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					Keeping Seniors Connected to the
         Labor Market

   • Benefits to working longer
   • Work patterns and trends at older ages
   • Work impediments at older ages
                                      The U.S. Population is
                                         Aging Rapidly
                                          Age Distribution of the Adult U.S. Population, 1950-2050
                      100%

                      90%

                      80%
Share of Population




                      70%
                                                                                                            85+
                      60%
                                                                                                            65-84
                      50%
                                                                                                            55-64
                      40%
                                                                                                            25-54
                      30%
                                                                                                            18-24
                      20%

                      10%

                       0%
                                   1950              1980           2000           2020              2050

                       Source: U.S. Census Bureau.
Population Aging Could Pose Problems
for Economy and Government Finances
• If current employment patterns persist, the share
  of adults that is employed will fall over time
• Would slow growth in national output,
  government revenues
• Strain government’s ability to cover rising cost of
  retirement programs, other public services
• Could result in worker shortages or skill gaps
 Working Longer Would Address These
  Economy Wide Concerns as Well as
Increase Individuals’ Retirement Income
                Security
 Increased Employment at Older Ages
Would Increase the Number of Workers
             per Retiree
         No. of Workers Age 18+ Per Nonworking Adult Age 65+ in
         2000 & 2020, by Assumed Participation Rates for Men 55+
      4.51
                                                                     4.08
                                                    3.55
                                      3.25




                               2000 rates for   1970 rates for   1950 rates for
                                 men 55+          men 55+          men 55+

    2000                                          2020
Source: Johnson and Steuerle (2004)
   People Can Raise Retirement
   Incomes by Working Longer
• Accumulate more Savings
• Accumulate more Social Security
• Build more wealth in employer pensions
• Extend retirement savings
  – reduce years over which Social Security,
    pensions, other wealth are spread
        Annual Income at Age 75, Net of Federal
          Income Taxes and Health Insurance
             Premiums, by Retirement Age
                                                                                      $34,790

                                                               $27,256
                                       $22,920

                $17,338




                   62                      65                     67                      70
Source: Butrica, Johnson, Smith, and Steuerle (2004).
Notes: Amounts are in constant 2004 dollars. Estimates refer to an unmarried man who turned 55 in 2005, spent
some time in college, worked continuously after age 22 earning average wages, participated in a DC plan since
age 35, and does not otherwise save. He purchases a single-life annuity at retirement and a Medigap policy. Tax
estimates assume the federal tax cuts enacted in 2001 and 2003 expire in 2010.
Keeping Seniors Connected to the
         Labor Market

   • Benefits to working longer
   • Work patterns and trends at older ages
   • Work impediments at older ages
Older Men’s Participation Rates Fell Steadily
  from 1969 to the late 1980s, Have Been
        Climbing in Recent Years
                                                Labor Force Participation Rates, Men Ages 55 and Older, by Age,
                                                                          1969 to 2004

                                       100

                                       90
  Labor Force Participation Rate (%)




                                       80

                                       70

                                       60
                                                                                                                   55-61
                                       50                                                                          62-64
                                       40                                                                          65-69
                                                                                                                   70+
                                       30

                                       20

                                       10

                                         0
                                         1969       1974     1979     1984      1989     1994     1999     2004
Note: Estimates are 3-year moving averages for the noninstitutionalized male civilian population, from March CPS data.
                                     Older Women’s Participation Rates Have
                                      Increased Sharply Since the Late 1980s

                                            Labor Force Participation Rates, Women Ages 55 and Older, by Age,
                                                                       1969 to 2004

                                     70


                                     60
Labor Force Participation Rate (%)




                                     50


                                     40                                                                             55-61
                                                                                                                    62-64
                                                                                                                    65-69
                                     30
                                                                                                                    70+

                                     20


                                     10


                                     0
                                     1969       1974      1979     1984      1989      1994     1999      2004
Note: Estimates are 3-year moving averages for the noninstitutionalized female civilian population, from March CPS data.
Labor Force Participation Rates for Older
     Men Increase With Education
                               Labor Force Participation Rates, Men Age 55 and Older,
                                         by Age and Education, 2003-2005

           90
                                     83.3
           80                 76.1
                       71.6
           70
                                                                 61.4                                                                Not HS Grad
                58.7
           60                                                                                                                        HS Grad
                                                          53.1                                                                       Some College
LFPR (%)




           50                                      44.5                                                                              College Grad
                                                                                                   43.2
           40                               37.4
                                                                                            31.8
                                                                                     28.0
           30
                                                                              23.3
                                                                                                                              18.4
           20                                                                                                          16.1
                                                                                                                11.5
                                                                                                          8.1
           10

            0
                        55-61                       62-64                             65-69                       70+
                                                                        Age
Note: Estimates are averages for 2003, 2004, and 2005 for the noninstitutionalized male civilian population, from March
CPS data.
Female Participation Rates Also Increased with
    Education, Especially At Ages 55-64

                                                      Labor Force Participation Rates, Women Age 55 and Older,
                                                                  by Age and Education, 2003-2005

                                       80
                                                                 73.0
 Labor Force Participation Rates (%)




                                       70                 65.6

                                                   59.2
                                       60
                                                                                             49.1
                                       50
                                                                                      43.7
                                                                                                                                                            Not HS Grad
                                            39.1
                                       40                                      35.7                                                                         HS Grad
                                                                                                                        30.8 31.3                           Some College
                                       30                                                                                                                   College Grad
                                                                        23.2                                     23.5

                                       20
                                                                                                          13.3
                                                                                                                                                9.4   9.9
                                       10                                                                                                 6.9
                                                                                                                                    3.5

                                        0
                                                   55-61                       62-64                             65-69                     70+
                                                                                                    Age

 Note: Estimates are averages for 2003, 2004, and 2005 for the noninstitutionalized female civilian population, from March
 CPS data.
Employment Rates for Older Men Decline
    Sharply With Health Problems
                                 Employment Rates by Age and Health Status, Men, 2002

                         90

                         80

                         70
  Employment Rates (%)




                         60

                         50                                                             Excellent
                                                                                        Very Good
                         40                                                             Good
                                                                                        Fair
                         30                                                             Poor
                         20

                         10

                         0
                              55-61             62-64                  65-69   70+
                                                             Age
          Note: Estimates from the 2002 Health and Retirement Study.
The Relationship Between Health Status and
Employment Is Even Stronger among Women
                 than Men
                             Employment Rates by Age and Health Status, Women, 2002

                       70


                       60
Employment Rates (%)




                       50


                       40                                                             Excellent
                                                                                      Very Good
                       30                                                             Good
                                                                                      Fair
                                                                                      Poor
                       20


                       10


                       0
                            55-61             62-64                  65-69   70+
                                                           Age
        Note: Estimates from the 2002 Health and Retirement Study.
Part-Time Employment Increases Rapidly with
         Age among Older Workers
                              Share of Working Men and Women Who Are Employed Part-Time,
                                                    by Age, 2003-2005

                        70                                                                          66.4


                        60                        55.9                                    56.2


                        50
  Share Part-Time (%)




                                           40.0                                  39.8
                        40
                                                                                                                     55-61
                                                                                                                     62-64
                        30                                             27.7
                                                                                                                     65-69
                                    21.9                                                                             70+
                        20
                             11.2
                        10


                        0
                                       Men                                         Women
  Note: Estimates are averages for 2003, 2004, and 2005 for the noninstitutionalized civilian population, from March CPS
  data.
Part-Year Employment Rises With Age After
                Age 61
                            Share of Working Men and Women Who Are Employed Part-Year,
                                                  by Age, 2003-2005
                       40
                                                                                                        36.2
                                                        34.9                                    34.4
                       35

                                                 30.0
                       30                                                               29.1
 Share Part-Year (%)




                       25                 23.6
                                                                        22.5
                                                                                20.7                                   25-54
                       20                                                                                              55-61
                                   16.6                                                                                62-64
                            14.3                                                                                       65-69
                       15
                                                                                                                       70+
                       10

                       5

                       0
                                          Men                                          Women
    Note: Estimates are averages for 2003, 2004, and 2005 for the noninstitutionalized civilian population, from March CPS
    data.
         Self-Employment Increases With Age,
                Especially Among Men
                               Share of Working Men and Women Who Are Self-Employed, by Age,
                                                         2003-2005

                          40
                                                            35.8
                          35
                                                     29.8
Share Self-Employed (%)




                          30

                                              24.4
                          25
                                                                                                                   25-54
                                       20.4
                          20                                                                        18.4           55-61
                                                                                    15.4
                                                                                                                   62-64
                                                                                            15.0
                          15    12.7
                                                                                                                   65-69
                                                                            11.3                                   70+
                          10                                         7.9

                           5

                           0
                                              Men                                  Women
Note: Estimates are averages for 2003, 2004, and 2005 for the noninstitutionalized civilian population, from March CPS
data.
  “Traditional” Retirements Are
         Now Quite Rare
• Retirement is increasingly a gradual process
  – not an abrupt transition

• About two-thirds of older people work after
  retiring from career jobs
• About one-third of older adults “unretire”
  – return to work after leaving the labor force
What Do Older Americans Want
 From Work in Retirement?
According to an AARP Survey they want:
• Flexible schedules and/or reduced hours
• Less stress
• Mental engagement
• Social engagement
• Pension and health benefits
Reasons to Think Trend Towards Increased
    Work at Older Ages Will Continue
 • Baby Boomers report they are more likely to
   work at older ages than earlier generations
 • Health is improving and educational attainment
   is likely to increase at older ages
 • Trend away from traditional defined benefit
   pensions to defined contribution pensions is
   likely to continue
 • Trend away from employer provided retiree
   health insurance is likely to continue
 • Social Security retirement age is scheduled to
   increase from 66 to 67.
Keeping Seniors Connected to the
         Labor Market

   • Benefits to working longer
   • Work patterns and trends at older ages
   • Work impediments at older ages
        Important to Consider Work
        Impediments at Older Ages
• Some workers can’t work longer for health
  reasons
• Evidence suggests older workers have more
  difficulty getting re-employed
• Traditional pensions often penalize workers who
  remain on the job after they can receive benefits
• Social Security discourages work at older ages by
  providing few rewards for workers who have
  spent 35+ yrs at work
• Higher health costs make older workers more
  expensive
                Conclusion
• Working longer would benefit the economy
  and individuals’ retirement security
• Labor Force Participation has recently been
  increasing at older ages
• Still there are some impediments to working
  longer