Delaying retirement might not guarantee financial security.

• Many people expect to keep working because they need extra retirement income.
• Studies indicate that employees frequently retire prematurely, possibly as a result of job loss or declining health.
• Delayed retirement is no longer a viable financial plan for workers, but working longer is a good option for those who can.

Many Americans resort to working longer in order to avoid feeling unprepared for retirement.

A recent survey by CNBC and SurveyMonkey found that approximately 27% of workers plan to continue working in retirement in order to supplement their income. The survey polled 6,657 U.S. adults in early August, including 2,603 retirees and 4,054 full-time or part-time workers, self-employed individuals, or business owners.

Experts warn that while working longer is a common strategy for building a nest egg, it may not always be successful.

An unexpected health complication or layoff may prevent workers from continuing to work into their late 60s, early 70s or beyond.

"Philip Chao, a certified financial planner and founder of Experiential Wealth in Cabin John, Maryland, stated, "On paper, it sounds great, but reality could be quite different.""

If workers lose their wages, they would need to find another way to sustain their retirement savings.

Workers often retire earlier than planned

Research shows Americans often stop working earlier than they anticipate.

The gap between retirees' reported retirement age and workers' expected retirement age has remained consistent at around five years since the early 2000s, according to an annual Gallup poll.

In 2023, Gallup found that the average non-retiree expected to retire at 66 years old. However, the average retiree actually retired at 62.

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A significant number of retirees, 46%, leave the workforce prematurely, according to research by the Employee Benefit Research Institute.

According to EBRI's 2023 Retirement Confidence Survey, only 6% of retirees actually retired at 70 or older, despite a third of workers saying they expect to do so or never retire.

A nonexistent 'escape valve'

Chao stated that Americans often use a later retirement age as an "escape valve" that doesn't actually exist. However, he emphasized that saying it and doing it are two completely different things.

It could ultimately be a "very dangerous" assumption, Chao said.

According to the EBRI survey, 35% of people who retired earlier than planned did so due to a hardship, while 31% retired because of changes at their company, such as a layoff.

A 2018 Urban Institute paper revealed that more than half of full-time workers in their early 50s are pushed out of their jobs due to layoffs and other circumstances before they're ready to retire. These workers often earn substantially less money if they find another job, the paper found.

According to EBRI, more than a third of people who retired early did so because they could afford to.

There are benefits to working longer

According to retirement experts, working longer can be financially beneficial for those who are able to do it.

By delaying the withdrawal of their savings and postponing the claim of Social Security benefits, workers can keep their nest egg intact for a longer period and potentially increase its growth through investment profits and additional contributions.

A quarter of workers said they want to work in retirement, and 17% of retirees continue to work because they enjoy it, according to the CNBC retirement survey.

Studies indicate that working longer can lead to enhanced health and increased lifespan for Americans. Nevertheless, the impact of these benefits is contingent on the level of stress experienced and the physical demands of the job.

It seems that the possibility of working longer is becoming more viable for an increasing number of older workers.

According to Jeffrey Jones, a Gallup analyst, transitioning from a manufacturing-based economy to one centered on service and information delivery enables individuals to work later in life.