As Americans live longer and worry about outlasting their money in retirement, a growing number are counting on one strategy for their future financial security: working longer.
Roughly 70% of U.S. workers who haven’t retired yet have considered pushing back their retirement date, according to a recent survey from F&G, an insurance company. Nearly half of the 2,000 adults surveyed said they’re afraid they won’t have enough money to retire.
Some people have gone beyond considering the strategy. “Two in 10 workers adjusted their target retirement age in 2024,” according to a recent report from the Employee Benefit Research Institute, “with most of them now planning to retire later.”
But experts say that plan to work longer may not be as reliable as workers hope.
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About 58% of workers retire earlier than they intended, according to 2024 research from the Transamerica Center for Retirement Studies in collaboration with the Transamerica Institute. Of those who did, 46% did so for health-related reasons, while 43% cited employment issues and 20%, family reasons.
Only 21% said they retired early because they are financially stable.
“The 2008 recession kind of knocked all those assumptions about being able to work longer with enough money out of reality,” said Teresa Ghilarducci, a professor of economics and policy analysis at The New School for Social Research. “We had 50-year-olds, 55-year-olds, being really pushed out of the labor market or lose their career jobs, and having to come back and having to spend their savings while they were still in their 50s and 60s because of the hardship of that recession.”
“So you can’t [always] work longer because of age discrimination, and because the labor market may not want the skills that you’ve acquired over 40 years, because the labor market and the skills required have moved forward,” she added.
A system built for a different generation
The instinct to delay retirement is understandable, experts say.
Life expectancy across developed countries has climbed significantly over the last several decades, according to World Bank data analyzed by the Federal Reserve Bank of St. Louis. At the same time, the burden of investing for retirement has shifted to workers.
For much of the 20th century, the American retirement system relied on what economists call the three-legged stool: Social Security, employer pensions and personal savings.
But one of those legs, Social Security, has a looming funding shortfall that has left some workers concerned about what kind of retirement benefits they may receive.
Another leg, pensions, has rapidly declined for private sector workers. In 1989, 63% of full-time workers at companies with more than 100 employees had pensions, according to the Bureau of Labor Statistics. As of early 2023, only about 15% of private industry workers did.
Workers now largely depend on 401(k)s and other defined-contribution plans, which rely on them to determine how much to contribute and how to invest those funds.
Some younger workers are rising to the challenge. Younger workers today often have more money in retirement accounts by age 30 than boomers did, according to Federal Reserve research.
“Millennials are saving at a higher rate at this age than Gen Xers or Boomers,” said Christine Mahoney, global pensions leader at the pension consulting firm Mercer. “So I guess I would say if they’re nervous and it’s making them save, that’s not necessarily a bad thing.”
But personal savings may not be enough. Unexpected medical bills, market downturns or job losses can quickly derail even disciplined savers, leading to what experts call 401(k) “leakage.” Add in the growing weight of student loan debt, and retirement becomes even harder to afford for some workers.
Is working longer the solution?
Some policymakers and economists say extended careers could help Americans close their retirement gaps.
“We have more options for extended work lives today than we’ve ever had before, and Americans are taking advantage of them,” said Andrew Biggs, a senior fellow at the American Enterprise Institute.
The number of employed Americans age 65 and older grew 33.2% between 2015 and 2024, according to a CNBC analysis of BLS data.
Biggs also emphasized that older workers continue to bring value to the labor force. “There’s great demand for older workers,” he said. “They still have a lot of skills, a lot left to give, and so they can be valuable to employers.”
But others say that perspective doesn’t align with how the labor market actually works.
“The labor market doesn’t always want you when you want the labor market,” said Ghilarducci. “Employers have the biggest role in the decision about whether or not you work and what the quality of your work is.”
Watch the video above to learn more about why Americans may end up working longer than their parents and whether planning to work longer will actually help people in retirement.
