On the Money

Retirement at 65 becomes a reach for some, as seniors stay in the workforce

Key Points
  • Nearly 20 percent of people over 65 are still working, the highest level in at least 5 decades.
  • "It is financially driven," AARP's Jean Setzfand explained to CNBC.
  • Seniors are working at higher levels than teenagers.
Retire at 70
Retire at 70

A person's 65th birthday used to be a milestone. That was the age at which your working days were over and your retirement began.

For millions of Americans nowadays, however, that's no longer possible. Nearly 20 percent of people age 65+ are still working full or part-time—the highest rate since 1962. After the end of the Great Recession, more seniors were forced to stay in the workforce for longer, in order to make ends meet.

"It is financially driven," AARP's senior vice president of programs Jean Setzfand told CNBC's "On the Money" in a recent interview.

"Our research shows us that 34 percent of the people we surveyed tell us that financial drivers are a major reason why they're staying in the workforce," she added.

In 2000, 13 percent of Americans age 65 and over were still working full or part time, according to data from Pew Research. Currently, that number has grown to 19 percent yet by 2021, the Bureau of Labor Statistics estimates 32 percent of boomers will still be on the job.

Meanwhile, even that number is expected to increase. With fewer pensions and not enough retirement savings, retiring at 65 isn't financially possible for many.

For decades, companies have been "moving away from pensions to 401(k) defined-contribution plans," Setzfand said. "What happens there is you have a lower base of guaranteed income. Everyone is really reliant on Social Security as that floor. They no longer have that traditional pension that lasts them through their lifetime."

Setzfand said that according to AARP research, about 55 million private-sector employees in the U.S. don't have access to workplace retirement savings plans.

The organization also found that without a retirement plan at work, only 5 percent of people open their own individual retirement account (IRA). Setzfand said that makes saving for retirement "15 times harder for them."

According to the Labor Department, the number of people in the labor force between the ages of 25 to 54 isn't projected to change much between now and 2024.

However, seniors are more likely to be working than teenagers. Today, there are more workers in the 55-and-over group than there are in the 16- 24 age group—and that gap is expected to widen.

But AARP's Setzfand said that's a good thing, because "19 percent of the folks that we talk to actually wanted to stay in the workplace because they actually enjoy it."

Work is "a social outlet, they feel productive. So there's a good reason for people to actually want to stay in the workplace longer," she said. "Because we're actually living longer and what greater way to stay engaged but at the workplace."

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