More Americans stay unretired

Mike Hennessey didn’t have much in the way of retirement savings after putting five children through college, so at age 72 he works four days a week as an office manager at a Centerville software firm.

Hennessey is one of the so-called “unretired,” a growing number of older Americans who are working full- or part-time after they reach traditional retirement age and become eligible to receive Social Security benefits.

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The percentage of workers ages 65 and older who are still in the nation’s labor force has been rising, particularly over the last decade, according to a Dayton Daily News analysis of U.S. Census Bureau data. In 2011, the national labor force participation rate for people ages 65 and older was 16.2 percent, up more than 4 percentage points from 12.1 percent in 1990.

In Ohio, more than 870,000 people ages 65 to 74 were in the labor force in 2011, a 10.7 percent increase from 2007, according to data from the American Community Survey, an ongoing statistical survey by the U.S. Census Bureau.

Experts attributed the rising number of people who work past normal retirement age to a variety of factors, including financial responsibilities and longer life spans. From 1950 to 2000, the average duration of retirement increased from 10.9 to 19.3 years for men and from 12.5 to 23.5 years for women, according to the U.S. Social Security Office of Retirement and Disability Policy.

“There is a huge fear of outliving our money,” said Kerry Hannon, the AARP’s jobs expert and author of “Great Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy … and Pays the Bills.” People are living longer, healthier lives, but their long-term medical costs are an unknown, she said.

Twenty-two percent of U.S. workers said the age at which they expect to retire has increased in the last year, according to the Employee Benefit Research Institute’s 2013 Retirement Confidence Survey. That figure is down from 25 percent in 2009, when the recession officially ended, but it’s up significantly from 5 percent in 2007, when the recession started.

For most of the 20th century, people withdrew from the workforce at progressively younger ages as Americans became wealthier, said Gary Burtless, a senior fellow in economic studies at the Brookings Institution in Washington, D.C. The availability of Social Security retirement benefits, employer-provided pension plans and the advent of Medicare in 1965 to finance health care for the aged also contributed to this trend.

“Now the tide has reversed and people are working until later in life,” Burtless said.

Labor force participation rates for men and women ages 62 to 79 started to climb in the mid-1990s, in part because of changes in the Social Security program that include gradually increasing the full retirement age from 65 to 67 by 2022.

This trend is expected to continue as the population ages. The U.S. Bureau of Labor Statistics projects that more than 41.4 million people ages 55 and older will be in the civilian labor force by 2020, when members of the large “baby boom” generation born between 1946 and 1964 will be from 56 to 74 years old.

Burtless said the rising rate of people who are working until they’re older “tends to be concentrated among better educated people.” Workers are now remaining in their “career jobs” longer beyond age 60 than they were 25 years ago, he said.

“It’s not all people quitting their career jobs and then working as a greeter at Walmart or working at McDonald’s in a fast food-type job,” Burtless said. “That is not the dominant way in which people are delaying their retirement.”

Many jobs today have little or no physical demands, which allows older worker to perform them until later in life, Hannon said. Some people also continue working for the mental and social engagement of their workplace.

Cliff Wild, age 78, of Kettering, retired from NCR Corp. in 1998, but he continues to work as a substitute school teacher. Wild also conducts surveys for the U.S. Public Health Service. “By keeping physically and, hopefully, mentally active, I think I have prospered in that I am still physically viable,” he said.

Employer-sponsored retirement accounts remain key to workers’ ability to retire, experts said. However, over the past several decades many employers have shifted from defined benefit pension plans, which offer employees an annuity at retirement, to defined contribution plans such as 401(k) plans.

Defined contribution plans reduce costs for companies and place more of the risk associated with funding retirement on employees. Under such plans, a worker’s benefits during retirement depend on their contributions to and the investment performance of their account, rather than on their years of service and earnings history.

About half of the U.S. workforce doesn’t have an employer-provided pension, according to the Social Security Administration.

“We are not getting richer as fast as we used to and the system that supports us in old age has stopped becoming more generous,” Burtless said.

In addition, many workers have not saved sufficient money for retirement. Federal Reserve data released last year said 40 percent of American households near retirement age have no retirement accounts. Among the 60 percent in that 55-64 age group who have retirement accounts, the median balance is about $100,000.

“I’ve always worked for a small company, so I’ve had to do on my own,” said Hennessey, the 72-year-old office manager at CUC in Centerville. “I had five kids, and getting five kids through college, etc., never allowed that much extra cash to put away.”

Hennessey, a Kettering resident who never retired, said he “might work indefinitely” because he enjoys his job.

People who work past retirement age can benefit from additional earning years, as well as the opportunity to grow their various retirement and savings accounts. “The longer you can keep chipping in there, your Social Security is going to keep growing,” Hannon said.

Fewer employers are offering retired workers medical benefits. “The longer you can keep a job that gives you access to a health plan, the better off you are going to be,” she said.

A number of area retirees told the Dayton Daily News they were still working full- or part-time jobs to help supplement their federal or employer retirement benefits, as well as to afford luxuries such as travel.

Marie Lai, age 74, of Clayton, works up to 20 hours weekly at the Meijer store in Englewood. She said she took that job for the health insurance benefits after being downsized from her former job in the accounting department of an area company.

“I was too young for Medicare and too old to start over again,” Lai said.

Lai planned to retire at 65 from Meijer, but continues working because she enjoys her co-workers and customers. Her paycheck now supplements a 401(k) plan from her former employer and her Social Security and Medicare benefits. “I don’t live paycheck to paycheck, so I can go on trips and things like that,” she said.

Larry Kinneer, age 72, of New Lebanon, retired 10 years ago from Hospice of Dayton, but he continues to work two days a week as a grant writer at State of the Heart Hospice in Greenville. Kinnear was vested in the Ohio Public Employees Retirement System after spending 10 years as Wright State University’s communications director, but he still works to be able to show his horse on a regional and national level.

“I have a highly competitive horse and an expensive hobby,” Kinnear said.

Jim Wilson, age 77, of Tipp City, works part-time from home as an insurance claims supervisor for a Columbus-based company. His wife, Mary Lou, also 77, works 20 hours weekly as an administrator for the Monroe Twp. trustees in Miami County.

Wilson enjoys having the money and flexibility to travel, but he warned that retirees who return to work can be hit hard by taxes. “Sometimes it will drive people up into a higher bracket,” he said.

Older workers could see a reduction in their Social Security benefits if they earn more than certain amounts and start drawing their benefits before the full retirement age, said Chris Buck, vice president of LifePlan Financial Group in Miamisburg. “If they are making over certain thresholds, some of those benefits could be taxable, as well,” he said.

Dave Berry, a director at Brady Ware & Company in Dayton, advises clients who plan to work after retirement to wait until age 70 to take their Social Security benefit, if they can afford to do so.

“For every year that you delay taking your Social Security benefit once you’ve reached your normal retirement age you get an 8 percent premium in your annual benefit,” Berry said. That represents a 32 percent increase for people who reach the full retirement age at 66 but wait until 70 to draw their benefit, he said.

The growing number of retired people who remain in the workforce could impact job prospects for younger workers, experts said. The Bureau of Labor Statistics projects 18.3 million people ages 16 to 24 in the civilian labor force by 2020, down more than 18 percent from 22.4 million in 1990.

Burtless said the U.S. labor market has suffered a jobs shortage since 2008 and many older workers have the advantage of already having a job. “It does appear that the younger people of labor force-entry ages are being hurt by virtue of the fact that older people are hanging on to their jobs longer,” he said.

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