Half of Americans Expect to Work Past Age 65

Sometimes, that may not be a good thing.

Katie Brockman
Katie Brockman
Jul 8, 2019 at 6:00AM
Investment Planning

When you've been working for most of your adult years, you may dream of retiring as soon as you possibly can to start the next chapter of your life. But for many Americans, that dream is being put on hold as more and more people continue working well into their 60s.

Nearly half (46%) of Americans say they expect to work past age 65, a survey from Northwestern Mutual discovered, and 18% of baby boomers and generation X say they plan to continue working until age 75 and beyond.

Working longer than you anticipated may not sound ideal if you're eager to retire, but if you're short on savings, it might be the only way to give yourself a good chance at living comfortably in retirement.

Jar of retirement savings next to an alarm clock

Image source: Getty Images

The advantages and disadvantages of working longer

If you're nearing retirement age and have little to nothing saved, you're not alone. Half of adults over the age of 55 have no retirement savings, according to a report from the U.S. Government Accountability Office, and 56% of Americans don't even know how much they should be saving, Northwestern Mutual found.

The biggest advantage of working longer is that you have more time to build up your retirement fund. If you're serious about saving and are willing to make sacrifices in order to save more, you can stash away a significant amount of money in just a few years.

For example, say you're 50 years old with no retirement savings, but you've just started saving $500 per month. If you continue saving at that rate earning a 7% annual rate of return on your investments, you'd have just over $150,000 socked away by age 65. But if you work another five years until age 70, all other factors remaining the same, you'd have close to $250,000 saved.

Also, with life expectancies continuing to rise, working a few more years doesn't mean you still won't enjoy a long retirement. One third of 65-year-olds today can expect to live past age 90, according to the Social Security Administration, and one in seven will make it past age 95. So even if you work until your 70s, you may still enjoy a good couple of decades in retirement.

That said, there are disadvantages to banking on the idea of working longer to increase your savings, and the biggest one is the risk of being forced into an early retirement. Forty-three percent of retirees say they had to leave the workforce earlier than they anticipated, according to a survey from the Employee Benefit Research Institute, and the main reasons why included layoffs or organizational shifts at work and unexpected health issues. So if you're assuming that you'll be able to work as long as you'd like, that may not necessarily be the case. And if you're forced into retirement before you've had a chance to save enough, you may be stuck with what you have -- whether it's enough to live on or not.

How to save more when you're falling behind

When you can't guarantee that you'll be able to work as long as you're expecting, the best thing you can do is save as much as you can right now. Then, if you are able to work past retirement age, that money will just be icing on the cake.

Of course, saving more is easier said than done. If you're struggling to save anything, saving enough to retire can seem impossible. But if you're willing to make sacrifices, it can be done.

First, start tracking all your expenses, either the old-fashioned way by combing through bank and credit card statements or by using an app that tracks your spending for you. Then, figure out where you can cut costs. Depending on how behind you are with your savings, you may need to make only minor budget adjustments or major sacrifices. Sometimes, saving just an extra couple hundred dollars per month can be enough to get you where you want to be financially. Other times, though, you may need to make significant lifestyle changes, like downsizing to a less expensive home or moving to a more affordable neighborhood.

You may also choose to pick up a side hustle and put that extra income toward retirement. Even something as flexible as dog walking on the weekends or becoming an Uber Technologies Inc. or Lyft Inc. driver can help you earn a few hundred dollars or more per month. And when you put all that extra money toward your savings, it can go a long way.

If you're unable to save any more now, you'll probably be forced to depend on Social Security benefits in retirement. And considering the average beneficiary only receives around $1,400 per month, that may not be enough to make ends meet. So you'll likely need to make sacrifices at some point, either now or in retirement.

Retirement is often an exciting milestone in life that workers spend decades looking forward to. But it can also be a source of stress for those who aren't financially prepared. If you're able to work a few years past the traditional retirement age, that can help boost your savings. But even if you do plan to work as long as possible, saving what you can now will help you prepare for any challenges or obstacles that come your way.