Working Longer Is a Risky Retirement Plan, Statistics Show

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While extending one’s career might seem like a foolproof method to prevent depleting retirement funds, it’s risky to rely only on this approach. 

Anticipated vs. Actual Retirement Age


A significant discrepancy exists between the retirement age people anticipate and the reality they face, predominantly prompted by unforeseen circumstances such as health issues or job cuts. 

For instance, a Gallup survey from 2022 reveals that while the average projected retirement age was 66, the actual age most Americans retired was four years earlier, at 62. This pattern has persisted since 2002, underscoring the unpredictability of planning to work longer.

46% End Careers


The 2023 Retirement Confidence Survey by the Employee Benefit Research Institute found that nearly half of all retiree (about 46%) ended their careers earlier than anticipated, a statistic that has remained stable for two decades. 

Hope vs. Reality


David Blanchett, a financial planner and head of retirement research, notes that many people in their late 40s to early 50s plan to retire at 65 but consider working until 70. However, the feasibility of reaching that age while still employed is often less certain than expected.

This persistent gap between expected and actual retirement ages shows that banking on additional work years is more of a gamble than a solution.

Financial Benefits of Delaying Retirement


Postponing retirement by just a few years can lead to a substantial positive effect on one’s financial health, according to financial expert David Blanchett. Individuals who delay retirement continue to receive a regular income, avoiding the need to draw from their savings prematurely. 

Risks and Rewards 


This extra time allows for continued savings accumulation and potential growth of their assets. Moreover, delaying the start of Social Security benefits can significantly increase the monthly benefits received for the rest of a person’s life.

Conversely, retiring earlier than planned can lead to adverse financial consequences.

Misjudging the Retirement Timeline


This situation is particularly common among those intending to retire in their early 60s or later. Blanchett’s research indicates that individuals aiming to retire past the age of 61 typically achieve only about half of their intended retirement span. For instance, someone planning to retire at 69 often finds themselves retiring around 65 instead.

Longer Lives Means Larger Savings Needed


Compounding this issue are broader trends that encourage later retirement. The age for full Social Security benefits has increased, now reaching up to 67 for anyone born in 1960 or later. 

With Americans living longer, the need for a larger retirement savings pool becomes even more critical to support a longer life in retirement.

401(k) Plans vs. Traditional Pensions


The shift from traditional pensions to 401(k)-type plans influences retirement decisions. Richard Johnson, a senior fellow at the Urban Institute, explains that unlike pensions, which often provide clear incentives to retire at a specific age, 401(k) plans lack such definitive triggers, influencing individuals to delay retirement further.

The Reality of Late Career Retirement


A third of workers envision retiring at 70 or even later, or perhaps not retiring at all, according to the Employee Benefit Research Institute (EBRI). However, the reality starkly contrasts these expectations, with only 6% of retirees actually retiring at 70. 

Forced Early Retirement


In 2023, EBRI reported that 35% of those who retired earlier than expected did so due to unavoidable hardships such as health issues or disabilities. Another 31% were forced into early retirement due to organizational changes at their workplace.

The Unpredictable Nature of Retirement


David Blanchett highlights the unpredictability of these factors, pointing out that these are elements beyond your control. Interestingly, another 35% reported being able to afford retiring early, and nearly half of all retirees managed to cease working around their planned retirement age.

Job Loss Impact on Older Workers


The impact of job loss on older workers is particularly severe. A 2018 study by the Urban Institute revealed that over half of full-time workers in their early 50s are ousted from their jobs, typically due to layoffs, before they are ready to retire. 

Job loss at older ages has significant consequences, often attributed to ageism.

Earning Less Than Before


The aftermath of such involuntary job separations is grim, with just 10% of those affected managing to earn as much weekly post-separation as they did prior. 

The remaining 90% find themselves earning less, often significantly so. For many, finding another job becomes a formidable challenge, further complicating their retirement plans.

Age Discrimination in the Job Market


Johnson’s research highlights that in the period following the Great Recession, from 2008 to 2012, workers aged 50 to 61 who lost their jobs were 20% less likely to find new employment compared to their younger counterparts in their 20s and early 30s. 

Those aged 62 and older faced even steeper challenges, being 50% less likely to secure a new job.

Is Working Past Retirement Age Viable?

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Johnson notes that while working longer might seem like a viable strategy to enhance retirement savings, relying on continued employment up to and beyond traditional retirement ages can be uncertain. 

Workers approaching retirement should not assume they can stay in their jobs indefinitely.

Financial Crises Complicate Retirement Plans


The dream of a comfortable retirement is becoming increasingly elusive for many due to plunging stock values, rampant inflation, and real estate devaluation. These factors are eroding savings and forcing more retirement-age workers back into the labor force, where they often find a less-than-welcoming environment. 

Retirees Struggling to Reenter the Workforce


A recent CNBC survey indicated that many retirees would consider returning to work, but securing the right job can be challenging, with actual job offers being rare.

This economic downturn is compounded by significant changes in the global workforce. As populations age, the Organization for Economic Co-operation and Development (OECD) projects that by 2050, nearly 40% of individuals in the world’s most developed economies will be over the age of 50. 

Demographic Shifts and Employment

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This demographic shift is occurring while job vacancies in the U.S. have consistently outpaced applicants since 2018, largely due to baby boomers retiring faster than millennials can fill their roles. 

Encouraging older individuals back into relevant, essential jobs is important for economic growth, though overcoming age bias remains a formidable challenge.

The Stigma of Age in Employment


While discussions around gender, racial, and cultural biases are prevalent, age discrimination is a significant and growing issue. It is increasingly common for workplace evaluations to be influenced by age, leading to considerable stigma. 

Age Bias in Job Searches


Bill Rivera from AARP highlights that age discrimination is a serious issue, with research showing that 62% of workers aged 50 and above have witnessed or experienced it directly. 

Furthermore, 15% have reported being denied jobs for which they applied, specifically because of their age. A recent survey also underscored the widespread concern, with 84% of workers reporting firsthand encounters with age discrimination.

Is Working Longer a Good Idea?


Despite the common saying that it’s never too late to chase a new career or dream job, older workers frequently prove that they still have much to offer. They represent a significant portion of the talent pool, eager to start new chapters in their careers. 

Yet, age remains a significant barrier, with many companies often dismissing older applicants. 

The Flawed Strategy of Delayed Retirement


This situation underscores why extending work life into later years can be a flawed retirement strategy. While working longer might seem like a viable way to secure financial stability, the reality of age bias severely limits employment opportunities for older workers, making it a less reliable plan than it might initially appear. 

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Kate Smith, a self-proclaimed word nerd who relishes the power of language to inform, entertain, and inspire. Kate's passion for sharing knowledge and sparking meaningful conversations fuels her every word.