When you look at the data that's out there on Americans' retirement savings, the numbers are pretty bleak.
As of 2022, the median retirement savings balance among Americans ages 65 to 74 was just $200,000, according to the Federal Reserve. And in 2024, Vanguard put the median 401(k) plan balance among Americans ages 65 and older at $95,425.
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Chances are, these numbers are higher today across the board thanks to recent stock-market gains. But even so, they're a clear indication that many older Americans have work to do on the retirement savings front.
Of course, retirees typically don't have to live on their savings alone. It's common to qualify for Social Security, too. But the average Social Security benefit today is just slightly higher than $2,000 a month. That means there's a lot of pressure to save for a reasonably comfortable lifestyle, since $24,000 a year won't cut it for many people.
If you're approaching retirement and aren't happy with your IRA or 401(k) balance, you may be resigned to working longer. And it's not as though working longer isn't an effective solution to the problem at hand. But there may be a much better way to cope with a gap in retirement savings.
Don't assume that delaying retirement is your only option
Working longer is a great way to boost retirement savings, not to mention that it will help stretch whatever savings you have already. The problem is that it might make you miserable. It's natural to reach a point in your life when you no longer have the energy for full-time work. And in some cases, continuing to hold down a full-time job could be detrimental to your health.
This assumes, of course, that continuing to work full-time is even on the table. Some older workers find that between health problems and industry changes, it's not feasible to work beyond a certain age.
But even if you can continue to work, that doesn't mean you want to. So there may be a better way to make up for your lack of savings without having to continue in a full-time job.
Part-time work could be a great solution
Working full-time for a few more years may be mentally and physically taxing. Working part-time, on the other hand, is something that may be easier to do and more enjoyable -- especially if you join the gig economy and find a job you like.
The benefit of working part-time is that it won't involve the same demanding schedule as a full-time job. At the same time, it's something you can potentially continue to do for many years in retirement, allowing you to supplement your income and keep busy at the same time.
Remember, if you don't have much in savings, once you retire, you may not be able to afford many options for keeping busy. Working part-time could be the perfect way to fill your schedule without spending money you don't have.
Working part-time might also be a more sustainable solution. If you're 65 years old and can barely handle a full-time job and commute today, you may only be able to push yourself to keep at it another year or two. But if you shift into part-time work, you may be able to hold down a job for another decade.
It's definitely a good idea to address whatever savings shortfall you have ahead of retirement. But forcing yourself to keep working full-time isn't necessarily the most optimal solution. You may find that staying employed on a part-time basis is a much better route to take -- in the near term as well as the long term.
