Making the Retirement Decision

Statistics show more people today are working beyond the traditional age of retirement. The U.S. Department of Labor reports that 20% of people older than 65 are still working—that’s double the number from 1985. What’s driving this trend? People are living longer. The financial face of retirement has changed. And many jobs today are less physically demanding than in years past.

Sometimes, circumstances nudge an older worker into retirement. This might include declining physical or cognitive health, health problems of one’s spouse, or another relative, or the retirement of a spouse who wants to relocate. Seniors who are laid off or whose jobs are eliminated might then face age discrimination as they look for a new job, and finally give up. And the COVID-19 pandemic has spurred fears that older workers will face increased age discrimination as workplaces reopen.

These days, retirement isn’t a one-size-fits-all life event. It is a personal choice for each older adult—and not a simple decision!

What should older workers consider before deciding to retire?

Finances. Almost half of all workers approaching age 65 say they plan to work at least a few years longer than that, and money is the main reason why. Stagnant wages and a shift away from traditional pensions to 401(k)s have left many older workers without an adequate nest egg. And they’re aware that each year up to the age of 70 that they delay collecting Social Security increases the amount of their benefit going forward.

Health. A number of studies have shown that older adults who stay on the job have better health than those who retire. Though the cause and effect are complicated—health challenges may force a worker to leave the workforce—going to work seems to lower the risk of some health problems. On the other hand, jobs that are physically taxing or mentally stressful can lead to poorer health, and make it hard to keep up with medical appointments and a wellness regimen.

Social connections. Many adults who have worked all their lives have grown the majority of their social connections through work. Our day-to-day interactions often take place in the workplace. Studies show this is particularly true for men. Retirement may mean we’ll have to take deliberate steps to avoid social isolation and accompanying depression.

Mental stimulation. Not all jobs give our brains a good workout—but most do, to an extent. And when it comes to brain health, “use it or lose it” is true. The American Academy of Neurology noted that job-related mental activity could build a cognitive reserve that helps us fend off Alzheimer’s disease and other dementias.

A sense of purpose and life goals. When people meet at a party, one of the first questions is usually “What do you do?” Our work is tied to our identity and self-esteem. On the other hand, working might prevent a person from following their passions. What activities might be important after retirement? Spending time with family when that is safe again? Travel? Volunteer work? Moving to a different community?

Caregiving. Many older workers leave their jobs to provide care for an ill spouse, their older parents, or other relatives with disabilities. Caregiving can be the equivalent of a second full-time job and the stress of balancing both roles can make retirement look like the best choice. But caregivers should think it through. It might be possible for them to continue working with the help of employer assistance programs, public services, and the support of other family members.

The changing face of retirement

Retirement isn’t the “either-or” proposition it once was. Older workers may cut back on their hours, move to a part-time position, or make a little extra money at a different job. Some launch an “encore career,” following a dream. Others are walking out the company door with their gold watch—and then walking right back in as a consultant.

Remember that many employers, too, are changing the workplace to accommodate older workers. They’re making safety and ergonomic improvements, providing support and flexibility for family caregivers, and instituting policies that discourage ageism—steps that benefit employees of every age, as well.

Many employees also will work with older workers to adjust the position itself. In a study published by the American Psychological Association, Margaret Beier, Ph.D., of Rice University said that protecting older employees from stress enables them to continue to bring their gifts to the job. “Experienced workers offer much in terms of knowing the company culture and being able to mentor younger employees, so it is vital that we look into the best ways to extend their careers and improve their health outcomes,” Beier reported.

As you mull over the all-important retirement decision, talk to your spouse and other family members, your financial advisor, and your healthcare provider. The better informed you are, the more likely you are to make the best decision.