Retirement & Financial Planning Report

Many factors affect people’s decisions to retire or to continue to work as they reach retirement ages, the Congressional Budget Office has said, pointing to trends that have increased the share of those working at age 55 and beyond in recent years and that are continuing.

CBO noted that after declining for decades, the share of those ages 55 to 79 who were employed began to increase in the mid-1990s: In 1995, 33 percent of people in that age range worked, but by 2018, 44 percent did. It identified factors encouraging people to work longer including:


Education. People with a college degree are more likely to be employed at any age than those without one, and the share of those with such degrees has been increasing over time, especially among women. Over that period, “the share of women with a college degree almost tripled, and the share of men with a college degree nearly doubled.”

Health. “From the mid-1990s to 2018, the health of people ages 55 to 79 improved substantially, reflecting gains in self-reported measures and longevity. Improvements in health affect employment both because healthier people are physically able to work longer and because increased life expectancy might induce people to spend more years working in order to finance retirement.”

Job characteristics. “Over time, fewer people worked in blue-collar jobs. Because blue-collar jobs tend to have greater physical demands than other jobs and workers in those jobs tend to retire earlier, that decrease helps to account for some of the rise in employment of people ages 55 to 79.”

Increased employment of women. “Research has indicated that the increased employment and delayed retirement of married women over the period might have contributed to the increased employment of married men because many couples retire together.”

Employer policies. The shift from defined benefit to defined contribution retirement plans reduces the incentive to retire at a particular age, and the added burden for workers to save on their own increases the incentive to work longer. Also, as private sector companies cut back on health insurance coverage for their retirees—only 37 percent of workers now have employer-based health insurance that covers retirees between ages 55 and 64 compared with 69 percent in 1992—workers have an incentive to work at least until age 65 when they become eligible for Medicare.