Should I Work Past Retirement Age?

Peter A. ScilovatiMarch 22, 2018

Retirement Planning

Our clients at HFA are inevitably trying to answer the ever-present question: “When should I retire”!  Independent of the financial planning and retirement projections we conduct for clients on a daily basis we have read about interesting trends concerning retirement schedules.

Research has shown that more Americans are saying No to retirement and working into their 60s and beyond. It’s the “new” old age. A 2016 New York Times article reports nearly a third of adults aged 65 to 69 are remaining in the workforce while a fifth of those aged 70 to 74 are still working. About two-thirds of these individuals have full-time jobs, defined by the Bureau of Labor Statistics as working at least 35 hours weekly. This changing labor pattern is partly due to Americans’ expanding life expectancy. There are more centenarians now than ever – the Centers for Disease Control and Prevention report there are 72,197 Americans aged 100 years and older, which represents an increase of 44 percent since 2000.

As the typical lifespan increases, so do the chances of outliving one’s money. As a result, retirees – particularly those in good health – are staying in the workforce to offset their longevity risk. However, even those reluctant to continue working may elect to stay in their jobs longer once they see the significant financial, physical, and mental benefits attributed to delaying retirement.

Working longer increases the likelihood of a financially stable retirement. In addition, working longer helps clients compensate for shortfalls in savings that cannot provide the support their household needs in retirement. In an article in Investment News, Jamie Hopkins and David Littell, faculty members of The American College of Financial Services, discuss how preparedness for retirement increases from 49 percent with a retirement age of 65-years old, to 85 percent with a retirement age of 70. For those who find work to no longer be satisfying, spending discretionary income on enjoyable activities outside the workplace can provide the relief from stress while still allowing clients to gain the benefits of working longer, write Hopkins and Littell.

Benefits of Working Past Retirement Age:

  • Social Security benefits increase when claims are deferred.
    • Individuals who claim Social Security benefits at age 62 receive substantially lower monthly payments than those who draw benefits later. Deferring Social Security benefits until the age of 70 may be possible when there’s a paycheck to cover living expenses. Claiming Social Security at 70 qualifies recipients for about 50 – 57 percent more income than claiming Social Security at the age of 62.
  • Investments and savings have more time to grow.
    • Working longer allows individuals more time to contribute to their savings, which is especially valuable for employees whose companies make matching contributions to their 401(k) accounts. Often, pre-retirees can accelerate their savings rates, once college tuition bills or home improvement projects are paid off. A few additional years of work means more time to accumulate “free” money from employer contributions to retirement accounts. The higher savings rate that is possible at this stage can very effectively set people up for a better quality of life in retirement.
  • Employer-subsidized health insurance is more affordable.
    • Since Americans under the age of 65 are not eligible for Medicare, those who retire before the age of 65 must buy health insurance in the marketplace. It’s a costly expense. More than three-quarters of retirees in their 50s and 60s spend 10 percent or more of their family income for health care. That’s more than two and a half times what those still working pay for employer coverage. Working longer allows seniors to purchase medical insurance through a subsidized group policy until eligible for Medicare. Thus, savings can go straight into a their retirement investments.
  • Working adults have better physical and mental health.
    • Studies show people who stay in the workforce are generally healthier and happier than those who are fully retired. The most recent statistics indicate the death rate from all causes for people working past the age of 65 is 11 percent lower than for those who did not work, and seniors who did were more likely to report they were in good, very good, or excellent health. Working also provides opportunities to learn and socialize, which improves mental health and happiness. Hopkins and Littell write that many people feel better when they work, and physical and mental health decline the longer people are in retirement.

Overall, delaying retirement for just a few years can transform an average retirement income into a better one and the wait provides health and wellness benefits, too. It is important to weigh the advantages that this may add to your retirement readiness. If you have any questions related to your specific situation, our financial planning team would be happy to help you evaluate and implement a plan.  Give our office a call at 610-651-2777.


The American College of Financial Services, Bryn Mawr, Pennsylvania