Introduction
Americans aged 65 and older are staying in the workforce longer. With increased life expectancy as well as the increased cost of living, including the cost of healthcare and everyday goods, many workers are working well into their later years. Additionally, by working longer some may delay Social Security benefits to increase their eventual payout.
At the same time, many older adults report finding fulfillment and purpose in work. Staying engaged in the workforce can provide social interaction and mental stimulation, while flexible working arrangements, such as remote work and flexible hours, make staying in the workforce easier on this aging population.
Key findings
- The share of small business employees aged 65+ has increased by 50% since January 2019. Employees approaching 65 live in a world that is very different from several decades ago. Longer life spans, changing demographics, and increased prices make it increasingly likely that older workers maintain employment.
- Over 1-in-12 employees at small non-profits are 65+ in December 2024. Workers aged 65+ are represented in all parts of the small business economy, but are most prominent in professional jobs including non-profits, real estate, accounting, and government.
- Workers who are 65+ have seen average weekly wages increase by 12% since January 2019. Wages for this group are very volatile, with end of year bonuses and the end of the year shopping season increasing pay in November, December, and January. However, nominal annual average weekly earnings have increased throughout the year since 2019.
Employees aged 65+ have increased their share in the workforce by 50% since January 2019
Small businesses have increasingly employed workers aged 65+ over the last five years. Their proportion in the workforce has increased by about 50% between January 2019 and December 2024 according to Gusto data. This corresponded with changing U.S. demographics. Starting in 2023 people aged 65+ made up the largest age category in the United States. While the population continued to age, these workers seemed to be less likely to leave their jobs.
While the share of people employed and the share of the workforce are separate measures, in 1970 about 11% of people 65+ were in the workforce (either employed or wanting to be employed) yet they were only expected to live until about 80 years old, and now the average 65 year old is expected to live until about 83 years old. With longer lifespans, older workers will likely continue to remain in the workforce longer, and small businesses continue to expand their payrolls to include them.
Finally, the last four years represent a period of historically high inflation. This could have driven people back into the workforce due to increasing costs. Starting in mid-2022 the share of SMB employees who are 65+ increased at a much faster rate compared to January 2019 than in the period from 2019-2021. As inflation picked up people may have re-entered the workforce.
Over 1-in-12 employees at small non-profits are 65+ in December 2024
Workers aged 65+ are represented in all parts of the small business economy, but are most prominent in professional jobs including non-profits, real estate, accounting, and government. Many of these industries are ones where top employers have specialized knowledge gained through experience. Additionally, roles in these industries may be adaptable to flexible work arrangements (most are mainly desk jobs), allowing older workers to contribute effectively while maintaining flexibility.
The average 65+ small business employee’s salary increased by 12% since 2019
The above chart shows the average weekly gross pay for small business employees aged 65 or older. The orange line shows the average weekly gross pay (as a three month moving average) for workers 65+, and the blue line shows inflation-adjusted wage necessary to have the same purchasing power as in January 2019. For comparison, the red line shows the average weekly gross pay for workers 16-64. While the average weekly gross pay for workers younger than 65 is higher than for those who are 65 or older, the trends are similar. The average annual wage increased by about 12% since 2019, with much of those gains happening prior to 2022. Starting in 2022, the average annual weekly wage was either at or below the wage necessary to keep earnings in line with the inflation rate. Increased costs likely kept many would-be retirees in their roles or drove workers aged 65 and older back to a wage job.
Compared to the pre-pandemic period the average senior worker continues to make less than the inflation adjusted rate from 2019. However, wages remain very variable with high peaks during the end of the year. This could be due to bonuses for senior employees or people working additional hours during the end of the year shopping periods.
Conclusion
The trend of older Americans, particularly those aged 65 and older, remaining in the workforce is largely driven by increased life expectancy, economic necessity, and the evolving job market. With the cost of living, many older individuals find it essential to continue working to secure their financial stability. Additionally, the fulfillment and social engagement that work provides play a significant role in their decision to stay employed. The data indicates a notable increase in the employment of older workers in small businesses, particularly in professional sectors like non-profits and real estate, where their experience is highly valued. As inflation persists, the dynamics of the workforce will likely continue to evolve, with older workers playing an increasingly prominent role in the economy.
