Rosalind Evans
Planning to delay retirement has become a common strategy for many Americans who fear they haven’t saved enough for their golden years. According to a recent survey by CNBC and SurveyMonkey, 27% of workers plan to work even in retirement to supplement their income. The survey polled 6,657 U.S. adults, including retirees and workers across various employment types. However, financial experts caution that relying on this plan could lead to unexpected challenges.
The Reality of Working Longer
Working beyond the traditional retirement age seems ideal for those short on savings. Philip Chao, a certified financial planner and founder of Experiential Wealth, emphasizes that while this may seem like a good idea, “reality could be very different.” Factors such as health complications or layoffs may prevent workers from staying in the workforce as long as they had hoped.
Research shows that many Americans retire earlier than planned. A Gallup poll reveals that the average non-retiree in 2023 expected to retire at age 66, while actual retirees left the workforce at around 62. Similarly, the Employee Benefit Research Institute (EBRI) found that 46% of retirees exited the workforce earlier than anticipated.
An Illusionary Escape Plan
Delaying retirement is often seen as a financial “escape valve,” but Chao warns that this assumption could be dangerous. He explains that “saying it and doing it are two totally different things.” Around 35% of people retire early due to health problems or disabilities, while another 31% retire because of layoffs or company changes. These unexpected events make it difficult for many to stick to their planned retirement age.
More than half (56%) of full-time workers in their early 50s get pushed out of their jobs before they’re ready to retire, according to a 2018 Urban Institute paper. Workers who re-enter the workforce often earn significantly less, making it harder to recover from early retirement.
Benefits of Working Longer for Those Who Can
Despite the challenges, working longer has clear benefits for those who can. Delaying retirement allows workers to keep their nest egg intact and continue contributing to it. They can also postpone claiming Social Security benefits, which increases their payouts over time. “A shift away from a manufacturing economy to one primarily focused on delivering services and information facilitates working to an older age,” says Jeffrey Jones, a Gallup analyst.
In addition to financial rewards, many Americans find emotional and physical benefits in continuing to work. About 26% of workers want to stay employed during retirement, and 17% of retirees work because they enjoy it. Some also report improved health and longevity from staying active, though this largely depends on the stress and physical demands of the job.
While delaying retirement may help some bolster their finances, it’s not a foolproof solution. Unexpected health issues, layoffs, and other unforeseen challenges can derail these plans, leaving workers scrambling for alternatives. Philip Chao wisely notes, “It sounds great on paper, but the reality could be very different.” When planning for retirement, having a backup plan is essential in case working longer isn’t an option.
