Americans over the age of 55 are the country’s fastest-growing workforce — here’s why so many are now kicking retirement down the road

Why older adults keep working

People have a variety of reasons for working beyond retirement age, but some clear trends have emerged.

One of the more positive reasons is that Americans are living longer — and healthier — than previous generations. According to the Centers for Disease Control and Prevention (CDC), the average life expectancy for a 65-year-old has increased by just over a year since 2000, now nearing 84.

Financial expert Suze Orman has even cautioned retirees-to-be to plan for living into their 90s. That means a retirement fund at 65 might need to last nearly a third of a person’s lifetime — a long time to go without income.

For many, work also provides purpose and mental stimulation. The 2024 University of Michigan National Poll on Healthy Aging found that nearly half of older adults said their work “gave them a sense of purpose and kept their brains sharp”. Nine in 10 said it helped their overall well-being.

Nicole Maestas, a professor at Harvard Medical School, points to another factor: today’s information economy. Jobs are less physically demanding than they were for previous generations, making it easier for older adults to stay employed.

Still, it comes down to money for most people.

That same University of Michigan poll found that nearly 78% of older workers said financial stability was the main reason they continued working. Others said they wanted to boost their savings or maintain access to health insurance.

A 2024 AARP survey found that about 66% of adults over 50 don’t feel they’ve saved enough to retire securely. According to a 2023 Gallup poll, only 2 in 5 workers are on track to retire comfortably.

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The financial landscape has shifted

One of the biggest changes facing today’s retirees compared t their parents’ generation: pensions are increasingly rare.

As of 2020, more than 85 million Americans were enrolled in defined contribution plans like 401(k)s. By contrast, only 12 million were in traditional definition benefit pension programs. That makes it harder to replace working income after retirement.

Researchers from the Georgetown Center for Retirement Initiatives found that today’s retirees are spending their savings faster than previous generations. The culprits? Rising costs of living, high health care expenses and increased longevity.

Inflation is also a major factor. Consumer Affairs reports that the consumer price index jumped 586% between 1973 and 2023. Combined with wage stagnation, and saving for retirement becomes even more difficult

In 2024, the Government Accountability Office reported that a third of households with a worker 55 or older had no employer-sponsored retirement plan at all. Half of all households had no retirement savings whatsoever.

Trouble ahead for Social security

Another looming concern is Social Security. It is projected to deplete its trust fund by 2034, at which point it would only be able to pay about 77% of scheduled benefits through incoming payroll taxes.

“Far too many people are one crisis away from economic insecurity," said Ramsey Alwin, president and chief executive of the National Council on Aging. A 2022 University of Massachusetts study supports that view, showing that half of single older adults and one in five couples struggle to meet their basic needs.

The Pension Research Council at Wharton has suggested reforms to help both current and future retirees. A key issue is access: almost 57 million Americans don’t have a workplace retirement savings plan. Workers of color and lower-income workers are disproportionately affected — over-represented in this group, with 53% of Blacks and 64% of Hispanics without access, compared to 42% of White workers. For low-income workers, those numbers jump to between 64 and 79%.

Wharton researchers recommend expanding access to retirement plans, as well as improved portability of 401(k) and IRA plans, to encourage people to keep saving as they change careers. They also recommend government programs to match contributions for low-income workers, allowing for more equal access to retirement, letting America's golden years be ones of leisure and not full-time work.