Retiring at age 65 is a fairy tale for millions of baby boomers who would love to relax but need the income.
Loreta Stampley spends her workdays talking to other senior citizens, not about grandchildren and travel plans but how to get a job that pays the bills.
Stampley, who earns $11 an hour as a jobs counselor for seniors, didn't expect to be working at age 72. But like many of her clients, she is among a growing number of U.S. seniors who are working much later into their golden years.
"My doctor asks me, 'Why are you doing this?' I tell him, 'Because I have to, just to live,'" said Stampley, whose Social Security check barely tops $650 a month, not enough to cover her $900 rent, much less food.
After a century-long trend of Americans retiring at a younger age, many seniors are wondering if they will ever turn in their employee IDs. Almost 7 million are working who are 65 or older, a 60 percent increase since 2001. About 3 million of those workers are 70 or older, up from almost 2 million a decade ago.
The Great Recession accelerated the trend. Since 2006, the last full year before the recession, the number of 65-and-older workers jumped 22 percent, or 1.25 million workers.
"People have lost savings in the most recent economic downturn, and realized they are a probably going to live longer than they expected to," said Jacquelyn James, research director of the Sloan Center on Aging and Work at Boston College. "All of those things have [helped] change the balance between work and leisure in favor of work."
Beyond the economy, shifting demographics continue to have an effect. The first wave of the roughly 79 million baby boomers turned 65 this year. Today, a 65-year-old man can expect to live 17 more years; a 65-year-old woman, another 20 years.
"People are living longer and generally are healthier and can -- and do -- work longer," said Minnesota state economist Tom Stinson.
A dramatic shift
When the recession took hold, home values plummeted, health care costs soared, and seniors, in particular, saw heavy losses from their investment portfolios. As a result, one in four Americans believes he or she will need to work until at least age 80, according to a recent Wells Fargo survey.
"Many of us have targeted age 65 as our normal retirement age," said Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust. "For people to actually be saying, 'It's going to be 80 or later,' I think is a dramatic shift."
Pat O'Neal, 64, of St. Paul watched her 401(k) savings diminish in recent years, so she now works the graveyard shift at a Cub Foods as a cashier. Taking Social Security early isn't an option, because it wouldn't cover the bills.
"I am like everybody else. I have to work," said O'Neal, a former postal worker.
To make ends meet, O'Neal stopped ordering Chinese takeout and makes chicken and broccoli at home. She walks to work and scaled back her cable television to a basic package. "It's hard, but you manage," she said. "I have cut it down to the bare necessities."
For some older workers, staying on the job is more of a choice. They might scale back hours at their current job, launch an encore career or start a nonprofit or small business. Changes to the Social Security program reward those who work longer, and employers eliminating pension plans and retiree health benefits have prompted more workers to think twice about ending their careers.
Studies even show a health benefit to working longer -- the activity can delay dementia, increase lifespan and contribute to greater happiness.
However, the majority of senior Americans who work are doing so because they need the paycheck. Of the three-quarters of Americans who expect to do some form of work in retirement, about two-thirds say they need the income, according to the Wells Fargo survey.
With longer life expectancy, rising health care costs and no risk-free places to save their money, "people are starting to realize they've got to change something," Nordquist said. "They either have to change their lifestyle expectations in retirement, save more between now and then, or they're going to retire later."
In response to the recession and weak economic recovery, the Federal Reserve has dramatically lowered interest rates and has said it will keep rates low until the middle of 2013. But this policy has hit seniors' finances especially hard.
"One thing it did do was absolutely cream interest income, which is an important source of income for a lot of older adults," Minnesota State Demographer Tom Gillaspy said.
Not enough assets
Many older workers can't afford to take a three-decade vacation; they haven't saved nearly enough to pay for basic expenses such as food and housing, let alone vacations, gifts for grand kids and health care.
A worker earning $50,000 a year would have to start saving 22 percent of his or her salary at age 25 in order to retire at age 62, assuming a conservative 4 percent investment rate of return. That same worker would have to save two-thirds of his salary if he started saving at age 45, according to data from the Center for Retirement Research at Boston College. Delay retirement to age 70, and that worker would have to save just 7 percent of his salary if he started saving in his 20s.
Six in 10 workers ages 55 or older have less than $100,000 saved for retirement, according to the Employee Benefits Research Institute (EBRI). If a worker with a $100,000 retirement fund withdrew 4 percent of her savings annually -- a rule-of-thumb used by financial advisers -- that would be a paltry $4,000 per year.
"People have not contributed as well to those 401(k) plans," Stinson said.
With the median retirement savings balance for Americans 65 and older at $36,000, it's easy to see why more seniors continue to work. By staying on the job, they delay the need to tap into retirement savings, continue to contribute to 401(k)s and allow more time for stock investments to recover.
When seniors say they will stop working doesn't always match when they can retire. Some are laid off before they're ready, and finding a job post-recession is getting more difficult.
The jobless rate for workers reached 6.7 percent for seniors over 65, more than double the 3.1 percent rate in 2005.
Stampley, whose job is to help struggling seniors find minimum-wage jobs in nonprofit agencies, says she sees more older workers coming to her for help.
"We are always trying to find people a job, but it's not that easy," she said. When companies start hiring, they often want younger, less-experienced and less-expensive job candidates, not her senior citizens, she said.
"Yet, there are some seniors who don't know how to live without a job,'' Stampley said. "It's a sad situation."
Running out of money
Others find that health issues complicate matters. About 40 percent of retirees report that they stopped working sooner than planned with health problems, job loss and having to take care of a family member topping the list of reasons for leaving the workforce, according to an EBRI survey.
Even if employees delay retirement past 65, many are still at risk of running out of money before they die. This fear explains why a growing number of older workers in several studies have said they're not sure if they will ever retire.
Carol Ouhl, 65, has worked for Securian Financial Group for 47 years and manages a side business as a dog trainer. She enjoys a steady income as a legal compliance analyst and says she has no plans to stop working now.
"I don't feel as financially stable as I had intended to,'' Ouhl said. "It is safer for me, long term, to keep working."
Dee DePass • 612-673-7725