Why 40% of Americans Plan to Work Past Age 65 in 2025

The New Reality: Retirement at 65 Is No Longer the Default

Something significant shifted in American retirement planning. According to [Northwestern Mutual’s 2025 Planning & Progress Study](https://news. northwesternmutual. com/2025-04-14-Americans-Believe-They-Will-Need-1-26-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2025-Planning-Progress-Study), 40% of Americans now plan to work during their retirement years-or are already doing so. For Gen X and Millennials, those numbers climb higher still: 48% and 45% respectively.

This isn’t merely a statistic. It represents a fundamental restructuring of how Americans think about the relationship between work, money, and aging.

The Savings Gap Creates Pressure

The math tells a brutal story. Americans believe they need approximately $1.26 million to retire comfortably in 2025, according to the same Northwestern Mutual study. Yet [Bankrate’s 2025 retirement report](https://www - bankrate. com/retirement/retirement-savings-report/) reveals that 58% of American workers admit their retirement savings are behind schedule. More than a third describe themselves as “significantly behind.

Median retirement savings for Americans aged 55-64 sits at roughly $185,000. That’s nowhere close to seven figures. For those 65-74, the number only reaches about $200,000-still insufficient for most retirees planning for potentially 20+ years of expenses.

Here’s the really alarming figure: [up to 46% of Americans have no retirement savings at all](https://coinlaw. io/retirement-savings-gap-statistics/).

Gen X Faces the Sharpest Squeeze

Gen X workers are staring down a particularly difficult situation. Their average household retirement savings hovers around $150,000, according to research cited in [CBS News coverage](https://www. cbsnews - com/news/social-security-full-retirement-age-2025-what-to-know/) of the retirement crisis. That’s roughly one-tenth of what most Americans believe they need.

Among those Gen Xers planning to work past traditional retirement age, 56% cite the need for additional income-higher than any other generation. They’re not choosing extended careers for fulfillment. They’re working because they have to.

Why People Keep Working: It’s Not All About Money

The motivations split almost evenly, which makes the phenomenon more nuanced than simple financial desperation might suggest.

[Northwestern Mutual’s survey](https://news - northwesternmutual. com/2025-04-14-Americans-Believe-They-Will-Need-1-26-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2025-Planning-Progress-Study) of 4,626 U - s.

• 50% say they want to continue feeling useful or mentally stimulated
• 48% say they need the additional income to afford retirement

These two camps represent fundamentally different relationships with work. One group views employment as identity and purpose. The other sees it as survival.

Among those planning to work in retirement, 59% expect to take on part-time or full-time employment in a different role. Another 20% plan to pick up gig work with flexible hours. Very few anticipate staying in their current positions.

The Workforce Is Already Aging Rapidly

[CNBC reported](https://www - cnbc. com/2025/02/02/why-more-retirement-age-americans-keep-working. html) that Americans aged 65 and older in the workforce grew by more than 33% between 2015 and 2024. The overall labor force expanded by less than 9% during that same period.

2025 marks what the [Alliance for Lifetime Income calls “Peak 65”](https://www. protectedincome. org/the-peak65/)-more Americans are turning 65 this year than in any previous year. The youngest baby boomers, born between 1959 and 1965, are now hitting traditional retirement age.

But many arrive unprepared - [Pew Research](https://www. pew. org/en/research-and-analysis/articles/2025/08/04/more-us-residents-are-working-past-retirement-age) found that about one-third of these younger boomers will rely on Social Security for at least 90% of their retirement income by age 70.

That’s a precarious foundation. Social Security was designed to replace roughly 40% of working income-not serve as a complete retirement plan.

Social Security Adds Uncertainty

The full retirement age continues its gradual increase. For anyone born in 1960 or later, it’s now 67-up from 66 for those born between 1943 and 1954.

But here’s what concerns financial planners: the [2025 Social Security Trustees Report](https://www. ssa - gov/news/press/factsheets/basicfact-alt. pdf) projects the Old-Age and Survivors Insurance trust fund could be depleted by 2033. If no reforms occur, Social Security would then cover only about 77% of scheduled benefits.

A 23% benefit cut would devastate retirees already depending on the program for most of their income.

The Retirement Timing Gap

There’s also a consistent disconnect between expectations and reality. Many Americans plan to retire at 65, but the median actual retirement age in the U. S - is 62. [Transamerica Institute research](https://www - transamericainstitute. org/docs/research/generations-age/uncertain-future-retirement-prospects-four-generations-survey-report-june-2025. pdf) indicates nearly six in ten retirees left the workforce earlier than planned.

Health issues, layoffs, caregiving responsibilities-life intervenes. Planning to work until 70 doesn’t guarantee employment will remain available that long.

FIRE Meets Extended Careers: A Strange Tension

While 40% of Americans plan extended working lives, an opposing philosophy has gained traction. The FIRE movement (Financial Independence, Retire Early) pushes adherents to save 50-75% of income and exit the workforce in their 40s or 50s.

[Empower research](https://www - empower. com/the-currency/work/sparks-fly-the-fire-movement-trend-is-fueling-early-retirement-news) shows Gen Z hopes to retire at age 54-earlier than any previous generation. The generational divide in retirement expectations has never been wider.

But FIRE faces its own 2025 challenges. [Finance Monthly’s analysis](https://www - finance-monthly. com/fire-movement-early-retirement-2025/) points to elevated housing prices, rising healthcare premiums, and everyday costs that make aggressive savings rates far more difficult than when the movement gained popularity.

The Movement Evolves

Pure early retirement has become less central to FIRE philosophy. Newer variations like CoastFIRE (saving aggressively early, then reducing contributions) and BaristaFIRE (semi-retirement with part-time work) acknowledge that complete workforce exit may not be practical-or even desirable-for everyone.

[Financial Samurai argues](https://www - financialsamurai. com/early-retirement-fire-is-becoming-obsolete/) that post-pandemic work flexibility has made traditional early retirement somewhat obsolete. When jobs offer remote options and reduced hours, the rigid distinction between “working” and “retired” matters less.

What This Means for Financial Planning

The 40% figure demands a strategic response. For those likely to work past 65-whether by choice or necessity-several adjustments make sense:

**Delay Social Security strategically. ** Benefits increase roughly 8% annually for each year of delay between full retirement age and 70. Working longer while postponing claims can significantly boost lifetime benefits.

**Maintain skill relevance. ** The job market doesn’t always welcome older workers. Continuous learning and professional development increase the odds of remaining employable.

**Build multiple income streams. ** Gig work, consulting, and part-time positions provide more flexibility than full-time employment. The 20% planning “side gigs” in retirement recognize this reality.

**Consider healthcare costs carefully. ** Medicare eligibility begins at 65, but coverage gaps and premiums still create substantial expenses. Working for employers offering health benefits past 65 can preserve savings.

**Recalculate savings targets. ** The standard 25x annual expenses rule assumes complete retirement. Working part-time reduces the portfolio size needed to generate adequate income.

The Psychological Dimension

Financial calculations only tell part of the story. For the 50% who want mental stimulation and purpose from continued work, retirement planning must address identity as much as income.

[Georgetown’s Center for Retirement Initiatives](https://cri - georgetown. edu/the-aging-of-america-a-changing-picture-of-work-and-retirement/) notes that phased retirement-gradually reducing hours rather than stopping abruptly-often produces better outcomes than sudden exits. The transition matters as much as the destination.

Some discover in retirement that financial independence means less without meaningful activity to fill the hours. Working part-time or pursuing encore careers can provide structure, social connection, and purpose that pure leisure doesn’t deliver.

The New Retirement Equation

The traditional model-work until 65, then stop entirely-served previous generations reasonably well. Pensions were more common - social Security benefits stretched further. Healthcare costs hadn’t exploded.

That model no longer fits most Americans’ reality.

The 40% planning to work in retirement are adapting to structural economic changes. Some will do so happily, finding meaning in continued contribution. Others will work because the alternative-running out of money-isn’t acceptable.

For investors and planners, the takeaway is clear: retirement isn’t a single event anymore. It’s a gradual transition that may span years or decades. Financial strategies must accommodate this flexibility rather than assuming a hard cutoff date that no longer reflects how most Americans will actually experience their later working years.