- Citing a longer life expectancy than previous generations, Americans ages 40 and older expect they will work after retirement.
- 92% of people ages 40 and older said they plan to work after their careers end.
- While working after your retirement may sound like a negative, the leading motivation for doing so was to stay mentally sharp, according to 72% of survey respondents.
- This article is for professionals, entrepreneurs and retirees interested in the trend of more people working after their careers are over.
For roughly eight decades, retirement for many Americans meant living out one's golden years with loved ones and supporting themselves through Social Security, which they'd paid into for so long. Yet recent studies show there's a growing contingent of middle-aged and older Americans who expect their retirement will at least partially be spent working.
In TD Ameritrade's 2019 Unretirement Survey, researchers found that a majority of middle-aged and older Americans "plan to work 20 hours per week or more" after they've officially retired. Christine Russell, senior manager of retirement and annuities at TD Ameritrade, said that sentiment reflects a major shift in how workers view their futures.
Did you know? In 2021, retired workers were eligible to earn up to $50,520 without having their Social Security benefits docked.
"Gone are the days of retirement being seen as an essential, defined life stage, where an employee could expect to work for a company long-term and be taken care of after retiring," Russell said. "As the workplace landscape continues to evolve, Americans are going to need to make an assessment about what their retirement trajectory may actually look like and plan accordingly."
The survey, conducted online from Aug. 30 to Sept. 10, 2019, polled 2,000 American adults between 40 and 70 years old with at least $25,000 in investable assets about their retirement prospects. Researchers divided respondents by their age and by decade, resulting in four groups of 500 individuals.
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Aging out of retirement
While not strictly an American concept, retirement in the United States began with the passage of the Social Security Act in 1935, which set the official retirement age at 65. At that time, the average life expectancy at birth was 60 for men and 64 for women. Thanks to advances in modern medicine, however, the average life expectancy for a baby born in 2017 is 79 years, according to the CDC.
With all of the planning that goes into retirement, today's 40- and 50-year-olds told researchers they anticipate having to work after their careers come to an end because of a longer life expectancy. Among respondents in the 40-49 age bracket, 92% said they planned to continue working, while 86% of those in the 50-59 group shared that same sentiment. Taking all four age groups into account, researchers said 1 in 3 currently have or plan to have a job in retirement.
Respondents in the 40s and 50s age groups that plan to work after retirement told researchers they only expected to work 20 hours a week in a paid position. Septuagenarian respondents told researchers they planned to keep working 10 hours a week.
Key takeaway: Since we're all expected to live longer lives than the generations that came before, there comes a question about what we're going to do with all that extra time. For more than half (55%) of the respondents in this survey, that means working until the end.
In preparation for longer lives, respondents said they either already have or plan to reduce overall expenses to save more (59%), increase income outside of a full-time job (35%) and get help from a financial advisor (27%). [Read related article: 5 Ways Small Business Owners Can Start Preparing for Retirement]
Reasons to keep working
Most people would agree that getting a paycheck is a strong motivator to work. Yet, according to the survey, retirees who already spent their entire lives working to support themselves and their families expect to have other motivations for working through retirement.
According to researchers, 37% of respondents in both the 40s and 50s age groups said they planned to continue working after retirement "even if there is no financial need." In fact, those in the youngest age group said they looked forward to volunteering, with 46% saying that they already have or would consider volunteering at a nonprofit or community center. Learn more about how to prepare for retirement as a small business owner.
Tip: To avoid having to work in retirement out of financial need, begin contributing to an employee retirement plan or small business retirement plan as soon as possible.
A wide group of respondents told researchers they would consider small breaks in their retirement. Nearly 30% of respondents said they have already done or would consider intermittent retirement. Furthermore, 53% of respondents said they would "rather work longer in their lifetime and have small one-year mini-retirement breaks than work without a break until retirement."
The main reason behind this, researchers said, was that 72% of respondents said they wanted to keep their mental acuity, while 67% simply wanted to curtail boredom, and 58% said they wanted to have social interactions with others. Still, 59% said their main motivation for working after retirement was to keep themselves financially solvent, something that could be avoided by implementing proper retirement saving strategies at an earlier age.
Tip: In a bind for liquid capital? Avoid borrowing against your 401(k) or other retirement funds unless absolutely necessary – your future financial well-being could depend on it.
Impact of the coronavirus pandemic on retirement
Of course, a lot has happened since the release of TD Ameritrade's 2019 study – most notably from the novel coronavirus pandemic – and there have been sweeping impacts around the globe, including financial impacts for workers in many developed countries.
One of the many things that the pandemic has impacted in the United States is workers' approach to retirement – whether or when it happens, how it happens and what it looks like if it does happen. According to Pew Research, 50.3% of Americans ages 55 and older are now retired, rising from 48.1% during the pandemic – but how many are truly out of the workforce for good?
The pandemic has encouraged many Americans – especially independent business owners who saw their earnings fall precipitously in 2020 – to reconsider the timetables of their careers, including when and how they plan to scale back their work in order to focus on other things.
Ironically, though, fallout from the pandemic has also led to Americans pushing back plans for retirement or having to continue working into retirement years. The pandemic has highlighted the important things in life outside of work, while also making it more difficult for many to completely stop working to enjoy those things.
As a result, many are now reconsidering their retirement with the thought that they may work part time, consult, or focus on their own business, which can give them the flexibility to enjoy their golden years while still bringing in a modest income. [Related: Self-Employed 401(k) FAQs]
In the meantime, Americans are reexamining their financial priorities to rightsize their spending, fleeing expensive housing markets for more affordable locales and seeking ways to incrementally improve their incomes during retirement – including by suspending Social Security benefits until age 70, when they can maximize their payments.
What has become clear is that Americans are increasingly thinking about the individual nature of their respective financial journeys. This forces many workers to think about retirement the way entrepreneurs have long approached the subject, rather than relying on the one-size-fits-all model so historically prevalent in corporate America.
Dock Treece contributed to the writing and reporting in this article.