“Retirement patterns have changed substantially in the United States in the last 30 years. During the period from 1900 to 1980, there was a continuous decline in the labor force participation of older individuals. However, this trend has reversed since the 1980s. Americans are now retiring later and expect to continue doing so. Recent research suggests a number of significant changes that have increased the labor force participation of older workers” (p.1).
“These include the following:
- Americans are more educated and are living longer. Significant increases in educational access were experienced throughout the last century. At the same time, life expectancies have increased steadily since 1900 and are predicted to continue rising.
- Congress eliminated mandatory retirement. In the 1970s, about half of Americans were covered by mandatory-retirement provisions requiring that they leave their jobs no later than a certain age, usually 65. In 1986, Congress abolished mandatory retirement by amending the Age Discrimination in Employment Act.
- Social Security raised full retirement age (FRA). The last major reform of the Social Security system occurred in 1983, when the Social Security Amendments…gradually increased the FRA from age 65 to age 67 for workers born after 1937.
- Employers have changed pension work plans. Increases in the delayed retirement credit and a move from defined- benefit pensions to defined-contribution plans such as 401(k)s have decreased work disincentives.
- Employer-sponsored post-retirement health coverage has declined. Due to increases in health care costs, fewer firms are providing post-retirement health insurance, and when they do, the retiree has to pay a higher premium” (p.1).
“Within this issue brief, [the authors] describe the increasingly complex patterns emerging between older workers and their labor force participation. [Their] findings are based on a comprehensive review of studies released between 2010 and 2015”, including the Employee Benefit Research Institute’s (EBRI) Retirement Confidence Survey (p.1).
After explaining retirement patterns among older workers, the authors then discuss the labor force transitions of older workers and conclude with brief thoughts on future trends and policy priorities.
(Abstractor: Author and Website Staff)Full publication title: Older Workers’ Labor Force Transitions from Work to Retirement: Findings from Recent Studies, 2010-2015
Major Findings & Recommendations
Labor Force Transitions “In addition to longer labor force participation, older workers now transition through their working lives in more complex ways. Retirement is no longer a single, one-time event; rather, it is a gradual move out of the labor force” (p.2). According to the EBRI Retirement Confidence Survey: • “In 1991, 11 percent of workers expected to retire after age 65, 50 percent expected to retire before age 65, and about 10 percent said they did not expect to retire at all. • In 2015, 36 percent of workers reported that they expected to retire after age 65, but only 25 percent said they planned to retire before age 65, and 10 percent said they did not plan to retire at all. • More importantly, the survey also found that about 67 percent of workers in 2015 said they plan to work for pay in retirement” (p.2-3). The authors found that older workers make a variety of labor force transitions, with the following patterns: • “Career-to-career job changes have become increasingly common” (p.3). “Career jobs are full-time, full-year jobs held for a long period of time” (p.2). • “Bridge employment is on the rise” (p.3). “Bridge jobs are usually part-time, part-year, or short-term jobs that workers engage in between a full-time career job and withdrawal from the labor force” (p.2). • “Older workers are more likely to become self-employed” (p.3). • “Reentry jobs [that follow a period of full retirement] are more common” (p.3). • “Phased retirement continues to be unpopular in the United States” (p.3). Lastly, “the literature identifies the following factors associated with individuals who retire in stages: have good health; are relatively young when leaving a career job; and can afford to retire early (but choose later to return to the workforce), or return to the workforce for financial reasons….If planned retirement income becomes insufficient, a return to the labor force may be the only choice for retirees to maintain their standard of living” (p.4). Looking Ahead “It is unlikely, given ever increasing health care costs, that generous post-retirement health benefits will return….[R]etirement patterns will be a fruitful area of research for years to come. Likewise, policymakers must ensure that policies are in place to safeguard an older workforce and protect the economy as a whole” (p.4). (Abstractor: Author and Website Staff)