age are doing so because of financial worries, though. NPR profiled an 89-year-old man who still teaches 11 classes weekly at his local YMCA, doing so because he loves his work.
Retiring with Purpose
Here’s one more positive work and retirement scenario to consider: Many older Americans, when they stop working for a paycheck, start finding ways to give back to their communities through volunteering as a second career. Still, others may find paying work, whether full-time, part-time or consulting, that provides them with a sense of satisfaction and an ability to contribute to their communities in a positive way.