Working Past Retirement Age Has Advantages, but Statistics Show You Can’t Count on It Happening

There are obvious advantages to working past the typical retirement age of 65.

First, in many people’s minds, is money. Making an income and continuing to save while not drawing down your nest egg can have a big financial impact, especially if you’re trying to catch up.

Second, if you enjoy your work, it can keep you energized and mentally engaged. A good job can continue to give your life needed structure.

Third, some of your best friendships can be with your coworkers. These relationships are more difficult to maintain when you retire.

But there can also be a major downside to planning on working past retirement age. For many people it doesn’t pan out as expected. Gallup found that, in 2022, people’s average expected retirement age was 66. But the actual age of retirement averaged 62.1

Additionally, a recent survey by the Employee Benefit Research Institute (EBRI) found that almost half of retirees reported leaving the workforce earlier than they planned.

David Blanchett, a certified financial planner and head of retirement research at PGIM, says that while working longer can have a “dramatic” positive financial effect, it often doesn’t work out as planned. His research found that those who target a retirement date past 61 end up making it only about half as far as expected. For example, someone who plans to work eight more years (to age 69) will usually end up working only half that (to age 65).

So, what’s causing people to retire sooner than they intended?

According to EBRI, among people who said they retired earlier than planned, 35% did so because of a hardship like a health problem or disability. Another 31% said it was due to changes at their company.

Unfortunately, when an involuntary job separation happens late in your career, it’s difficult to find a new position at the same salary. Richard Johnson, a senior fellow at the Urban Institute think tank, found that among people who lose their job in their 50s, 90% are forced to take a position that pays less. “Often substantially less,” writes Johnson.

The point is not to be pessimistic or fearful about the years leading up to retirement, but to be realistic. Life is full of unforeseen changes and often these can derail plans to continue working indefinitely. Knowing this, it’s smart to take a critical look at your career prospects, especially if you hope to work through your 60s.

Your options may include planning for a career change, transitioning to a part-time role, or retiring earlier than expected. Your trusted advisor will be happy to assist you in thinking through what you should do under various scenarios, and how to plan for the financial impact.