The Active Retirement Shift

Why people are retiring later, working into their retirement years, and staying busy after 65

By Ross Boissoneau | Oct. 5, 2024

Ah, retirement. The good life. Just make it to 65 and let that pension kick in. No more alarm clocks or worries about what the boss thinks.

Once upon a time, that was the norm. Today, however, many are working past 65, because they need to or they want to—or both. And when folks leave their careers at 60, 65, or 70, they may not be leaving the world of work but instead changing jobs or finding something new to do on a part-time basis.

According to the Pew Research Center, roughly one in five Americans aged 65 and older were employed in 2023—nearly double the share of those who were working 35 years ago. And while the Employee Benefit Research Institute reports the median retirement age for Americans is 62, their 2024 Retirement Confidence Survey found that three-quarters of workers think that they will work for pay in retirement.

Working Because You Want To

A number of variables have influenced the way we think about retirement. They range from people exploring more interests to missing the potential social and business connections they’ve forged to worries about having enough money to live on.

“The definition of retirement is changing,” says Dennis Prout of Prout Financial in Traverse City. “Maybe it [retirement] is consulting or part-time work.”

That could include everything from bookkeeping for a small nonprofit to working in retail at your favorite shop. “Things you have a knack for,” Prout says.

Or things you wanted to pursue but couldn’t due to financial constraints during prime money-making years. Today, someone can consider themselves retired but still work, volunteer, or consult part-time. “Everybody’s definition of work is different. You have more freedom later; 30 or 40 years ago you didn’t have that freedom,” Prout says.

And then there are those who still enjoy their current line of work as they get into their 60s or beyond. Perhaps they don’t want to do it as much, but they still enjoy going into the office. “Do we want or need to retire at 65? That’s a great question [for people] to ask themselves,” Prout says.

There is more good news for older workers. The Pew Research Center says their earning power has grown in recent decades. In 2022, the typical worker aged 65 or older earned $22 per hour, up from $13 per hour in 1987.

Potential benefits to delaying retirement include everything from a bigger Social Security check to IRA-related tax breaks to employer-paid health insurance. Part-time workers can enjoy the security of a little extra income, while even unpaid volunteers can benefit from the social connections and mental sharpness that come from staying active and engaged outside the home.

Working Because You Have To

Of course, a huge part of the retirement equation is money, specifically concerns about having enough savings beyond Social Security to make ends meet.

Prout says as pensions disappeared, they were replaced by individual savings, 401(k) plans, and other personalized accounts. “They have a level of responsibility for their own retirement. There’s not a pension anymore.”

Georgetown University Center for Retirement Initiatives notes that people are living longer, and longer lifespans mean more years in retirement. A national opinion poll done by the National Institute on Retirement Security finds that working-age Americans are increasingly worried about retirement, putting pressure on individuals who will need to plan and save accordingly.

Prout says planning for retirement should begin early, and if not early, then now. “Saving [money] is huge. You have to start. Don’t let the negative self-talk stop you,” he says.

His second mantra: Manage your debt. And do that first before trying to accumulate wealth in other ways. Many credit cards charge interest rates of as much as 20 percent, so he says if you have credit card debt, you should pay that off before trying to start a 401(k) savings plan.

How much money you need to retire on has to do with a variety of lifestyle factors. A survey from Northwestern Mutual found workers are aiming for $1.46 million—averaging out to $58,400 per year to live on for a 25-year retirement. However, the same survey found the average amount that U.S. adults have saved for retirement is only $88,400.

Retirement Up North

So if retirement doesn’t look like it used to, what does it look like?

For just about every iteration of retired life, you need look no further than the Friendship Centers of Emmet County, the county’s designated Council on Aging, with their main hub in Petoskey and satellite location in Brutus. Executive Director Deneen Smith tells us she sees a huge range of ages and interests among the seniors who take advantage of the centers’ activities. (Michigan’s state law and the Older Americans Act recognize seniors as anyone 60 or over.)

Smith says over 1,300 people have signed into the Friendship Centers at some point, and the average daily number of users in Petoskey is 150.

As the hub, the Petoskey location includes the administrative offices and is the base for the Meals on Wheels program. She says there are four buses to provide transportation for seniors, and they offer in-home services such as housekeeping, personal care, and respite care for caregivers.

On the other hand, many of those taking advantage of what the Friendship Centers offer are active retirees or even not-quite-retirees who want to enjoy the social aspects of the programs the centers offer.

“Social activities are a big deal to us,” says Smith, noting that older people can become isolated, and activities with others improves mental health. The activities range from yoga to kayaking, lectures to hikes, lunch to card games, and more. Line dancing, movies, and a number of other options are provided at the two locations by a staff of 37.

Both Prout and Smith note that the changes inherent in aging need not be negative. “Life expectancy has increased. People are living longer, healthier lives,” says Smith. In Emmet County, she says approximately one-third of the residents are 60 and over.

“We’re living longer in relatively good health,” agrees Prout. “I’ve got clients who are 70-plus who are active cyclists. They’ve embraced retirement but they’re active.”

Bottom line: “Everybody’s different,” says Prout, and every situation is different, now more than ever before.