Baby Boomers and Beyond: Working Far Past Retirement Age

Takeaways

• A growing number of Americans are working past traditional retirement age, often due to financial necessity but also for engagement and purpose.

• Working later in life has significant implications for financial planning, health care, and estate planning, requiring careful consideration of taxes, benefits, and legal documents.

Many Americans are worried they won’t have enough money saved to retire, and a cohort of the oldest workers is proving this concern to be legitimate.

Nearly half a million Americans over the age of 80 are still working, while the 75-plus demographic is the fastest-growing segment of the workforce.

For some, the choice to keep working is about staying active and engaged. For others, it’s necessary amid rising health care costs, a longer life than their savings anticipated, or the need to support a spouse or loved one.

But whether out of necessity or passion, working into your 70s, 80s, and even beyond comes with financial, health care, and estate planning implications. If you — or a parent, spouse, or grandparent — are still in the workforce at this stage of life, here’s what you need to consider.

Why More Seniors Are Working Past “Retirement Age”

Not long ago, working past age 65 was unusual. But with more Americans describing the American Dream as out of reach, the American retirement dream — the idea of retiring at 65, if not sooner, and spending your later years living comfortably off your savings — is also fading.

A recent Bankrate survey found that 57 percent of American workers feel behind on their retirement savings, with 35 percent feeling significantly behind. Among older generations, 68 percent of Gen X workers (born between 1965 and 1980) and 66 percent of the Baby Boomer generation (born between 1946 and 1964) share this concern.

According to a Federal Reserve survey, nearly 46 percent of American households in 2022 had no retirement savings.

Overall, workers age 70 and older make up less than 6 percent of the U.S. labor force. But the number of working Americans over the age of 80 has increased from 3.6 percent to 4.2 percent in the past decade, while Americans age 75 and over are twice as likely to be in the workforce now compared with the early 1990s.

Among those aged 75 and older, about 9 percent are currently employed — more than double the rate in 1987. And since early 2022, the number of workers aged 80+ has grown 24 percent, dwarfing the 4 percent growth in overall employment. About one-quarter of these workers aged 80 and above are self-employed.

Key Takeaways for Seniors Working into Their 80s

Business Insider profiled a woman named Lydia who works at age 81 to help cover living expenses and health care costs. Lydia and dozens of other workers aged 80+ told Business Insider that their “decision” to keep working is not a decision at all: health issues, loneliness, and increased cost of living were the key factors keeping them at a job at an age when most people are retired. Many said they accepted minimum-wage positions or continued working despite medical diagnoses.

However, there are also those who genuinely choose to work late in life. They might enjoy the extra income or want to stay active and social. Some even credit it as a key to healthy living and longevity.

TODAY.com spoke to a 101-year-old who said she simply likes working and being around people and a woman in her 90s who worked at the same company for 75 years. One 88-year old woman still works full time to show her grandkids a “good example.”

Research supports the notion that people have different motivations for working beyond retirement age, which generally fall into these buckets:

• Financial pressure. Social Security benefits alone barely cover living expenses, and some people lack a pension or other workplace retirement plan. Savings may also have been depleted by the 2008 financial crisis, inflation, or unexpected medical bills.
• Purpose and connection. Work provides structure, social interaction, and a sense of contribution that some don’t want to lose.
• Health and longevity. Advances in medicine and lifestyle mean more people can remain active into their 80s and beyond, helping them stay mentally sharp and emotionally fulfilled.
• Health coverage. Employment can help maintain access to employer-provided health insurance, especially before Medicare eligibility or when supplemental coverage is necessary.
• Passion. For some, it’s not about money. They love what they do and see no reason to stop.
• Employer demand. Some industries value experience and institutional knowledge, and employers facing labor shortages are more willing to keep or hire older workers.

For those who do stay in the workforce, flexible job types and age-friendly work environments have helped make it possible for many older workers to prolong their careers. Instead of a traditional, abrupt retirement, they can transition more gradually, balancing their personal needs with ongoing employment.

But there are also challenges: age discrimination, jobs that are physically demanding, navigating complex rules for things like Social Security, Medicare, and pensions, and financial and estate planning considerations.

Financial Planning

Earning wages in your later years can affect how your income is taxed and how retirement benefits work.

• Tax impacts of earned income. Additional wages can push Social Security benefits into taxable territory. Up to 85 percent of your Social Security may be taxed depending on your combined income.
• Required Minimum Distributions (RMDs). Even if you’re still working, once you turn 73, RMDs from individual retirement accounts (IRAs) and most other retirement accounts are mandatory. The only exception may be a 401(k) from a current employer.
• Pension offsets or reductions. Some pension plans reduce benefits if you earn income past a certain age or continue working past retirement age, while others allow continued accrual of credits.

Planning tips:

• Review your tax situation each year to anticipate Social Security taxation.
• Coordinate withdrawals from retirement accounts with ongoing income.
• Check with your pension administrator or human resources department to understand any reductions or offsets.

Health Care and Long-Term Care

Health care planning becomes more complex the longer you work, particularly in your 70s and 80s.

• Medicare coverage gaps. Medicare doesn’t cover long-term care, so supplemental insurance may be necessary.
• Employer coverage vs. Medicare timing. Staying on an employer plan can affect when you enroll in Medicare Parts A and B. Missing deadlines can lead to penalties or gaps in coverage.
• Planning for incapacity. The risk of sudden illness or disability increases with age. If you become unable to work, having plans in place is critical.

Planning tips:

• Confirm Medicare enrollment and coordinate with employer benefits.
• Consider supplemental coverage or long-term care insurance if needed.
• Keep powers of attorney and health care proxies current to ensure someone can act on your behalf if you’re incapacitated.

Estate Planning

A longer working life can mean a more complex financial picture. Assets may grow, family circumstances may shift, and planning documents may need to be updated accordingly.

• Updating wills and trusts. As wealth or family circumstances change, your estate plan should reflect current realities.
• Business succession. If you run a business past retirement age, clarify succession plans and how ownership will transfer.
• Powers of attorney and health care proxies. These documents can prove vital if sudden incapacity strikes mid-career.
• Legacy vs. liquidity tension. Spending down assets for your own needs versus leaving an inheritance can require a careful balancing act.

Planning tips:

• Review all estate planning documents every few years or after major life changes.
• Coordinate business succession with estate planning to avoid disruption.
• Discuss your plans with family or trusted advisors to prevent surprises.

Legal and Public Policy

Personal choices are not the only factors at play. Laws and policies also affect how feasible it is to work into your 80s, and staying on top of changes to them is a crucial planning aspect.

• Age discrimination remains a challenge, even though laws prohibit it. Many seniors report being overlooked for jobs despite being willing and able to work.
• Government program rules about Social Security, Medicare, and Medicaid are complicated and can interact with work in complex ways. Working seniors may fall into gray areas when trying to coordinate benefits.
• Social Security reform is also a looming issue. With trust funds projected to run short within the next decade, future benefits may be affected, especially for those relying on delayed retirement strategies.

Planning tips:

• Be aware of age discrimination laws and document any issues if they arise.
• Understand how continued earnings affect benefits.
• Don’t go it alone. Elder law attorneys, financial planners, and benefits specialists can help you understand how the rules apply to your situation.

Planning for an Extended Career

Retirement today is less about a fixed age and more about personal circumstances. The shifting reality of work creates new planning challenges that traditional retirement advice often overlooks.

Working into your 80s changes how you should plan your finances, health care, and estate. Careful planning is necessary at every age. But extra or different planning may also be necessary when working as a senior.