More workers are still clocking in to work at 65
A Pew Research study finds that older workers are working more hours and earning better pay than previous generations.
The number of older workers on the job is creeping higher.
Roughly 1 in 5 Americans ages 65 and older (19%) were employed in 2023, four times the number in the mid-1980s. That tallies up to around 11 million workers and is on par with the number of those in that age cohort who were clocking in during the early 1960s.
That’s the scuttlebutt from a new report from the Pew Research Center. “Older adults have not been left behind in the US job market,” Richard Fry, a senior researcher at Pew and co-author of the report, told Yahoo Finance.
That lines up with my own family’s experience. My husband, 69, is employed full-time; my brother, 67, is going full steam at a company where he has worked for more than three decades; and my brother-in-law, 65, juggles a patchwork quilt of paid positions from teaching at a university to consulting to work as a corporate board member — intermixed with plenty of leisure time for biking, hiking, boating, travel, and time with family.
The survey also found that workers over 65 work longer hours than their predecessors and have higher levels of education. Over the course of a year, the average older worker works 1,573 hours, up from 1,213 hours in 1987. And more than 4 in 10 have a bachelor’s degree or more education, compared with 18% in 1987. That puts them about on par with workers ages 25 to 64, according to the survey.
What’s more, they're raking in heftier pay per hour than older workers before them.
The inflation-adjusted earnings of the typical worker aged 65 or older rose from $13 an hour in 1987 to $22 an hour in 2022. And today, more than 6 in 10 are working full-time, compared with 47% in 1987.
Read more: How to find out your 2024 Social Security COLA increase
“We are also seeing that older workers are less likely to say they find their job stressful, reporting higher levels of job satisfaction overall compared to younger workers,” Fry added.
Two-thirds (67%) of workers ages 65 and older say they’re extremely or very satisfied with their job overall, compared with 55% of those 50 to 64, 51% of those 30 to 49, and 44% of those 18 to 29, according to another recent Pew survey conducted in February.
Why are they still working? For many older workers, my family included, it’s because they love what they do and want to stay engaged mentally and with a community. Not to be dismissed, the paycheck makes them feel valued and is a financial safety net, even if they have saved adequately for retirement.
Policy shifts have also encouraged people to stay on the job longer, according to the Pew research. Changes to the Social Security system, for example, raised the age which workers receive their full retirement benefits from 65 to 67.
Read more: What is the retirement age for Social Security, 401(k), and IRA withdrawals?
The ‘older worker’ effect on the economy
“Older workers have accounted for much of the recent growth in the labor force,” Richard Johnson, director of the Program on Retirement Policy at the Urban Institute, told Yahoo Finance.
Workers ages 65 and older represent about a quarter of the increase in the labor force over the past 25 years, and workers ages 55 and older represent more than three-quarters of the increase, he said.
“Without the added contributions of older workers, the labor force would have stagnated, reducing productivity gains and lowering economic growth,” Johnson added.
And the tide is not turning.
Adults ages 65 and older are projected to be 8.6% of the labor force (those working and looking for work) in 2032, up from 6.6% in 2022, according to the Bureau of Labor Statistics. And older adults are projected to account for 57% of labor force growth over this period.
“That is a pretty astonishing number,” Bradley Schurman, a demographic strategist and the author of “The Super Age,” told Yahoo Finance.
“People can cry and moan about the fact that, ‘isn't it so awful that over 65s have to be in the workforce?,’” Schurman said. “No, it's not. It's good for you. I’m not saying that people should be chained to a job that they can barely do because they're physically infirmed or mentally incompetent. But for those that have the physical and mental wherewithal, this is a good thing because you stay healthier physically and financially, and have more money in your pocket. When you have people earning for longer, they stay active consumers.”
‘Unretiring’ ticks up
Even workers who retired during the pandemic have returned from the labor market sidelines to fill open slots in a bubbling job market that is only now starting to shift to a simmer.
A recent report from T. Rowe Price found that around 7% of retirees are looking for work in retirement, while 20% say they’re already working part-time or full-time. The two main reasons for coming back into the workforce: 45% chose to work for social and emotional benefits, while a slightly larger percentage — 48% — felt they needed to work for financial reasons.
The biggest financial payoffs of additional years of paid work are pushing back retirement account withdrawals, continuing to save and delaying claiming Social Security benefits. If you choose to wait to tap your benefits until age 70, you earn delayed retirement credits, which come to roughly an 8% per year annual increase in your benefit until you hit 70 when the credits stop accruing.
‘Progress,’ but pay gap for older workers vs. younger ones persists
Despite the increase in employment for many people 65 and older, it’s not an easy skate for all older workers. “It is heartening to see that the door is still open to these older workers when they want a job or need one,” Ramona Schindelheim, WorkingNation editor-in-chief, told Yahoo Finance. “I see progress, but I still see an unmet need for many older workers and a missed opportunity for employers to capitalize on the labor right in front of them.”
And the income gap between workers aged 25 to 64 and workers 65 and older is still “too wide,” she added. Older workers make 78 cents on the dollar compared to their younger counterparts. In 2023, the median annual income for workers 65 and older was $58,600, compared to $73,700 for workers aged 25 to 64, according to Pew research.
“One of the reasons they get so much less is that the existing skills and experience older workers have are undervalued, both organizationally and financially,” Schindelheim said. “Older workers have experience in problem-solving, teamwork, and institutional memory.”
There are glimmers of hope that the mindset that employers have about older workers may be changing. Over 3 in 5 employers said they gave a “great deal” or “quite a bit of consideration” to job applicants age 50 and older when recruiting last year, according to a recent Transamerica Institute workplace survey.
Of course, that doesn’t mean they hired them.
“The headwinds encountered by older job seekers in the past are receding to a certain degree,” Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and Transamerica Center for Retirement, told Yahoo Finance.
While the jump in employment for workers 65 and older is notable, “many continue to struggle,” Johnson said. “Older Black and Hispanic men earn about one-third less than older white men. Many employers are still reluctant to hire older workers, so older unemployed workers spend about twice as much time out of work than younger unemployed workers.”
Kerry Hannon is a Senior Reporter and Columnist at Yahoo Finance. She is a workplace futurist, a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.
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