Financial advisors and retirement coaches often have two words for people in their 50s and 60s concerned about retirement: work longer. This, they say, can increase their savings, help them receive larger Social Security benefits by delaying their application, and provide them with something to do before retirement.
The realities of working longer
“As things stand, working longer is not a realistic cure for retirement insecurity for many Americans,” write Lisa F. Berkman, director of the Harvard Center for Population and Development Studies, and Beth C. Truesdale, sociologist and researcher at the WE Upjohn Institute for Employment Research and a visiting scientist at the Berkman Center.
Read: Older workers are wrong about work, money and care
They came to this conclusion after studying data on everything from older Americans’ labor market participation to their health, care responsibilities, wealth and income.
“Stable” and “intermittent” older workers
A large number of people who, according to Berkman and Truesdale, are unlikely to be able to work longer: the group they call “stable outputs”. That’s the 15% of people who never worked in their 50s, according to the biennial Health and Retirement Study of Americans Over 50.
The authors found that only 42% of American adults were both continuously employed in their 50s And employed at some time between the ages of 62 and 66. In other words, if you’re not working in your 50s, chances are you’re not working in your mid to late 60s.
“Anyone who’s dropped out of the workforce, we don’t have a single prayer to help them get from 65 to 67,” Berkman told me.
Truesdale added: “You can only delay your retirement if you still have a job to delay your retirement. Although it is not impossible that someone who is no longer in the workforce in their 50s could return to work later, it is extremely rare.
Another 34% of Americans over 50 are what the authors of “Overtime” call “intermittent” – they enter and exit the workforce in their 50s.
“If we made policy changes that made it more plausible for more of these people to have more stable and better paying jobs in their 50s, I think they would have a better chance of being able to stay on the job longer. labor market,” Truesdale said.
Why some older people don’t work for pay
Non-working people in their 50s are excluded from the labor market for various reasons: their health or that of a family member, their caring responsibilities and age discrimination preventing them from being hired are the three main ones.
A fourth is employers’ working conditions — “the fact that work can be precarious or schedules are really hard to predict and difficult for families and workers to accommodate,” Berkman said.
In fact, the authors conclude, improving working conditions could greatly help people to work in their 50s and then, if they choose, to work in their 60s or beyond.
“Working conditions are changeable,” Berkman said. “We could easily transition to a society in which we could accommodate people who have health problems, care and family responsibilities if we wanted to. If we made it easier for people to stay in the job market, maybe they would stay in the job market.
Read: Why Many Age-Friendly Jobs Aren’t For Older Workers
Working longer: dreams and realities
American workers are much more likely to expect to work longer than Americans actually do. In the latest Retirement Confidence Survey from the Employee Benefits Research Institute, 29% of workers said they expected to retire at age 70 or older or never to retire. their retirement at all. But only 7% of retirees actually retired after age 69; 42% retired at age 61. The median retirement age today: 62.
Americans have worked longer in recent years than in the past, on average, as noted in a recent article by Andrew G. Biggs, senior fellow at the American Enterprise Institute.
“For decades labor force participation at older ages declined, encouraged by the introduction of the first Social Security benefits in the late 1950s and early 1960s,” Biggs wrote. “But today, Americans between the ages of 62 and 65 are participating in the labor force at the highest rates since data collection began in the early 1960s.”
Predict a reversal of the tendency to work longer
Berkman and Truesdale do not expect this trend to continue.
“Extending healthy life expectancy is not something that seems automatic in our future right now,” Berkman said. “The United States has slipped in terms of life expectancy from being in the middle of OECD countries to being at the very bottom.”
U.S. life expectancy rates are particularly worrisome for less-educated, low-income Americans, she added. “We think inequality is driving some of this,” Berkman said.
The magnitude of inequality, particularly across education levels, “really overshadows the relatively small changes that you see even over two or three decades in terms of changes in the labor force,” Truesdale noted. And, she added, the labor force participation of prime-age men is declining.
The challenges that many may face
The result, according to Berkman: “People who have more resources, are better educated, have better health and minimal care responsibilities may very well be able to work longer and want to work longer and take jobs that suit them. allow you to work longer.”
I count myself among the lucky ones, working part-time in retirement at age 66 as a freelance writer and editor.
Others won’t be so lucky.
“The majority of people will have some sort of challenge, going forward” to work longer hours, Berkman said. However, Truesdale noted, “even people who start out with all the benefits can’t necessarily take for granted the idea that they’ll work longer and retire safely.”
What might help
Berkman and Truesdale would like to see federal and state governments and employers make changes that could help more people work longer if they want to.
They talk about requiring 401(k) workplace pension plans; create state-run programs for residents without a retirement plan; making jobs more age-friendly; reduce age discrimination by employers and increase the minimum wage.
They would also like to see retirement economists, labor economists and organizational psychologists join forces to address the prospects of working longer.
“It’s been interesting to see how compartmentalized these areas are,” Berkman said. “Retirement economists think about savings and incentives for social security and pensions; they don’t think about labor or working conditions. Labor economists and organizational psychologists think about how companies work and what creates good jobs and don’t think about working longer or retiring. It’s as if they were two separate worlds. they need to talk to each other.
Advice from the authors
For now, if you expect to work longer to improve your financial security in retirement, say the authors of “Overtime,” you need a Plan B.
“Optimism is good for our health,” Berkman said. “We would all like to be perfectly healthy in the 60s, 70s and 80s. But it doesn’t happen that way. So people have to be ready to have an alternative path that is sustainable.