Many workers are staying on the job longer or plan to before going into their golden years.
More retirees said they retired at ages 66-69, rising from 11% in 2021 to 14% in 2022, according to the latest annual survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research.
And 7 in 10 workers expect to work for pay as a source of their retirement income, and 1 in 5 are counting on it as a major source, according to the EBRI poll. A growing percentage of workers say they will never retire – 15% in 2022, up from 10% in 2021, according to the EBRI survey.
Unfortunately, expectations of working in retirement can backfire. For workers who plan to work in some fashion for pay after they retire, that desire still appears to be more of a nice notion than a reality. Only 27% of retirees have employment income, according to the EBRI poll.
‘Sad commentary that health insurance has to be such a big factor’
That desire to remain employed is backed up by other recent surveys. More than half of workers (57%) plan to work in retirement citing a variety of reasons ranging from the income to keeping their brains alert, or the social connection, according to the most recent study by the nonprofit Transamerica Center for Retirement Studies.
The specter of soaring medical costs alone is stomach-churning. The average couple age 65 retiring this year and enrolled in Medicare may need approximately $315,000 saved (after tax) to cover healthcare expenses in retirement, according to the Fidelity Retiree Health Care Cost Estimate.
That’s what motivated Russ Eanes, an author, to get back in the workforce after retiring five years ago from his job as chief executive at MennoMedia, a book publisher. A year ago, he went back to work at GetSetUp, an interactive website that delivers virtual education to older adults.
The impetus: A steady paycheck and access to a health insurance plan.
“It's a sad commentary that health insurance has to be such a big factor in these decisions,” Eanes told Yahoo Money.. “I'm on Medicare as of February, but my wife is a year behind, so we have to scramble to figure out how to have her covered for another year. While I was making out okay as a freelancer, it can be feast or famine.”
Older workers are not always ‘proactive’
But getting back to work or staying employed is not always easy, and in some cases, it can be the workers themselves who short-change their ability to stay on the job longer.
“Many 50+ workers are not proactive about taking steps to help ensure they can work as long as they want and need,” Catherine Collinson, CEO and president of nonprofit Transamerica Institute and Transamerica Center for Retirement Studies, told Yahoo Money. “Among those employed by for-profit companies, our research showed that only 62 % are focused on staying healthy so they can continue working and just 44% are keeping their job skills up to date.”
Only a small percentage are networking and meeting new people (16%), taking classes to learn new skills (12%), scoping out the employment market and opportunities available (10 %), attending virtual conferences and webinars (9%), or obtaining a new degree, certification, or professional designation (5 %), Collinson said.
Meantime, more than 2 in 5 workers expect a gradual transition to retirement, according to the EBRI survey.
In reality, “only a fraction of companies offer employees the option of a phased retirement,” Collinson said. “Our most recent employer survey finds 27% of employers offer a formal phased retirement program.”
Even more troubling– nearly half of retirees retired earlier than they planned.
“Back-to-work plans can be upended by unexpected health challenges and caregiving demands,” Nancy Collamer, a retirement coach and author of “Second-Act Careers: 50+ Ways to Profit from Your Passions During Semi-Retirement,” told Yahoo Money.
The median expected retirement age for workers — age 65 — and the reported retirement age of retirees —age 62, according to the EBRI survey. Two-thirds said their early retirement was for a reason out of their control, such as a health problem or disability, company downsizing or reorganizations, or caregiving for a loved one.
Some of those reasons were amplified by the pandemic.
Since March 2020, 1.1 million more Americans between the ages of 55 and 74 retired earlier than what would have been expected during normal times, according to a recent report from The New School's Schwartz Center for Economic Policy Analysis. The number of those who retired involuntarily a year after losing a job was 10 times higher than pre-pandemic times, the report found.
‘Beginning to feel the impact of inflation’
This trend may be shifting. As of March 2022, 3.2% of workers who were retired just one year ago are now employed again, according to research by Nick Bunker, the director of economic research at Indeed Hiring Lab.
One caveat: while the EBRI Retirement Confidence Survey was conducted as the inflation rate had already begun its rapid rise, and at that time, the majority of workers and retirees reported being confident that they had enough money to keep up with inflation in retirement, the economic picture is grimmer now.
With the inflation rate at 8.3% in April of 2022, down slightly from 8.5% in March, which was the highest since December of 1981, and the S&P 500 index off its January peak by 16.6%, that exuberance may be fading.
“Some workers are beginning to feel the impact of inflation, and the number is likely to grow,” Copeland said. “How the economy evolves over the next few months is likely to result in workers reconsidering where they stand regarding retirement. If inflation continues at historic rates and the stock market continues falling, more workers will be reevaluating their retirement plans.”
Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter @kerryhannon