As Americans enter retirement, many expect to keep working.
- Citing a longer life expectancy than previous generations, Americans age 40 and older expect they will work after retirement.
- Among the 500 people polled who said they were in their 40s, 92% 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 respondents.
For roughly eight decades, retirement for many American workers meant being able to live out one's golden years with loved ones while living off the Social Security program they'd paid into for so long. Yet according to a new study, there's a growing contingent of middle-aged and older Americans who expect their retirement will at least partially be spent in the workforce.
According to data in TD Ameritrade's "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.
"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," she 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 August 30 to September 10, 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.
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.
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 reasons 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.