More Americans over 65 are working — here's why
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An increasing number of Americans age 65 and older are working — and earning higher wages, per a study from the Pew Research Center out Thursday.
Why it matters: This is good for the economy, especially as the U.S. population ages — but whether or not it's good for older Americans is a bit more subjective.
Zoom in: The share of older adults working has been steadily increasing since the late 1980s, with a detour during the pandemic as older folks retired in greater numbers. Several forces are driving the shift:
- Older workers are increasingly likely to have a four-year degree, and typically workers with more education are more likely to be employed.
- Technology has made many jobs less physically taxing, so older workers are more likely to take them.
- Meanwhile, changes in the Social Security law pushed many to continue working past 65 to get their full retirement benefits.
- At the same time, there's been a shift away from pension plans, which typically force people out of a job at a certain age, into 401(k) style plans that are less restrictive (and less generous, critics say).
By the numbers: Last year, the typical 65+ worker earned $22 an hour, up from $13 (in 2022 dollars) in 1987. That's about $3 less than the average for those age 25-64, and the number includes wages of full- and part-time workers.
Be smart: Before Social Security existed, older people worked — a lot. In the 1880s, about three-fourths of older men were employed, said Richard Fry, senior researcher at Pew. They also didn't live as long.
- Meanwhile, the 65+ age group is a fast-growing one — by 2032 all the baby boomers will be in this category, per the BLS's projections, and their increased workforce participation is good for an economy that is struggling with long-term labor shortages.
The big picture: "If people are working longer because they find purpose in their jobs and want to stay engaged, that's good for them individually," said Nick Bunker, head of economic research at Indeed Hiring Lab.
- It's also good for the productive capacity of the economy, and the firms where they work. "Older folks have lots of experience and knowledge to pass down," he said.
- Yes, but: If there are people who want to retire, but can't because of financial constraints, "that's bad," he added.
What to watch: The share of older adults working peaked before the pandemic — will it surpass those levels?
- The number hasn't bounced back as much as anticipated partly because older Americans benefited hugely from the stock market surge and real estate gains of the past few years — and didn't need to work anymore.
