Ron Levitt could have retired 16 years ago when he sold his bustling optometry practice in Rocky Hill, Connecticut. Instead, he kept his white coat on, found two part-time gigs seeing patients and continued working.
Today, at 74, Levitt spends all of the money he earns on vacations with his wife and golf-club memberships. Aside from the extra cash, Levitt says it also keeps boredom at bay.
A rising share of Americans is holding jobs into their golden years, bucking the overall trend of people leaving the labor force that is concerning Federal Reserve policy makers trying to boost growth. As the elderly continue to work, their paychecks are fueling spending and contributing to the U.S. economic expansion.
“The fact that their income is boosted by being employed will mean they spend more than their cohort who is retired," said Dean Maki, chief economist at Point72 Asset Management in Stamford, Connecticut.
The share of those over the age of 65 in the labor force was 19.4 percent on an unadjusted basis in June, up from 15 percent in June 2006, according to the Bureau of Labor Statistics. Meanwhile, the overall labor force participation rate last month was an adjusted 62.7 percent, down from 66.2 percent a decade ago and hovering near the lowest point since 1977.
Continuing Trend
While many point to the recession wiping out retirement savings as a catalyst for seniors to keep working, the rise in the last decade is part of a long-term trend. The participation rate for the 65-plus group began climbing in the mid-1980s after falling for four decades when flush social security benefits created an incentive to retire.
"They were leaving a lot of potential on table," said Matt Rutledge, an economist at Boston College whose research focuses on labor market outcomes for the elderly. "They could’ve helped shore up their own financial needs, they could’ve helped a younger generation if they needed support, and they could’ve contributed more taxes into the system. If they were not working, they were not doing those things."
Economists attribute numerous factors to the rebound in older people working, but point to better health as the main driver. Additionally, jobs are becoming less physically demanding.
Outliving Wealth