Why Some People Never Retire

Alexandra Macqueen, CFP

For decades, American workers have treated retirement—the end of the “daily grind” of working for pay—as an important part of the American life cycle. But not everyone retires, whether they’ve planned to or not.

Have you ever wondered why some people don’t retire? The answer, it turns out, is linked to transformations in the economy, demography, and society that have occurred since the concept of retirement was first introduced in the United States. Here are three surprising reasons to help explain why some people never leave the world of work.

1. Retirement Is No Longer Expected

To understand why some people never retire, we need to understand what is meant by “retirement.” The idea of a period of non-working “rest” at the end of life can be traced back to 1880s Germany (then Prussia) when President Otto von Bismarck introduced the idea of a government-funded old-age pension for Prussian citizens, which started at age 70.

Bismarck’s idea was rather new. Before it, there was no agreement that your “working life” could come to an end while you were still alive. As long as you were living, you were expected to work! Thanks to Bismarck, the idea of a period of “non-work” following many years of work caught on around the world, with the United States introducing Social Security in 1935 to help workers leave the paid workforce at age 65.

Over the next decades, the idea of retirement grew in popularity. Employer-sponsored defined-benefit pension plans were added to benefits packages for some Americans, as well as other employer-sponsored retirement savings plans, such as 401(k)s.

But as time passed, the idea of retirement did not remain static. Instead, it continued to transform as the economy and society changed and grew. Today, although the number of people over the age of 65 has increased dramatically, and despite the fact that the idea of retirement is enshrined in programs such as Social Security, not all Americans over the age of 65 have stopped working.

In fact, the number of post-65 workers is on an upswing. In 2014, about 15 percent of women and more than 20 percent of men 65 and older were in the labor force, and these levels are projected to rise to 20 percent for women and 27 percent for men by 2022.

The reasons people might continue to work after the “traditional” retirement age of 65 are as varied as the individuals themselves. They include:

  • a financial need to continue working or build up a cushion for later years.
  • the desire to stay active and engaged in the work force.
  • the removal of barriers that might once have prevented working past age 65.
  • the itch to explore new kinds of work.

Whatever the reasons, the reality is that more and more people are working after the age of 65. Ultimately, the idea of a career “off switch” may become as unusual as the idea of a non-working period at the end of life may have been to the members of the German Reichstag in 1881.

2. Retirement Can Last As Long As Your Working Life

When Social Security was introduced in 1935, life expectancy at age 65 was about 13 more years. That number has increased to about 18 years for men and over 20 years for women—but because those numbers are averages, that means that fully half of people who reach the age of 65 are expected to live beyond those additional two decades.

What does that mean for retirement? A working career might last 25, 30, or 35 years; the new reality is that retirement can last just as long—or even longer for a very few.

This observation is particularly relevant to women, who may start working later than men or take time away from paid work to raise children or care for other family members (such as aging parents). Women in these categories tend to have fewer years of employment and less time to build up Social Security credits and other retirement savings before the age of 65 than men. This is especially worrisome given that women, on average, live longer after retirement than men.

For those concerned about the possibility of living a very long time after they retire—known as “longevity risk,” or the risk that you will outlive your money—one solution is to spend additional years in the workforce.

The mathematics of moving one year of life from the “non-working” side of the ledger to the “working” side are simple: Every year that you continue to work reduces the number of years for which your retirement nest egg has to sustain you. Because the length of time spent in retirement is uncertain, continuing to work—generating income and postponing withdrawals from your retirement nest egg—provides more certainty to your retirement finances. For people who are “longevity-risk-averse,” this simple solution can be very appealing—and can lead them to a “never-retire” plan.

3. There’s Growing Room for Post-65 Workers in Today’s Economy

With longer lifespans, an increase in the number of people over the age of 65, and a declining approach to retirement as an “off switch” for working life, it isn’t surprising that the economy continues to make room for people who want to work beyond that age. Employers may seek out “older” workers who feel that there’s no expiration date on their skills and talents.

In recent decades, a new wave of working-after-65 attitudes and practices have emerged across the country, with people remaining in their careers after reaching the conventional retirement age, starting second careers in their 50s, or opening businesses and pursuing self-employment after decades spent in more traditional work settings.

The “post-retirement” career can often provide many of the features workers prize, such as flexibility, a smaller commitment of time and energy, a work experience that more closely matches individual preferences, and a way to reduce financial risk in later years by continuing to generate income. (This would also allow other sources of retirement income, such as Social Security or private retirement savings, to remain untouched for a few years.)

Of course, not every older worker remains in the workforce by choice, and some observers have pointed to this growing trend as a troubling indicator of declining income and rising cost of living.

Making the Decision

If you’re approaching the “traditional” age of retirement and contemplating whether you’re going to remain working past age 65, what are the issues you need to consider? First, of course, is whether you would like to continue working and earning income—and, if the answer is yes, whether you’d like to stay in your current work situation or explore something new.

Your overall health should impact your decision, including your assessment of how your health may change in coming years. Also consider how long you might live, which you might be able to gauge by reviewing how long your family members lived. Look to your same-sex parent for best guidance.

If there are costs associated with continuing to work that would otherwise decline (e.g., buying prepared lunches and maintaining a working wardrobe), make sure you’ve factored them into your plan.

If you’re married, coordinate with your spouse, whether it’s so you can both remain in the workforce until a planned date, or you can harmonize your overall financial plans. Other family members may also have expectations about how you’re going to spend your post-65 years, so you may want to touch base with them as well.

If you’re eligible for Social Security or an employer-sponsored workplace pension, or you have a private retirement savings account, make sure you understand what your options are for taking or deferring income from those sources, and the implications for each option. If you are married and there are multiple potential sources of retirement income for you to draw from, the task of optimizing income from all these sources may be complex, requiring careful consideration.

Finally, you’ll probably want to think about how you want the rest of your life to look and how you’re going to address challenges, such as unexpected health care costs, that could arise.

All in all, a plan to work after the age of 65—a “never-retire” retirement plan—can provide a source of continued income and fulfillment, whether it provides the chance to remain in a work setting that is personally rewarding, explore something new, or help strengthen your financial position for the coming years.


2 Responses to "Why Some People Never Retire"

  • Rosemary | January 28, 2018 at 8:52 pm

    My entire life has been one of reinventing myself. I've owned four different businesses and own two right now and have just started a Non-profit for the maritime industry. I am almost 68 and hope to keep right on building businesses and creating new opportunities. I feel most alive when I'm creating and God willing I will do this until I pass away! Retiring, to me, would be boring! I love being out at sea, and helping others to fulfill their dreams and I'd just wither if I had to retire. Maybe I'm hyper-active. My mother is 95 and she'd probably agree. She says I never grew up and I just keep doing the same things I did as a kid. Maybe she's right but I love being ACTIVE and ALIVE!

  • Landroll | November 23, 2017 at 12:09 am

    If my wife had not moved to mid stage Alzheimer's, I'd have continued to work. I was at the top of my field, liked my work, the people I worked with and for. Life was good. I was 67 when I had to start caring full time for my wife. I don't regret quitting my work but I miss my buds and sense of value to them. But my wife of 47 yrs and her quality of life come first.

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