How Longer Lives Impact Employment and Retirement Planning
Increased longevity is a significant achievement, reflecting advancements in healthcare and overall quality of life. Life expectancy has increased tremendously in the United States, from an average of roughly 47 years in 1900 to 77 years in 2020. However, this extended lifespan brings unique challenges, particularly regarding retirement security. Many older workers find themselves remaining in the workforce longer, often out of necessity rather than choice. This article explores the complexities of balancing extended careers with retirement preparedness, the impact of COVID-19, and how these challenges disproportionately affect workers of color and women.
The Necessity of Extended Careers
For many older workers, the decision to stay in the workforce is driven by financial necessity. The shift from traditional pensions to retirement savings plans has placed the responsibility of financial planning on individuals.
According to a 2023 report, over 40% of working Americans aged 45 to 64 have no retirement account assets beyond their entitlement to Social Security benefits. About 67 million people, or about 1 in every 5 U.S. residents, collected Social Security benefits in February 2024. The median retirement account balance for those aged 55 to 64 was $104,000 in 2019, which translates to a modest monthly income if annuitized at age 65. As a result, many older adults find themselves unable to retire and compelled to continue working, frequently in jobs that offer diminishing quality and pay.
The Impact of COVID-19
The COVID-19 pandemic has intensified the challenges faced by older workers. Many experienced job losses, reduced hours, or the need to withdraw from retirement savings, further jeopardizing their financial security. An analysis of federal employment data revealed that millions of workers over the age of 55 lost their jobs during the pandemic. The job loss during this period was greater than during the 2007–2009 Great Recession.
This highlighted the vulnerabilities of older workers in physically demanding or low-paying jobs, where remote work was often not an option. This situation has forced many to reconsider their retirement plans and financial strategies.
Disproportionate Impact on Workers of Color and Women
The challenges of balancing extended careers with retirement preparedness are particularly pronounced for certain demographic groups. Workers of color and women often face additional hurdles that can affect their financial stability and retirement readiness. According to the American Association of University Women (AAUW), “46% of unmarried women over 65 receiving benefits rely on Social Security for nearly all (90% or more) of their income”
Women often face unique challenges in retirement planning due to career interruptions related to caregiving responsibilities and the ongoing gender pay gap. These factors can lead to lower lifetime earnings and, consequently, reduced retirement savings. In 2023, the official poverty rate for women 65 and older was 11.6% in 2021, compared to 8.8% for older men. The pandemic has intensified these issues, as many women have had to leave the workforce to care for family members, impacting their long-term financial security.
In addition, there is a significant racial retirement wealth gap, leading older adults of color to face more retirement insecurity than their white counterparts. The median wealth of African Americans amounted to $44,900 or 15.8% of the median wealth of white households ($285,000) in 2022. In comparison, the median Latino/Hispanic household owned $61,600 in 2022, or 21.6% of the median wealth of white households. Not to mention, Black and Latino workers are less likely to be offered workplace retirement plans and more likely to work in low-paid jobs with little margin for savings.
Strategies for Enhancing Retirement Preparedness
While the challenges are significant, there are strategies that can help older workers improve their retirement preparedness:
- Lifelong Learning and Skill Development: Older workers can benefit from pursuing additional training or education to enhance their skills and increase their employability. Many community colleges and online platforms offer programs tailored to adult learners. The Center for Workforce Inclusion offers the Digital Certification Program to prepare older workers for the modern workplace while combating ageism.
- Flexible Work Options: Exploring part-time or flexible work arrangements can help older workers balance their need for income with their desire for a more manageable work-life balance. These options can reduce physical strain and allow for a smoother transition into retirement.
- Financial Planning Resources: Accessing financial planning resources can empower older workers to make informed decisions about their retirement. Workshops, online tools, and one-on-one consultations can provide valuable guidance on savings strategies and investment options.
- Community Support Networks: Building connections with community organizations can provide older workers with additional resources and support. These networks can offer information on job opportunities, financial literacy programs, and social services that cater to their needs.
While increased longevity presents challenges for retirement preparedness, particularly for older workers, there are proactive steps that individuals can take to improve their financial security. By focusing on skill development, exploring flexible work options, and accessing financial planning resources, older workers can navigate the complexities of extended careers and work toward a more secure retirement. With the right strategies in place, longer lives can be a time of opportunity and fulfillment rather than a source of financial stress.
