As Americans grapple with the reality of longer lifespans and the fear of outliving their retirement savings, a popular solution has emerged: work longer. But is this strategy as foolproof as it seems? At Extreme Investor Network, we dig deeper to reveal what this trend really means for your financial future—and what savvy investors should do now.
The Growing Trend: Delaying Retirement
Recent data highlight a striking shift in retirement planning. According to a survey by F&G Insurance, nearly 70% of U.S. workers who haven’t retired yet are considering pushing back their retirement date. Nearly half express anxiety about having enough money to retire comfortably. This is no small concern, with the Employee Benefit Research Institute reporting that 20% of workers adjusted their retirement age in 2024, mostly opting to retire later.
At first glance, working longer seems like a logical fix. More years in the workforce mean more income and more time to build savings. However, the reality is far more complex.
The Hard Truth: Early Retirement Happens More Often Than You Think
Despite intentions to work longer, about 58% of workers retire earlier than planned, according to the Transamerica Center for Retirement Studies. Why? Health issues (46%), employment problems (43%), and family responsibilities (20%) are the main culprits. Only 21% retire early because they feel financially secure.
Teresa Ghilarducci, a noted economist, points out that the 2008 recession shattered the assumption that people can always work longer to make up for financial shortfalls. Older workers were pushed out of the labor market, forced to dip into savings prematurely. This pattern is likely to repeat, especially as age discrimination and skill mismatches remain rampant in today’s fast-evolving job market.
A Retirement System Out of Sync with Today’s Realities
The traditional “three-legged stool” of retirement—Social Security, employer pensions, and personal savings—is wobbling. Social Security faces a looming funding shortfall, casting doubt on future benefit levels. Employer pensions have almost vanished in the private sector, dropping from 63% coverage in 1989 to just 15% today.
This leaves workers heavily reliant on 401(k)s and similar defined-contribution plans. While younger generations like Millennials tend to save more aggressively—Federal Reserve data show Millennials have more retirement savings by age 30 than Boomers did—this is no guarantee of security. Medical emergencies, market volatility, and job instability can quickly erode these savings. Plus, the burden of student loan debt further complicates the picture.
Working Longer: Opportunity or Illusion?
Some experts, like Andrew Biggs of the American Enterprise Institute, argue that extended careers are a viable solution. Employment among Americans aged 65 and older has surged by over 33% between 2015 and 2024, reflecting both necessity and opportunity. Older workers bring valuable skills and experience, and many employers recognize this.
Yet, Ghilarducci warns that the labor market doesn’t always cooperate. Employers often control who stays employed, and older workers may face age discrimination or find their skills outdated.
What This Means for Investors and Advisors: Actionable Insights
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Plan for Flexibility, Not Certainty: Investors must prepare for the possibility of early retirement despite intentions to work longer. This means building a more robust emergency fund and diversifying income sources beyond just retirement accounts.
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Prioritize Health and Skill Development: Maintaining good health and continuously updating skills can improve employability in later years. Advisors should encourage clients to invest in lifelong learning and wellness.
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Reassess Social Security Timing: Given Social Security’s uncertain future, strategizing the optimal time to claim benefits is more critical than ever. Delaying benefits can increase monthly payouts but requires financial resilience.
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Advocate for Policy Change: The retirement system is outdated. Investors and advisors should support reforms that strengthen Social Security and incentivize employer pension plans, helping to rebuild the “three-legged stool.”
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Consider Alternative Income Streams: With the gig economy and remote work expanding, older workers might find new ways to earn income beyond traditional employment. Exploring these options can provide financial stability.
Unique Insight: The Rise of “Bridge Jobs”
One trend we see gaining momentum is the use of “bridge jobs”—part-time or less demanding roles taken on after formal retirement. These jobs can provide essential income and help maintain skills without the full commitment of a traditional career. For example, a recent AARP study found that 45% of workers aged 50-70 are engaged in bridge jobs, often in consulting, freelance work, or part-time roles in their previous fields.
Advisors should incorporate this possibility into retirement plans, helping clients identify potential bridge job opportunities aligned with their skills and interests.
What’s Next?
The message is clear: relying solely on working longer is a risky bet. Investors and advisors must adopt a multi-pronged approach that includes aggressive saving, strategic health and skill investments, and flexible retirement planning.
As the landscape shifts, those who adapt early will be best positioned to secure their financial futures. At Extreme Investor Network, we’ll continue to track these trends and deliver insights you won’t find anywhere else—because your retirement deserves nothing less.
Sources:
- Employee Benefit Research Institute (EBRI) 2024 Retirement Confidence Survey
- Transamerica Center for Retirement Studies, 2024
- Federal Reserve Bank of St. Louis, Life Expectancy Data
- Bureau of Labor Statistics, Pension Coverage Data
- AARP, Bridge Jobs Report 2023
Stay tuned for more exclusive analysis and expert advice to keep your investments—and your retirement plans—on track.
Source: Working longer may not fix your retirement, economists say