Financial Planning, Retirement

The Graying Of The U.S. Workforce

5/19/16 8:00 AM

iStock_000003223740_Small-1-1.jpgEarlier this week we explored several potential ways to help improve overall retirement readiness in America. One option that we did not mention but has become quite common recently is a postponed retirement. Indeed, the “traditional” age of retirement has long been considered 65 since this was for many years Social Security’s full-benefit retirement age. More and more “senior” Americans, though, are continuing to work well past the age of 65. In fact, nearly one out of every five (18.9 percent) adults age 65 or older was still a member of the workforce in April, according to the latest job report from the Bureau of Labor Statistics (BLS). That ratio is even higher after excluding older individuals physically unable to work, and for another perspective, the total number of wage and salary earning workers age 65 or older in America has more than doubled from 2.97 million in 2000 to 6.41 million in 2015. Nearly two-thirds of those older workers are employed full-time, up from less than half in 2000.


The rise in the absolute number of Americans working past the age of 65 has ballooned in recent years mainly due to the aging of the large Baby Boomer generation. However, the proportion of older Americans working past the traditional age of retirement has nearly doubled since the 1980s and there are several likely factors behind this trend. For starters, people are living longer and healthier lives than ever before, thus enabling more Americans to continue to work well past the age of 65. As for the motivation behind staying in the labor force, some may do so because they enjoy their work but others will do so out of necessity. For the latter, insufficient savings is typically the reason a person will postpone retirement or at some point reenter the work force after having already retired. Earning a steady income from a job can definitely help address a retirement savings shortfall but continuing to work will not be an option for every senior citizen. Therefore, the best way to ensure financial security in old age is to start setting money aside as soon as possible and to regularly consult with a professional financial advisor to make sure that you are on track to achieve the retirement you want. As always, we are here to help with any questions you may have.



Sources: U.S. BLS, Bloomberg, J.P. Morgan, Advisor Perspectives, FRBA, FRBSL

Post author: Charles Couch