If ‘Unretirement’ Is Here to Stay, Here’s What Employers Need to Know

Most career paths follow a predictable trajectory: Work hard, then retire comfortably. But now that path between work and retirement is getting muddied. Whether due to personal choices, a flagging economy, financial pressures or inadequate retirement readiness, more older workers are extending their employment or “unretiring,” meaning they are returning to work part-time or foregoing a full retirement for a phased retirement.

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• How to Create a Phased Retirement Policy

LinkedIn data shows the share of workers who retired during the pandemic but then returned to the workforce reached 5.5% in 2023, before declining slightly to 4.4% in 2024. Although the unretirement trend appears to be stabilizing, it stands well above the pandemic levels of 2% to 3%.

For employers, the data signals unretirement is becoming more common and underscores the need for total rewards (TR) programs to support workers who are delaying retirement or returning to part-time roles.

Why Retirees Are Returning to Work

The trend of unretirement reflects both employee financial concerns and a desire for continued engagement, according to Dena Faccio, the senior vice president of total rewards, employee relations and HR business partner-workplace solutions at investment company Voya Financial.

“For those who need to [return to work], it could be because they haven’t saved enough for retirement or it could just be whatever their situation is that causes them to need to work longer,” she explained.

Additionally, economic pressures and a sense of purpose are reshaping retirement decisions. A 2024 Morningstar study found approximately 45% of American households risk running short on retirement funds, with Baby Boomers facing a 52% higher risk than other generations. At the same time, a T. Rowe Price study found an increasing number of employees are indicating a desire to work, with 57% of pre-retirees stating they want to continue working in some form upon reaching the traditional retirement age of 65.

“Current total rewards programs, as well as the traditional view of retirement as a single singular date, may no longer align with employee realities,” said Jennifer DeMeo, a managing director and workforce management solutions leader at consulting firm WTW.

Adapting Pay and Benefits

Supporting workers who are returning to work or electing to stay employed longer likely requires new approaches to pay and benefits. “We have five generations in the workforce, and similar to how we need to understand and adapt to millennials and Gen Alpha, we need to also pay attention to the other end of the spectrum,” Faccio said. “Those folks who are closer to retirement age or staying in the workforce longer — we need to also make sure they feel included and valued.”

DeMeo said compensation models should reflect part-time contributions while maintaining fairness and transparency. “Pay structures should consider experience, role impact and market benchmarks,” she said. “Additionally, phased retirement programs can offer reduced hours, potentially with prorated benefits, helping older workers transition gradually while staying engaged.”

Opportunities for Retirement Readiness

To meet the needs of an evolving workforce, employers should consider expanding their TR packages to include financial wellness benefits and retirement readiness planning to all employees, including late-career workers.

WTW data further revealed the need for enhanced financial resilience programs: U.S. workers aged 50 and older said they want help determining:

• How much they can spend during retirement;
• When they will be able to retire; and,
• How much they need to save for a comfortable retirement.

Kevin Crain, the executive director of the nonprofit Institutional Retirement Income Council, suggested implementing a pre-retirement financial wellness program to include:

• Post-retirement planning projection tools;
• Education on Social Security and Medicare; and,
• Pre-retiree counseling that helps people think through life post-retirement, including working in a non-full-time role.

DeMeo shared additional opportunities for retirement readiness, including:

• Designing flexible retirement programs. Employee choice designs allow employees to direct annual employer contributions to either bolster retirement savings, pay down student loans or set aside money for healthcare costs, helping employees balance short- and long-term financial goals.
• Expanding emergency savings programs. These programs may protect workers against unexpected expenses. DeMeo said those expenses can include education, access to savings accounts and matching employee contributions.
• Promoting financial resilience through education and engagement. Provider partners can deliver targeted education and resources to employee groups who have indicated interest in a specific financial topic. She said offering workers access to financial education and resources can help boost engagement and employee outcomes.

By extending financial wellness programs beyond early and mid-career employees to those later in their careers, TR professionals can help workers feel more confident about retirement. And if done correctly, Crain said, “Employees will feel better prepared to retire at an earlier age than they thought possible, which benefits both the company and the worker.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Employee Compensation
• Total Rewards