Golden Years Redefined as Older Americans Buck Trend And Work

  • Labor force participation rate for those over age 65 is rising
  • Better health, changes in Social Security part of uptick

Ron Levitt could have retired 16 years ago when he sold his bustling optometry practice in Rocky Hill, Connecticut. Instead, he kept his white coat on, found two part-time gigs seeing patients and continued working.

Today, at 74, Levitt spends all of the money he earns on vacations with his wife and golf-club memberships. Aside from the extra cash, Levitt says it also keeps boredom at bay.

A rising share of Americans is holding jobs into their golden years, bucking the overall trend of people leaving the labor force that is concerning Federal Reserve policy makers trying to boost growth. As the elderly continue to work, their paychecks are fueling spending and contributing to the U.S. economic expansion.

“The fact that their income is boosted by being employed will mean they spend more than their cohort who is retired," said Dean Maki, chief economist at Point72 Asset Management in Stamford, Connecticut. 

The share of those over the age of 65 in the labor force was 19.4 percent on an unadjusted basis in June, up from 15 percent in June 2006, according to the Bureau of Labor Statistics. Meanwhile, the overall labor force participation rate last month was an adjusted 62.7 percent, down from 66.2 percent a decade ago and hovering near the lowest point since 1977.

Continuing Trend

While many point to the recession wiping out retirement savings as a catalyst for seniors to keep working, the rise in the last decade is part of a long-term trend. The participation rate for the 65-plus group began climbing in the mid-1980s after falling for four decades when flush social security benefits created an incentive to retire.

"They were leaving a lot of potential on table," said Matt Rutledge, an economist at Boston College whose research focuses on labor market outcomes for the elderly. "They could’ve helped shore up their own financial needs, they could’ve helped a younger generation if they needed support, and they could’ve contributed more taxes into the system. If they were not working, they were not doing those things."

Economists attribute numerous factors to the rebound in older people working, but point to better health as the main driver. Additionally, jobs are becoming less physically demanding.

Outliving Wealth

They “are worried their lifespan is going to outpace their wealth span," said Joseph Coughlin, director of the AgeLab at the Massachusetts Institute of Technology in Boston.

Changes in benefits for the elderly have been part of the equation. More retirement plans are based on employee contributions, which encourages working longer. The eligible age for social security has increased, and there are less costs associated with working while receiving benefits.

A chunk of seniors is also working because they want to. Like Levitt, they are using most of their additional income to improve their quality of life, and in turn contribute more to consumer spending, the largest portion of the economy. In 2014, those who are 65 and older spent about 97 percent of their income, according to the Labor Department’s Consumer Expenditure Survey. Comparatively, the overall expenditure share in the U.S. was 80 percent.

Among those still working is 73-year-old Sandra Engelson, who serves as the director of human resources for a construction company in New York. Engelson said she spends about 80 percent of her pay on dining out, traveling and going to the theater.

Better Lifestyle

"I’m not ready to live on my savings, which would not make my lifestyle the way I want it to be," she said.

Older workers like Engelson are "good for everybody," said Gary Burtless, a senior fellow at the Brookings Institution in Washington and former Labor Department economist. "It means that older people are not so dependent on the young. They’re supporting themselves and they’re making contributions to social security, Medicare until later in life."

Most of the elderly who want to work are able to find it. On an unadjusted basis, the unemployment rate for those 65 and older was 4.1 percent in June, below the overall national rate of 5.1 percent. Even during the recession and its aftermath, the jobless rate for seniors didn’t jump as much as for the general population.

The increase in the participation rate for those over 65 still isn’t enough to make up for the total number of retiring baby boomers that is pushing down the overall participation rate. As more and more baby boomers hang it up, total participation will continue to decline, which means the economy’s ability to grow will slow, Maki said.

Yet, more elderly are refusing to slow down. A Pew Center analysis of Labor Department data showed that the proportion of 65 or older workers that are part-timers fell to 36.1 percent in May from 46.1 percent in May 2000.

Engelson, the human resources director, works full-time, six days a week. Although she’s hoping to cut down to five days, Engelson doesn’t intend to go part-time.

Philip Vincent straddles the line between part-time and full-time, depending on how busy he gets. That’s because the 72-year-old has an untraditional job: he’s an Uber driver in Washington. 

After selling his small business three years ago and retiring, Vincent found he had too much downtime. Now he drives around in his new Lincoln MKS, and likes both the social interaction -- he says he’s met people from countless countries -- and the supplemental income. He is using some of his driving money to make car payments.

Although it’s hard to measure, alternative arrangements represent an expansion of work opportunities for senior citizens. The gig economy "provides people a lot of flexibility in hours, location, in the range of work they do," said Debra Whitman, chief public policy officer at the American Association of Retired Persons. That pairs well with an older worker’s needs.

For Vincent, his reason for working is simple: "Everybody is different. I know people that are retired and they like to lay around, I can’t do that."

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