According to the U.S. Bureau of Labor Statistics (BLS), Americans over the age of 65 reached their highest labor force participation rate since the 1970s in 2017. The number of people ages 65 and older were are working or actively looking for work has been increasing at the fastest rate of all time, with a labor force participation rate steadily growing 2-3% annually since 1996. Labor force participation rate is expected to continue to rise for Americans over the age of 65 until 2024, while the labor force participation rate for other age groups aren’t expected to rise over the same time period.
Financial needs are the main reason that Americans over the age of 65 are reentering the workforce.
More than half of American Workers’ most frequently cited retirement fear is “outliving my savings/investments”, according to The 18th Annual Transamerica Retirement Survey. In their annual report, the Transamerica Center for Retirement Studies discloses that only 30 percent of Americans accumulate $250,000 or more in retirement savings, and middle-income American workers' median retirement savings is only $71,000. Middle-income Americans account for 52% of the US population, while lower-income Americans account for 29% of the US population, According to a recent report from Pew Research Center.
An AARP report reveals that the number of older Americans filing for bankruptcy has surged fivefold since 1991. (Insert @ risk + Helena quote about retirement)
The main factors that determine the extent and quality of retirement in America are: when an individual decides to retire and what the financial sources will be for that individual during their retirement. When the Social Security Act established in 1935, as one of the systems for old-age workers to receive benefits, the minimum age for receiving the full benefits was set to 65, according to the Social Security Administration. But flexibility with the retirement age arose with alternative retirement benefit options from employer-sponsored benefits to personal savings plans.
The Baby Boomer generation played an integral role in shaping the way retirement works, as the largest generation in American history. Baby boomers began entering the labor force in 1962, according to the Bureau of Labor Statistics. From 1962 to 2011, the labor force peaked in size as a result of the workforce entry of the baby boomer generation and the integration of working women. (Social Security)
In determining what the financial sources will be for that individual during their retirement that includes: whether to phase into retirement by going part time for a period then later entering full retirement, when to start receiving social security, and evaluating equity because many workers have more net wealth in their assets than retirement savings.
Once the main two factors are established, it’s mostly a matter for individuals to manage their living expenses accordingly.
United Income Inc., an investment management and financial planning company, conducted a study measuring the financial impact of various retirement planning decisions that confirmed “the three most important [factors] are selecting your retirement date, deciding on the asset allocation for your retirement savings, and deciding when to claim Social Security benefits.”
But the process of phasing into retirement is also contributing to the higher labor force participation rates amongst older Americans. Catherine Collinson, CEO of Transamerica Center for Retirement Studies, said, “Full retirement is no longer a point in time. The transition could be a decade or more, and involve shifting gears and working in a different capacity or finding a flexible arrangement.”
But Collinson also suggests that the concept of retirement has also shifted to a transition into a different career direction for many reaching the age of 65 because there is a stronger interest in maintaining a sense of purpose with a longer life span. Old age is not really considered old age the way it used to. Americans over 65 are proving to still be very alert and thus civically and communally active. According to the 2017 Home Instead, Inc. survey, 80 percent of American retirees and Americans approaching retirement age expressed that they want to make a meaningful impact in their communities in their post-retirement years. After financial reasons, finding new challenges and fulfillment were the second and third most important motivators for Americans over 65 to re-enter or remain in the workforce. The study also shows while the majority of Americans approaching retirement age expect to have to continue working or “unretire” at some point, 68 percent of them plan to change or have changed industries for a new career in a different field.
Sara Rix, senior strategic policy adviser at the AARP Public Policy Institute, says, “Who wants to do the same thing for 20 more years that they've been doing for a long time? Many people now working into their late 70s and 80s have careers with a lot of variety that helps keep work interesting and enjoyable."
"Today, more aging men and women are redefining what their next chapter looks like, seeking out new career opportunities that serve their skills, passions and life goals," said Jeff Huber, president and CEO of Home Instead, Inc. "We are seeing the desire among seniors for a second career to not just fulfill a monetary need, but source of personal fulfillment later in life. In fact, many of our own professional caregivers are seniors themselves."