Americans are now fearing retiring more than death and getting divorced. According to the survey conducted by Livecareer, more than 82% of the respondents claimed to delay their retirement, and 92% of them mentioned they had to work longer than they had planned. Moreover, according to the F&G Annuities & Life Inc. survey, 33% of the retirees considered rejoining the workforce, while 68% of the pre-retirees were willing to push back their retirements.
If we look at the women’s workforce, there is also the trend of delaying their retirement or rejoining the workforce. According to the Alliance for Lifetime Income, more than half of the women nearing retirement age have less than $100,000 in assets, out of which 67% are single women.
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Rising Cost of Living and Inflation
The cost of living in the United States has been rising consistently over the past few decades, affecting retirees’ financial security. According to Statista, the annual inflation rate in America grew from 3.2% in 2011 to 8.3% in 2022, one of the highest rates in recent years. However, the inflation rate fell to 3.3 % in 2024. This ongoing inflation remains the number one reason for Americans to delay their retirement. Even those who saved diligently for decades may find that their nest egg isn’t sufficient in the face of ongoing inflation, especially when factoring in a possible retirement period of 20 to 30 years.
Healthcare Costs and Medical Expenses
Medical expenses are one of the most significant financial burdens for retirees. A 2023 report from Fidelity Investments estimated that a 65-year-old couple retiring today would need approximately $157,500 on Health Care, even with Medicare Coverage. This is a daunting figure for many, especially when health insurance premiums, out-of-pocket costs, and long-term care expenses are included.
As more Americans grapple with these potential expenses, delaying retirement becomes a practical solution. Working longer allows individuals to remain covered by employer-sponsored health insurance, which can be significantly more affordable than Medicare Advantage or other private health insurance options. Additionally, continuing to work can prevent early retirement savings withdrawal, which can compound and grow over time.
Lack of Sufficient Retirement Savings
Another critical factor postponing Americans’ retirement plans is insufficient retirement planning. According to Benjamin F. Edwards, more than 25% of Americans don’t have any retirement savings, whereas approximately 40% do not feel they are on track for retirement.
In addition, the 401(k) model has proven insufficient for many. While employer-sponsored pensions were more common, today’s workforce largely relies on defined-contribution plans like 401(k)s and IRAs. These plans depend heavily on individual contributions and investment returns, which can be unpredictable. For those who experienced market downturns, such as the 2008 financial crisis or the COVID-19 pandemic, retirement savings can be even further diminished.
Beyond Financial concerns
F&G stated that 45% of retirees who are rejoining the workforce claim to enjoy the intellectual challenges of the job. Moreover, the gig economy, remote work, and flexible job opportunities have provided alternatives for retirees who want to continue working. Many retirees work part-time or freelance to stay active, connected, and financially secure.
The COVID-19 pandemic accelerated the adoption of remote work, making it possible for older adults to continue working without the physical demands of commuting or traditional office work. This shift has enabled retirees to supplement their income while enjoying the flexibility to balance work with personal pursuits.
Psychological and Social Factors
For some, retirement presents psychological and social challenges. Work can be a source of purpose, social connection, and identity, making the transition to retirement difficult. For these individuals, staying in the workforce—even part-time—offers a sense of fulfillment and connection that retirement may not provide. This trend has led to an increased interest in “phased retirement” programs, which allow older workers to reduce their hours and gradually transition to retirement over time.
A Changing Retirement Landscape
With more Americans rethinking what retirement means, policymakers and employers may need to consider ways to support this evolving demographic. Retirement savings programs, ensuring healthcare affordability, and offering flexible work options can all contribute to a healthier, more financially secure aging population. As Americans navigate these challenges, one thing is clear: retirement no longer means an abrupt end to work but an evolving stage of life where financial independence and personal fulfillment remain top priorities.
