Nearly 1 in 5 US workers are over 65 as retirements are delayed

The workforce is growing older, and that’s very likely a good thing for U.S. productivity. Various statistics reveal the active workforce over 65 is more likely to have higher education levels than historically, working at a 0.75 full-time equivalent rate on average, and is working for lower wages on average than younger workers.

This growth toward an aging workforce is readily apparent within the 75-and-older age group. Since 1987, the number of 75 and older workers has more than doubled, from 4% to 9%, according to a study from the Pew Research Center. And the ranks of the employed are filling up among those who are a few years younger, too: 19% of the nation's 11 million 65 and older population is employed, nearly twice as many as were employed 35 years ago.

These older workers are delaying retirement due to evolving trends in the work world, such as financial need and changes in education, retirement policy, healthcare, and the knowledge economy.

Older workers with higher education levels are more likely to be working than their less-educated peers. According to the U.S. Bureau of Labor Statistics (BLS), 63,230,000 people with bachelor's, master's, professional, and doctoral degrees were employed in November 2023, while only 34,413,000 people with high school diplomas were employed.

Financial necessity and the prospect of earning decent wages to supplement mandatory retirement allocations may be one incentive for people to keep working. These older workers no longer have to settle for the average salary of $13 per hour or an average annual wage of $5,200 (in 2022 dollars), as the Pew researchers calculated.

Now, the median wage for older workers is $22 per hour and the average annual wage is $58,600. It’s still less than the $73,000 average wage for younger workers, but it’s a vast improvement over the older-younger wage gap in 1964, which was an average of $5,200 for older workers vs. $26,000 for younger workers.

Another reason that older workers are bringing in more money than in the past is because they are working more hours than they used to. Older workers now put in about 1,573 hours per year. In contrast, according to the PEW research, the average older worker in 1963 only worked 1,213 hours per year.

Their tendency to work more hours may be a result of improved health. Older adults today are much less likely to have disabilities that prevent them from working than they did in the past. Research published in 2023 in the International Journal of Environmental Research and Public Health found from a nationally representative sample of 5.4 million older Americans that, over 10 years, there were substantial decreases in the age–sex–race-adjusted odds of disability among older Americans.

Older workers may be healthier, but that doesn’t mean they want the type of jobs that give them a full-body workout; researchers from the National Bureau of Economic Research (NBER) concluded that older workers prefer less physically demanding jobs. Fortunately, another working paper from NBER showed that the workplace is becoming more age-friendly. The authors wrote, "(B)etween 1990 and 2020, around three-quarters of occupations have seen their age-friendliness increase and employment in above-average age-friendly occupations has risen by 49 million.” According to the authors, “(m)any of the top age-friendly occupations involve office work and limited physical exertion, such as proofreaders, insurance adjusters, financial managers, insurance adjusters, examiners and investigators, and business and promotion agents.”

Changes in retirement plans may also encourage workers to defer retirement. Gone for most workers are the days of having a company benefit/pension plan that specifies a retirement date and guarantees an income after that date. Instead, workers contribute to a defined contribution plan, such as a 401(k). A workshop proceedings from the National Academies of Sciences, Engineering, and Medicine states, "(A) simple calculation suggests that the 25-point drop in the share of private-sector workers with a defined benefit plan from 1980 to 2014 could have led to a roughly 6-month increase in the average retirement age."

Social Security policy changes have also likely caused people to delay retirement. An article on the BLS website summarizes this change, noting that "(i)n 1983, Social Security changed legislation concerning retirement age, such as increasing the full retirement age (FRA), changing the way benefit formulas were calculated, and increasing the delayed retirement credit, which increased the financial return to working past the FRA."