The Hidden Dangers of Planning Retirement Around Extended Work Years: Health and Job Risks

You’re fast approaching retirement, but don’t have enough money to comfortably retire just yet. Instead of stashing more money in your 401(k), what if you just worked longer, delaying retirement until you saved enough?

While this may seem like a good idea in theory, in practice it might not work out. We connected with policy experts to understand at what age people are retiring and why working forever won’t solve your retirement woes.

When Are People Actually Retiring?

Most Americans retire before they reach full retirement age (FRA) for Social Security, which is age 67 for those born in 1960 or later.

“If you look at men, probably about half of people make it to age 65 today,” said Geoffrey Sanzenbacher, Professor of the Practice at Boston College. “For women, those numbers are a little bit lower… So we’re talking [about] less than half [of women] making it to age 65.”

In 2024, the average retirement age was 64.6 and 62.6 for men and women, respectively, according to data from the Center for Retirement Research at Boston College.

Most Retirees Don’t Plan To Leave The Workforce Early

So why are people leaving the workforce early? For many people, it may not be a choice.

“The biggest reason that people retire before they really want to is health … their health deteriorates in some way,” said Sanzenbacher. “Another reason is they lose their job non-voluntarily.”

In a Transamerica Center for Retirement Studies survey of more than 2,400 retirees, nearly six in 10 said they retired earlier than planned, with nearly half of that group reporting that they left due to health reasons.

“In this day and age where, for most people in the workforce, the full Social Security retirement age is 67, to cut off that last five years of savings [where] your savings compound and grow, it’s a big setback,” said Catherine Collinson, President of Transamerica Center for Retirement Studies.

Although there are many retirees who retire at or after FRA (according to Sanzenbacher, 40% of men retire at age 67 or later), pre-retirees shouldn’t necessarily bank on working longer to fix their retirement savings shortfall.

Instead of Planning to Work Longer, Consider Taking These Steps Now

Policy experts recommend that pre-retirees start planning for retirement well before they’re in their 60s. Collinson advises people in their 40s and 50s to take a closer look at their finances now, planning for potential best and worst case scenarios.

“Look at a number of scenarios based on retirement planning assumptions,” said Collinson. “There’s a base case [where] you work up until your full retirement age, and various factors go well. … Also look at other factors which could cut short your working years, so that you can do some contingency planning.”

Sanzenbacher recommends that pre-retirees in their 50s reflect on their careers, thinking about whether they want to switch jobs or continue working in their current role until they’re ready to retire. This decision could impact how long people end up working.

“One thing we’ve found is that people who switch jobs voluntarily in their 50s end up working longer than other people who don’t switch jobs. We think part of that is causal—that you’re able to move to a job that you’re better able to do,” said Sanzenbacher.

He also suggests that people be practical about their likelihood of working longer and that they take advantage of the catch-up provisions for retirement accounts if they have extra funds.

In 2025, individuals aged 50 or older are eligible to contribute an additional $7,500 to their 401(k)s while those aged 60, 61, 62 and 63 are eligible for an even higher-catch up contribution of $11,250. For individual retirement accounts (IRAs), both Roth and traditional, the catch up contribution is $1,000.

“For people who plan to like work until 64 or 65 , probably a third or a half of them aren’t going to make it. So being realistic about that is important, too,” said Sanzenbacher.

The Bottom Line

If you were planning to work up to full retirement age or later to make up for your retirement savings shortfall, consider the advantages and disadvantages and carefully consider all your retirement scenarios.

It’s important to be proactive and realistic when it comes to your retirement plan. Start planning while you’re in your 40s and 50s by weighing the possible consequences of retiring early rather than at full retirement age. Consider whether you have a job that you want to stay in. And see if you can put away extra cash in your retirement accounts now just in case your health or another factor pushes you to leave the workforce earlier than expected.