Retirement insecurity: The number of Americans working past age 65 has doubled since 1987 — and today's older workers are putting in more hours than ever. What's behind the alarming trend?

Why older workers are working longer

Economists and researchers say this silver wave of seniors in the U.S. workforce could come down to changes in both the nature of work and the economy.

The Pew report uncovered that older workers are making more money than they did in 1987, with the median worker aged 65 or older earning $22 an hour, up from just $13 in 1987 and narrowing the wage gap with younger workers.

This age group is also far more inclined to have completed a bachelor’s degree than they were back in the 1980s, moving up from 18% to 44% today, on par with younger workers — and opening up more job opportunities they might qualify for.

Americans are aging better than they did in previous decades as well, meaning they have fewer health issues that bar them from remaining in the labor market. And they’re more likely to be working from an office and enjoying greater flexibility, than performing a physically taxing role at a farm or a manufacturing plant.

However, there are a few financial factors that could also prevent this age group from fully retiring right now.

The Social Security system has changed, pushing the age Americans receive their full retirement benefits from 65 to 67. And more companies are ditching the traditional pension funds for flexible contribution plans, like 401(k)s, that encourage employees to work longer to build their savings.

The state of the economy can play a significant role as well. For example, when the COVID-19 pandemic hit — triggering isolation measures, business shutdowns and thousands of layoffs — plenty of older workers were forced to retire earlier than they anticipated.

When restrictions were lifted and the job market became replete with openings and wage increases in the midst of inflation, many senior Americans chose to “unretire” — especially if their retirement savings weren’t enough to manage rising prices.

“How much money you have for retirement now depends on the economic cycle,” Joanne Song McLaughlin, a labor economist at the University of Buffalo, told The Washington Post. “And that can create incentives for older workers to work longer.”

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Some workers simply haven’t saved enough

Although some older Americans are still working in order to keep themselves busy (and provide a tidy boost to their retirement income), others just don’t have a choice.

Some reports have found that even $1 million in savings might not be enough to afford a comfortable retirement today, thanks to inflation. Your dollars won’t go as far as they did back in 1987, with $100 back then affording something that would cost you nearly $280 today.

But many Americans nearing their golden years haven’t gotten a chance to build any retirement savings in the first place. The most recent data from the Joint Economic Committee in 2020 revealed only 35% of those between the ages of 55 and 64 had a pension or retirement savings held in a 401(k) or IRA.

Those who did shore up some funds reported a median account balance of just $88,000 — even though the recommended savings target is six times your current income at age 50.

Low-income workers are even worse off, with a 2023 report from the Government Accountability Office (GAO) that revealed a whopping 90% of low-income workers between the ages of 51 and 64 had a retirement account balance in 2019.

Of course, it’s not too late to start putting some savings aside, even for workers in their 50s or 60s. You might not be able to retire at the traditional age of 65, but perhaps you can cut back on your hours and switch to part-time work with the goal of fully retiring at a later date.

Consider speaking to a financial adviser who can evaluate your situation, set some hard goals and get yourself on track.

Start investing some funds into a 401(k) or a Roth IRA, and look for other ways to cut back on costs and boost your income.