Working Longer and Phased Retirement

Contents

1. The long decline and the turn
2. Who works past sixty five
3. Why the share rose
4. The gap between plan and reality
5. Job loss at older ages
6. Rural Nebraska
7. Phased retirement and other ramps
8. What changed and what did not

Through divorces and other transitions Brent O’Mara has sat with clients, and this entry describes a transition that no longer happens on a single day. The date is 1985. In that year the share of Americans 65 and older who were working or looking for work reached its lowest point, 10.8 percent, at the end of a decline that had run since the Bureau of Labor Statistics began its survey in 1948, when the figure was 27.0 percent.² The line has risen since. By 2024 it was 19.5 percent, and in 2025, with October’s data missing because of a government shutdown, it stood at 19.1 percent, down from a 2019 peak of 20.2 but well above the 12.9 percent of 2000.²¹ More Americans work past 65 than at any time since the 1960s, and the surveys say why.

The long decline and the turn

In 1948 nearly half of men over 65 were in the labor force and fewer than one woman in ten. The men’s share fell for almost four decades, to 15.8 percent in 1985, while the women’s share held near 7 to 10 percent, and from 1985 the two moved together upward, to 23.4 percent of men and 16.2 percent of women in 2024.² The population behind the percentages grew faster still: 10.7 million people 65 and older in 1948 became 59.7 million in 2024, an increase of 457 percent against 161 percent for everyone 16 and older, so that 11.6 million of the 168.1 million people in the labor force were 65 or older.²

Figure

Labor force participation at 65 and older

• 194827
• 198510.8
• 200012.9
• 202419.5

Who works past sixty five

Older workers work differently. In 2024, 38.3 percent of employed people 65 and older worked part time, against 14.2 percent of those 55 to 64, and in every age group women were likelier than men to work part time; on an average day adults over 65 spent 7.1 hours on leisure, against 4.2 for those 25 to 54, with more than half of it watching television.² Pew Research counted roughly 11 million older workers in 2023, nearly four times the number of the mid 1980s, with 19 percent of adults 65 and older employed against 11 percent in 1987, a share last seen in the early 1960s; workers 75 and older were the group growing quickest, 9 percent of that age employed against 4 percent in 1987.³ A Federal Reserve survey found that 45 percent of employed older adults considered themselves retired.³

Why the share rose

Pew lists the causes. Older adults are better educated than earlier cohorts, and education raises employment. They are healthier and less likely to have a disability. Employers moved from pensions, which encouraged retirement at a set age, to 401(k) plans, which do not. Congress raised the full Social Security retirement age from 65 to 67, which labor economists believe encouraged people to keep working. And many occupations became more age friendly after 1990, with less physical strain and more flexible hours.³ The Washington Post found the opposite pull at work in 2021, when stimulus payments, market gains, rising home values and health concerns drew better off Americans into early retirement, some of them delaying their Social Security claim even so.⁸ The Bureau projects the trend continuing, with older adults 8.6 percent of the labor force in 2032 against 6.6 percent in 2022.³

The gap between plan and reality

Working longer is widely described as one of the best ways to repair a retirement shortfall, and the catch is that no one can count on it. Nearly half of the people who retired in 2025, 46 percent, did so earlier than they had planned, and the share has hovered between 40 and 50 percent every year since the late 1990s.⁴ Three quarters of those early retirements, 76 percent, came from factors beyond the person’s control: health problems and disabilities, and company downsizing, closure or reorganization.⁴ Gallup has measured the same gap from the other end, an expected retirement age of 66 against an actual age of 61 or 62, a difference of about five years that has held since 2002.⁴⁵ One worker in three expects to retire at 70 or later, or never; 6 percent of retirees actually did.⁵

Figure

Expectation and reality

of people who retired in 2025 did so earlier than planned

46 percent

of those early retirements were for reasons beyond the person's control

76 percent

the age people expected to retire and the age they actually did, in 2022

66 and 61

Job loss at older ages

The reason the plan fails is often involuntary. Richard Johnson of the Urban Institute found that 56 percent of full time workers in their early fifties were pushed out of a job before they were ready to retire, that only 10 percent of those who lost a job then ever again earned as much per week, and that in the years after the 2008 recession workers 50 to 61 who lost a job were 20 percent less likely to be reemployed than workers in their twenties and early thirties, with those 62 and older 50 percent less likely.⁵ David Blanchett’s research found that people who target a retirement age past 61 make it about half as far as they expect, so that someone aiming for 69 tends to stop around 65.⁵ The advice that follows from the surveys is to plan twice, once for the intended date and once for an earlier one, and to treat savings as the bridge to a later Social Security claim if work ends early.⁴

Rural Nebraska

The Nebraska Rural Poll asked 2,680 residents of the state’s 84 nonmetropolitan counties about work in retirement in 2007. Thirty one percent of those who called themselves retired were still working, and 48 percent of those not yet retired planned to work past 65, most of them part time in their primary career.⁶ The motives split by status: retirees worked to stay active and because they enjoyed it, while those still working expected to need the income and, for 38 percent, the health insurance.⁶ Farmers and ranchers stood apart, with 70 percent of those not yet retired planning to keep working and 82 percent of the retired ones still at it, three quarters of them farming or ranching part time.⁶ The poll noted a projection of the day that participation among people 65 and older would rise from 15.1 percent in 2005 to 21.5 percent in 2020, a projection the later data came close to.⁶

Figure

Rural Nebraska in 2007, retirees beside those not yet retired

	Already retired	Not yet retired
Working past the traditional age	31 percent were still working	48 percent planned to
Leading reason	to keep physically active, 84 percent	basic income needs, 66 percent
Employment as retirement income	72 percent received none	80 percent expected some

Phased retirement and other ramps

AARP’s guidance for employers frames the subject in terms of longevity: average life expectancy rose from 54 in 1919 to 79 in 2019 and is expected to reach the mid eighties by 2060, which makes the three stage life of school, work and retirement a poor fit for careers that may run into the seventies.⁷ Phased retirement, in that guidance, means a program that lets employees reduce their hours as they approach retirement, a ramp rather than a cliff, designed around four decisions: who is eligible, how long the phase lasts, what happens to health and other benefits, and how pay and pension calculations are affected; one hospital changed its pension formula to count the five highest years rather than the five final ones so that reduced hours would not cut the benefit.⁷ The other ramps are independent contracting, with 37 percent of contractors aged 55 and over in 2017, returnships for people coming back after a break, and alumni networks that bring retirees back for projects and mentoring.⁷ Which shape suits a given household depends on a family’s circumstances, including health coverage before Medicare and the terms of any pension, and qualified professionals can check the arithmetic.

What changed and what did not

What changed is the expectation. In the 2026 Retirement Confidence Survey, 64 percent of Americans felt confident of living comfortably in retirement, down from the year before, with workers at 61 percent and retirees at 73; a growing share of workers said they did not plan to retire at all, and nearly a quarter had moved their target date, most of them later.⁹ What did not change is the reality behind it: the median worker still expected to retire at 65, the median retiree had stopped at 62, and nearly half had retired earlier than planned, the same gap the surveys have recorded for two decades.⁹⁵