Why More Americans Are Working Into Retirement

The Data on Post-Retirement Work

Four in ten Americans say they are currently working or plan to work during their retirement years, according to the Northwestern Mutual 2026 Planning & Progress Study, which surveyed 4,375 U.S. adults in January 2026. Among Millennials and Gen Xers, that figure rises to 50 percent. The leading reason cited is not purely financial: 56 percent of those planning to work said they want to continue feeling useful and mentally stimulated. Financial motivations follow closely - 48 percent said they want additional income to fund their preferred retirement lifestyle, and 47 percent said they will need the income to afford retirement at all.

That combination of financial and personal motivation reflects a broader pattern in how Americans are redefining the retirement timeline. The traditional model of a single exit point from the workforce at age 65 is not the dominant expectation among most working-age adults today. The Northwestern Mutual data, along with labor statistics from multiple federal sources, shows that continued engagement beyond retirement age is now a mainstream planning outcome rather than an exception.

What the Labor Data Shows

The trend is confirmed beyond a single survey. A Pew Research Center analysis found that adults ages 65 and older are projected to account for 57 percent of total labor force growth through 2032, rising from 6.6 percent of the workforce in 2022 to a projected 8.6 percent in 2032. Bureau of Labor Statistics data shows that the share of Americans 65 and older participating in the labor force was approximately 19.5 percent as of 2024 - up from a low of 10.8 percent in 1985, according to a Labor Department analysis cited by U.S. News and World Report.

Several structural factors explain the shift. The transition from defined benefit pensions - which incentivized retirement at a fixed age - to defined contribution plans like the 401(k) removed the mechanism that once encouraged workers to leave at a specific point. Changes to Social Security that raised the full retirement age from 65 to 67 pushed the financial calculus toward working longer. And the nature of work itself has changed: research cited by Pew shows that many occupations have become more accommodating of older workers since 1990, with more flexibility, less physical intensity, and more independent options available.

The Bridge Job Model

Economists use the term “bridge job” to describe post-retirement work - often part-time, often in a different field than the primary career, and frequently described by workers as personally meaningful. A Federal Reserve survey referenced by Pew found that 45 percent of employed older adults already consider themselves retired. They are collecting benefits or drawing from savings while generating income from paid work simultaneously. That category now represents a substantial portion of the older workforce.

The reasons workers choose this path extend beyond what survey responses fully capture. Research reviewed by Georgetown University’s Center for Retirement Initiatives found that social connections - with colleagues, clients, and communities - are a meaningful factor in why older workers stay engaged beyond traditional retirement age. Bureau of Labor Statistics projections show that older adults are expected to represent the fastest-growing segment of the labor force through at least 2032.

What This Means for Planning

The practical implication for anyone approaching retirement is that the planning question has expanded. It is no longer only about accumulated savings and Social Security claiming timing. It also includes whether continued paid work is part of the plan, what form that work takes, and how it interacts with tax obligations and benefit calculations. Part-time consulting, phased transitions with a current employer, freelance work in a former field, and second-career positions are all options that increasing numbers of Americans are actively incorporating into their retirement income models.

The Northwestern Mutual data offers one useful data point: Americans who work with a financial advisor plan to retire an average of two and a half years earlier than those who do not - age 63.7 versus 66.1. That reflects how a comprehensive plan, one that accounts for bridge income, optimized Social Security timing, and tax-efficient withdrawal strategies, gives individuals more flexibility about when and how they transition out of primary employment.

References: How Much Money Do You Need to Retire? | The Growth of the Older Workforce