Working in Retirement is Increasingly an Expectation
Table of Contents
Older retirees tend to experience their later years in more traditional fashion: living on Social Security, a pension (if they are fortunate), and savings. Many spend their time relaxing or traveling if they can—but very few hold down a full-time job or continue their careers. Younger retirees and baby boomers, on the other hand, are looking for something very different. Both these groups view retirement as a transition of lifestyles rather than the abrupt end of a job, a new opportunity rather than the conclusion of a career. Nor do they necessarily view any particular age as the end of an active life, including work. Indeed, nearly 70 percent of boomers report that they expect to continue working in their "retirement" years.29
True financial security demands what AARP sees as four pillars of economic securit—Social Security, pensions and individual savings combined, continued earnings from employment, and health insurance coverage.
Yet conventional thinking, not to mention much of the public discussion about entitlements, continues to see age 65 and retirement as virtually synonymous. Medicare kicks in at that point for most people, of course, and some employers cling to it as the "traditional" retirement age for workers. But otherwise, the evidence tells us that age 65 has lost much of its significance. For years, most people have been drawing benefits well under age 65. A 2004 CBO report showed that more than four million boomers have already left the labor force as a result of disability or retirement.30 Now there is evidence of people working longer and perhaps postponing their retirement, even past age 65, although not necessarily postponing receipt of benefits. Social Security’s "normal" retirement age, the age at which one can claim full benefits, is rising. Anyone under 44 today will not qualify for full benefits until he or she reaches 67. The fact that Americans are choosing to retire at such disparate ages creates a need to re-examine the various key components of retirement security.31 It is clear that the elements of the traditional "three-legged stool"—Social Security, pensions, and personal savings—are no longer sufficient. True financial security demands what AARP sees as four pillars of economic security—Social Security, pensions and individual savings combined, continued earnings from employment, and health insurance coverage.
According to Bureau of Labor Statistics (BLS) data, a growing number of older workers are remaining in the workforce. After decades of decline, the labor force participation rate for those over 65 leveled off in the mid-1980s and has since been increasing. Moreover, the participation rate for those at or just above the so-called "conventional" retirement age—ages 65 to 69— has also increased.32
This is not really surprising. The importance of earnings from a full-time or a part-time job is looming ever larger in the lives of Americans approaching or reaching the point when they retire from their jobs.33 Of course, many retirees choose to continue working, perhaps as a way to phase themselves out of a full-time occupation into something less stressful or time-consuming. Others like what they do so much, they choose to keep working. Yet for other Americans, postponing retirement is necessary. Their savings, pensions, and Social Security fall short of what they need, or they would lose health insurance coverage if they left their job, and they cannot afford to replace it.
As a result, the nation’s workforce is growing older. In 2000, workers aged 55 and older accounted for 13 percent of the workforce. BLS projects that figure will rise to 19 percent by the year 2012. Over that same time period, workers between 25 and 54 are expected to decline as a percentage of the workforce, from 71 percent in 2000 to 66 percent in 2012.34