Portfolio Management Ahwatukee

Why Work Past 65?

More and more seniors are opting to work past 65. Recent data from the US Bureau of Labor Statistics show that nearly one-fifth of people over 65 have a job—the largest number of older workers in U.S. history!

Prior to Medicare being enacted in the 1960s, less than half of retirees had any kind of health insurance. About 18% of seniors continued working, mainly because they wanted to have employer provided healthcare. On July 30, 1965, President Lyndon B. Johnson signed into law the Medicare bill which provided coverage for Americans age 65 and older. Former President Truman issued the very first Medicare card during the ceremony. (Twenty years earlier, Truman had fought for health coverage during his presidency, but was unsuccessful in getting the bill passed.)1

Insights 2016-06-08
Once seniors had access to health care, fewer continued working after age 65. The numbers dropped steadily for nearly 20 years (from 1965 to 1985). But then the trend reversed and has now surpassed previous levels.

So why are more people delaying retirement even with Medicare benefits available?

They need the money

According to a survey by the Transamerica Center for Retirement Studies, more than half of older workers said that earning more income and benefits was their primary reason to keep their job.2 In fact, 60 percent of US households have no money in a 401(k) or similar retirement account. And with fewer employers offering traditional pensions, many seniors feel they have no choice but to work as long as possible.

They enjoy their job

On a positive note, over a third of those surveyed said they were continuing to work because they enjoyed their career and “want to stay involved.” What is fascinating regarding this response is that the numbers are counterintuitive. Older people that are college graduates tend to work longer than those without any college education. You would think that those who have less education and lower earnings would have to work longer, but research shows that many who have advanced degrees enjoy their work and want to keep doing it.

Employers value their experience and wisdom

Over the past few decades, peak earning ages have shifted. In the 1980s, people earned their peak income in their 40s. Today, those in their 50s and 60s are earning the highest salaries of their careers. Employers value senior employees more than at any other time in history. Their education and skills can be a great asset.

Seniors are more active, healthier, and living longer

Perhaps one of the greatest factors influencing retirement plans is the fact that we have longer life expectancies. Having a longer career doesn’t necessarily mean a shorter retirement. The huge baby boom generation is really driving this point home. They want to stay active, travel, and check things off “bucket lists.” In order to do so, however, they may opt to work an extra three, five, or seven more years and still plan to enjoy a full retirement after that!

When is the right time for you to stop working? Feel free to give us a call and we can help guide you in this decision-making process.

1) https://www.medicareresources.org/basic-medicare-information/brief-history-of-medicare/
2) https://www.transamericacenter.org/retirement-research/retiree-survey