Financial Planning, Retirement, Economy

Delaying Retirement Is Often Not An Ideal Option

8/30/16 8:00 AM

iStock_000003223740_Small-1-1.jpgThe Stanford Center on Longevity (SCL) estimates that by 2050 more than one in five (21 percent) Americans will be at least 65 years of age. That is nearly double the ratio from 2010 and almost three times what was seen during the 1950s. Americans of this age traditionally would be retired but a growing number of people are continuing to work well past the age of 65. In fact, projections using Bureau of Labor Statistics (BLS) data suggest that nearly a quarter (23 percent) of all Americans ages 70-74, and 14 percent of adults ages 75-79, will still be a part of the U.S. civilian labor force in 2024, roughly double the proportions seen in 1994.


Such estimates are supported by a new study from the Transamerica Center for Retirement Studies, which found that more than half (51 percent) of surveyed U.S. adults plan to work past the traditional retirement age of 65, and 27 percent even said that they do not expect to ever retire. For some Americans, continuing to work after the age of 65 will be because they are passionate about their profession or simply have a desire to stay active, e.g. many respondents said that during retirement they plan to “pursue an encore career” (13 percent), “continue to work in the same field” (12 percent), and/or “start a business” (11 percent). For other Americans, though, continuing to work in old-age will be a necessity because they must earn a few more years of income to make up for inadequate retirement savings.


Regardless of why people may want to put off retirement, many are potentially at risk of overestimating their ability to continue to work in old age. Indeed, it is true that medical advances are allowing people to live not just longer but also healthier lives. This alone, though, does not guarantee that a person will be able to maintain a desired form of employment in old age. For example, it is widely recognized that blue-collar workers retire relatively early because their jobs tend to be physically demanding but a study we looked at earlier this year from Boston College’s Center for Retirement Research (CRR) suggested that even some white-collar occupations face age-related challenges.


A similar CRR study released this month explored how job-changers over the age of 50 often wind up in “old-person” jobs, where the share of older hires relative to prime-age hires is elevated, and the type of employment is typically low-paying and low-status, e.g. night watchman, retail clerk, or crossing guard. There were several reasons for this occurrence, according to the researchers, including the implementation of “personnel policies which created impediments to hiring job-seekers ages 50 and over in the 1990s,” and “occupations that require extensive training, computer use, numerical aptitude, and union membership being less open to older job-seekers.” However, the report’s authors are a bit more (cautiously) optimistic about the opportunities for older job-seekers going forward for the following reasons:

  • The shift away from defined benefit pensions has eliminated one barrier to hiring older workers, because employers no longer face the burden of back loaded benefit accruals.
  • Traditional personnel policies seem less significant in a more fluid knowledge-based economy that emphasizes generic, as opposed to firm-specific, human capital.
  • Older workers are no longer less educated than younger workers, and could thus be more attractive to employers.
  • The aging of the large Baby Boom cohort could mean that job applicants are evaluated by older hiring managers, who tend to value older workers more than younger managers.



Sources: Stanford University, U.S. BLS, TCRS, Boston College (CRR)

Post author: Charles Couch