Panel: Causes and Consequences of Working Longer
(Aging & Retirement)

Friday, November 9, 2012: 9:45 AM-11:15 AM
Poe (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Organizers:  Richard Johnson, Urban Institute
Moderators:  Sharmila Choudhury, Congressional Research Service and Sara Rix, AARP
Chairs:  Karen Smith, The Urban Institute

The first wave of baby boomers reached 65 last year, reminding us that a future of labor shortages and a drain on Social Security and Medicare finances is getting closer. The rise in the share of retirees in the population, long projected but now upon us, could strain the economy for decades. In just a few years, Social Security is scheduled to begin paying more in benefits than it collects in taxes. If current employment patterns continue, the number of workers for every retired adult will fall from 3.2 to 2.2 between 2010 and 2030, meaning that each worker will have to pay more to support retirees or retirement benefits will have to be cut. One way to ease the pressure is to encourage adults to delay retirement and stay in the workforce. Perhaps now more than ever, the decision every adult makes to work or retire will have a profound effect on public budgets and the economy. Keeping older adults employed increases tax revenue and may promote economic growth. Working longer also increases people’s Social Security and employer-sponsored pension benefits and delays their period of dependency on retirement savings. Studies suggest working longer may even improve physical and emotional health. Adults, who are living longer and healthier lives, say they want to stay in the workplace as they age. Jobs are becoming less physically demanding. Companies are gravitating toward pension plans that don’t penalize employees for working past typical retirement ages, and employees are redefining retirement to include part-time work and self-employment. In response to these trends, employers are talking about ways to accommodate older employees with flexible work options. This panel consists of four papers that examine older workers and the retirement decision. The first paper looks at long-term employment trends at older ages. Using Current Population Survey data, it identifies those groups that have delayed retirement in the years since the mid-1990s, when the trend toward later retirement began. The second paper explores the reasons behind the stickiness of age-65 retirement. Social Security’s full retirement age has increased from 65 to 66, yet many people still claim benefits at 65. Is Medicare eligibility at age 65 the reason, or are people unaware of the change in Social Security rules? The third paper examines the prevalence and determinants of various paths to retirement using three cohorts of older Americans from the Health and Retirement Study. How has the prevalence of bridge jobs, phased retirement, and re-entry changed over the past two decades and what are the key determinants of these diverse retirement patterns? The final paper examines what happens to state and local government workers when they retire. Because nearly all government workers are covered by generous traditional pension plans, most retire early. Do they leave the labor force completely, or more to other jobs? If they keep working, how do their new jobs compare to their career employment? Together these papers will provide new insights into the retirement decision and the various issues confronting older workers.

Sticky Ages: Why Is Age 65 Still a Retirement Peak?
Norma Coe and Matthew S. Rutledge, Boston College

Retirement Patterns and the Macroeconomy: Determinants of Bridge Jobs, Phased Retirement, and Re-Entry
Michael Giandrea, U.S. Bureau of Labor Statistics and Kevin E. Cahill, Sloan Center on Aging and Work at Boston College

What Happens to State and Local Workers After They Retire?
Richard Johnson and Janice Park, Urban Institute

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