Retired Americans are fighting. What happened?

Employees don't retire

Rethink the retirement party. More experienced workers are defying expectations and staying in the workforce for compelling reasons – they simply cannot afford to retire.

That's according to a new study by Korn Ferry, which found that the number of clients of investment giant Fidelity who can afford to cover all of their expenses in retirement has increased from 83% last year to 78% this year year has fallen.

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The big problem

The Korn-Ferry study isn't the only piece of evidence pointing to a problem. Payroll services company Paychex has found that around one in six current retirees (roughly 17%) are considering going back to work, with more than half saying they need more money.

The increasing number of older workers staying on is a concern for senior management, as business planners have counted on their expensive older workers retiring, freeing up higher positions for younger workers looking to advance their careers.

“When older workers are performing well, you're in a bit of a bind,” says Ron Porter, head of Korn Ferry's global human resources center of excellence.

That's a big change from 2020, when companies were desperate to keep older workers in the early stages of the COVID-19 epidemic. The resulting persistent labor shortages prompted many large companies to launch “return” programs aimed at recruiting and training long-displaced people, including parents and retirees. In 2023, however, many companies are looking to cut costs or restructure, and executives want better-paid 50- and 60-year-olds to retire.

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Impact on younger workers

Employees don't retire

Employees don't retire

In fact, many companies have anticipated that older members of their workforce will be as naturally eligible for Social Security as older workers and for withdrawals from tax-advantaged retirement accounts without penalty. The expectation was that younger workers with different skillsets could help transform their business operations.

This desire could prove to be bad news for middle-aged and younger workers. Because age discrimination by employers is illegal, targeting older workers is risky. This could give older workers a new leverage over their employers who might offer hiring. Another option is the emerging practice of retirement positions. These jobs are designed to help older workers transition into retirement by enabling them to supervise and train younger workers, impart knowledge and skills, and transition to reduced workweeks.

The conclusion

Older workers, who fear they cannot afford to retire, are staying in the job longer, raising concern among business leaders who want their higher-paid employees to move on, freeing senior positions for younger workers.

Retirement planning tips

  • A financial advisor can help you prepare for retirement. Finding a financial advisor doesn't have to be difficult. SmartAsset's free tool puts you in touch with up to three financial advisors based in your area, and you can interview the right advisors for free to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.

  • Use SmartAsset's free retirement calculator to get a feel for whether you're on track to reach your retirement goals.

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Pension Crisis: Older Americans Struggling to Afford Life After Work first appeared on the SmartAsset blog.

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