Pew: More boomers are working during their retirement years

by NEW YORK DIGITAL NEWS



The graying of the American workforce continues: Baby boomers are working longer and earning more than their predecessors did in what Americans typically think of as retirement years, new research finds.

Almost 20% of Americans ages 65 and older were employed this year, according to a new report from Pew Research Center. That’s nearly double the share of those who were working 35 years ago. Total, there are around 11 million Americans 65 or older who are working today, comprising 7% of all wages and salaries paid by U.S. employers. In 1987, they made up 2%.

And not only are more Americans at or above the traditional retirement age of 65 working, but they are also earning substantially more compared to what older workers earned in the 1980s. Now, the typical older worker earns $22 per hour, compared to $13 per hour then. Their wage growth—some of which can be attributed to them working longer hours than older Americans did in the past—has outpaced that of workers aged 25 to 64 over the same time period, according to Pew’s research, which is based on data from the U.S. Census Bureau’s Current Population Survey and the Federal Reserve’s 2022 Survey of Household Economics and Decisionmaking.

Though the change has picked up in recent years—save for the exodus of older workers during the COVID-19 pandemic—it has been underway for a few decades, according to the Minneapolis Federal Reserve. While older workers started retiring earlier after World War II thanks to new, generous government programs, the 1990s saw more of them working longer.

There are a number of reasons for this change, highlighted in Pew’s report and in other research. Among some of the largest changes: A much higher share of baby boomers have four-year degrees, relative to the generations before them, and were able to work white collar, less physically-taxing jobs. Baby boomer women were also more likely to enter the paid workforce than women in previous generations, broadly speaking.

Advancements in health care have kept more people healthier longer, and the strong job market of the past few years makes it easier to stick around and work a little longer.

“Our sense of what is old has changed over the past 40 years,” says Aaron Terrazas, chief economist at Glassdoor.

And there are simply more baby boomers than there were other generations (thus the name). In 2023, the majority of baby boomers are at least 65.

Retirement benefits like pensions and defined-contribution plans (i.e. 401(k)s) have also changed substantially since the ’80s. Boomers with employer-provided health insurance have an enticement to keep working. And while they are more likely than previous generations and current younger generations to receive a pension, there are still many baby boomers who do not have one and contribute on their own to something like a 401(k), which encourages people to work longer in order to save more.

Plus, “changes in the 80s, specifically, and then more gradual changes in the generosity of Social Security benefits and the timing of Social Security benefits have created incentives for people to work a little bit longer,” says Terrazas. Waiting an additional year or a few years increases benefits substantially, which many older people rely on to pay their bills each month.

“We are also seeing that older workers are less likely to say they find their job stressful, reporting higher levels of job satisfaction overall compared to younger workers,” says Richard Fry, a senior researcher at Pew and the lead author of the study.

Another big change: The U.S. is aging as a society, as are many other parts of the world. That means that a higher share of the workforce will be older because a larger share of the population is, compared to the 1980s. “There’s going to be more old people doing everything. Working, traveling, eating out. It’s an unavoidable trend,” says Terrazas.

That said, the median baby boomer turned 70 this year, Terrazas points out. They are—slowly but surely—reaching the “upper limit” of when it makes sense to keep working. In fact, Glassdoor projects Gen Z will overtake boomers in the full-time workforce next year.

Pew says the trend of more older workers is likely to continue, at least over the next decade. But Terrazas says this is likely close to the height of older Americans in the workforce, particularly as more boomers reach their 80s and are less physically capable of continuing to work.

“As baby boomers exit the job market, that changes what companies prioritize,” he says. “Companies have always prioritized the needs and interests of their younger workforce.”

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