Americans are living longer -- and working longer

Several studies report that many older workers' retirement plan is to continue working for as long as possible. But this "plan" raises a big question: Will they really be able to work longer?

Some recent research provides evidence that they can: It found that the percentage of older Americans who are working longer has increased in recent years, although those numbers are still low.

The Stanford Center on Longevity (SCL) Sightlines report contains statistics on the prevalence of the working status of older Americans. In 2012, almost one-third (29 percent) of those between the ages of 65 and 69 were still working at least 10 hours per week on a regular basis. That's an increase of 26 percent since this population was surveyed in 2000. Similarly, 17 percent of Americans 70 to 74 were still working in 2012, an increase of 42 percent over 2000.

This result is consistent with other studies that have reported that the number of older Americans continuing to work has been increasing recently. A number of factors account for this increase, including an improving economy, more workers realizing they haven't saved enough for long retirements and many workers who simply enjoy remaining engaged with work.

According to the Sightlines report, workers with higher educational attainment and higher incomes are mainly working longer, which brings up a whole new problem with the "working longer retirement plan." Many workers with less education or physically demanding jobs may be unable to find work or even continue working at their current jobs. And if they can't find the work they need, they'll have to significantly reduce their living expenses in retirement, which could be a big challenge for many people.

For a lot of people, however, working longer makes sense given the longevity revolution we're experiencing. If you retire in your 60s and end up living to your 90s, it takes a lot of money to be fully retired for 30 years or more. Working longer, even if it's part time, will help your retirement savings last longer.

Another recent SCL report, on optimizing retirement income strategies, estimates that people who delay drawing down their Social Security and retirement savings from age 65 to 70 by continuing to work can increase their retirement incomes by 25 percent to 34 percent. This estimate doesn't count any additional contributions to retirement savings from ages 65 to 70, so it's a good measure of the advantages of postponing the use of existing retirement resources.

It also reveals one possible retirement strategy for older workers who would like to retire but can't afford to: Find a way to gain more work/life balance by reducing your working hours, thus giving you more time to pursue your nonwork interests. You might determine that you can work just enough to cover your living expenses while you delay drawing down your existing retirement savings and taking your Social Security benefits.

With this strategy, you could gain an improvement in your life satisfaction and improve your financial security when you eventually retire. The Sightlines report indicates that it's possible more Americans are pursuing this strategy because it also found that more are delaying the start of their Social Security benefits.

Continuing to work in your later years has social and health benefits as well. Sightlines discusses the health benefits of social engagement, noting that people who are socially isolated have higher mortality risks. Working is one way to remain socially engaged. In addition, there's provocative evidence that working longer is beneficial to your health and lifespan, although the evidence isn't conclusive.

The view that's emerging from longevity experts is that we're really lengthening the period of middle age and not necessarily increasing the years when we're frail and disabled. That's based on evidence that many people in their 60s and 70s are in good health and are able to continue working.

The bottom line is that we're living much longer than prior generations, but we can't afford to keep adding years at the end of our lives when we're fully retired and no longer working. Therefore, it only makes sense to work longer, but we'll want to take steps to make these additional working years enjoyable and productive.

So let's view these extra years of life as a gift and enthusiastically take on the challenge of finding out how to work longer and still enjoy it.

  • Steve Vernon On Twitter»

    View all articles by Steve Vernon on CBS MoneyWatch»
    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.