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Retirement Trends and Policies to Encourage Work Among Older Americans

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  • Gary Burtless

    ()
    (Brookings Institution)

  • Joseph F. Quinn

    ()
    (Boston College)

Abstract

The trend toward earlier and earlier retirement was one of the most important labor market developments of the twentieth century. It was evident in all the major industrialized countries. In the United States, however, the trend toward earlier retirement came to at least a temporary halt in the mid-1980s. Male participation rates at older ages have stabilized or even increased slightly. Older womenÃs participation rates are clearly rising. This paper examines the environmental and policy changes contributing to the long-term decline in the U.S. retirement age as well as developments that contributed to the recent reversal. The dominant source of earlier retirement was the long-term increase in Americans' wealth, which permitted workers to enjoy rising living standards even as they spent a growing percentage of their lives outside the paid work force. The expansion of Social Security pensions and of employer-sponsored pension plans and the introduction of mandatory retirement rules also encouraged earlier retirement over much of the last century. Many public policies and private institutions that encouraged early retirement have been modified in recent years. Mandatory retirement has been outlawed in most jobs. Social Security is no longer growing more generous, and worker coverage under company pension plans is no longer rising. Both Social Security and many private pensions have become more "age neutral" with respect to retirement. Public and private pension programs now provide weaker financial incentives for workers to retire at particular ages, such as age 62 or age 65, and offer stronger incentives for aging workers to remain in the labor force. The paper outlines additional policies that could encourage later retirement. An open question is whether such policies are needed. Rising labor productivity and increased work effort during the pre-retirement years mean that Americans can continue to enjoy higher living standards, even as improved longevity adds to the number of years that workers spend in retirement. If opinion polls are to be believed, most workers favor preserving the institutions that allow early retirement even if it means these institutions will require heavier contributions from active workers.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 436.

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Length: 39 pages
Date of creation: 12 Jan 2000
Date of revision:
Publication status: published in Ensuring Health and Income Security for an Aging Workforce, (Peter Budetti, Richard Burkhauser, Janice Gregory and Allan Hunt, editors). Kalamazoo: The W. E. Upjohn Institute for Employment Research, 2001, pp. 375-415.
Handle: RePEc:boc:bocoec:436

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References

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  1. Alan L. Gustman & Thomas L. Steinmeier, 1993. "Employer Provided Health Insurance and Retirement Behavior," NBER Working Papers 4307, National Bureau of Economic Research, Inc.
  2. Joseph F. Quinn, 1999. "Has the Early Retirement Trend Reversed?," Boston College Working Papers in Economics 424, Boston College Department of Economics.
  3. Burtless, Gary & Moffitt, Robert A, 1985. "The Joint Choice of Retirement Age and Postretirement Hours of Work," Journal of Labor Economics, University of Chicago Press, vol. 3(2), pages 209-36, April.
  4. Joseph F. Quinn, 1993. "Retirement And The Labor Force Behavior Of The Elderly," Boston College Working Papers in Economics 257, Boston College Department of Economics.
  5. Joseph F. Quinn, 1993. "The Future Of Retirement," Boston College Working Papers in Economics 249, Boston College Department of Economics.
  6. Burtless, Gary, 1986. "Social Security, Unanticipated Benefit Increases, and the Timing of Retirement," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 781-805, October.
  7. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
  8. Krueger, Alan B & Pischke, Jorn-Steffen, 1992. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Journal of Labor Economics, University of Chicago Press, vol. 10(4), pages 412-37, October.
  9. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
  10. Joseph F. Quinn & Richard V. Burkhauser & Daniel A. Myers, 1990. "Passing the Torch: The Influence of Economic Incentives on Work and Retirement," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number pt, December.
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Cited by:
  1. Bernardo Lanza Queiroz & Moema Gonçalves Bueno Figoli, 2011. "Population aging and the rising costs of public pension in Brazil," Textos para Discussão Cedeplar-UFMG td438, Cedeplar, Universidade Federal de Minas Gerais.
  2. James M. Poterba & Steven F. Venti & David A. Wise, 2001. "The Changing Face of Private Retirement Saving in the United States," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 2(4), pages 3-11, October.
  3. Dorn, David & Sousa-Poza, Alfonso, 2007. "'Voluntary' and 'Involuntary' Early Retirement: An International Analysis," IZA Discussion Papers 2714, Institute for the Study of Labor (IZA).
  4. Donald Bruce & Douglas Holtz-Eakin & Joseph F. Quinn, 2000. "Self-Employment and Labor Market Transitions at Older Ages," Boston College Working Papers in Economics 490, Boston College Department of Economics.
  5. Karakaya, Güngör, 2008. "Early cessation of activity in the labour market: impact of supply and demand factors," MPRA Paper 13390, University Library of Munich, Germany.
  6. Karen Leppel, 2005. "Labor force plans and labor force status," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 12(8), pages 173-196, April.
  7. C. Sofia Machado & Miguel Portela, 2011. "Hours of work and retirement behavior," NIPE Working Papers 02/2011, NIPE - Universidade do Minho.
  8. James M. Poterba & Steven F. Venti & David A. Wise, 2001. "The Transition to Personal Accounts and Increasing Retirement Wealth: Macro and Micro Evidence," NBER Working Papers 8610, National Bureau of Economic Research, Inc.
  9. Cori E. Uccello, 2001. "Are Americans Saving Enough For Retirement?," Issues in Brief ib-7, Center for Retirement Research.
  10. Ignacio Álvarez & Natalia da Silva & Álvaro Forteza & Ianina Rossi, 2012. "Incentivos y patrones de retiro en Uruguay," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(2), pages 219-271.
  11. Alvaro Forteza & Graciela Sanromán, 2011. "Estimación de un modelo estructural para las decisiones de retiro en Uruguay," Documentos de Trabajo (working papers) 2411, Department of Economics - dECON.
  12. Gordon B.T. Mermin & Richard W. Johnson & Dan Murphy, 2006. "Why Do Boomers Plan to Work So Long?," Working Papers, Center for Retirement Research at Boston College wp2006-19, Center for Retirement Research, revised Nov 2006.
  13. Fabio Pammolli & Nicola Carmine Salerno, 2004. "Regole pensionistiche e prolungamento dell'attività: analisi del TIR e effetti del cumulo lavoro-pensione," Working Papers 07-2004, Competitività Regole Mecati (CERM).
  14. Beatrice Scheubel & Daniel Schunk & Joachim Winter, 2009. "Don't Raise the Retirement Age! An Experiment on Opposition to Pension Reforms and East-West Differences in Germany," CESifo Working Paper Series 2752, CESifo Group Munich.
  15. Bernardo Lanza Queiroz, 2007. "The determinants of male retirement in urban Brazil," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 17(1), pages 11-36, January-A.
  16. Alicia H. Munnell & Steven A. Sass, 2007. "The Labor Supply of Older Americans," Working Papers, Center for Retirement Research at Boston College wp2007-12, Center for Retirement Research, revised Jun 2007.
  17. David Dorn & Alfonso Sousa-Poza, 2005. "Early Retirement: Free Choice or Forced Decision," CESifo Working Paper Series 1542, CESifo Group Munich.
  18. Blau, David M. & Goodstein, Ryan, 2007. "What Explains Trends in Labor Force Participation of Older Men in the United States?," IZA Discussion Papers 2991, Institute for the Study of Labor (IZA).
  19. Bernardo Queiroz, 2013. "Social security, economic development and the labor force participation of the elderly in Latin America," Textos para Discussão Cedeplar-UFMG 490, Cedeplar, Universidade Federal de Minas Gerais.

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