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Why Do Boomers Plan to Work So Long?

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Author Info

  • Gordon B.T. Mermin
  • Richard W. Johnson

    ()
    (Urban Institute)

  • Dan Murphy

    (Urban Institute)

Abstract

Recent changes in retirement trends and patterns have raised questions about the likely retirement behavior of baby boomers, the large cohort born between 1946 and 1964. This study compares the retirement expectations of workers ages 51 to 56 in 2004 (who were born between 1948 and 1953, the leading edge of the baby boom) and 1992 (born between 1936 and 1941). Data come from the Health and Retirement Study. Work expectations increased significantly over the period. Between 1992 and 2004, the mean expected probability of working full-time past age 62 among workers ages 51 to 56 increased from 47 percent to 51 percent. The increase was even more rapid for the expected mean probability of full-time work after age 65, which grew from 27 percent to about 33 percent over the period. Controlling for other factors, self employment, education, and earnings increased work expectations at older ages, while defined benefit pension coverage, employer-sponsored retiree health benefits, and household wealth reduced expectations. Lower rates of retiree health insurance offers from employers, higher levels of educational attainment, and lower rates of defined benefit pension coverage accounted for most of the increase between 1992 and 2004 in expected work probabilities after ages 62 and 65. These trends suggest that the boomers will remain at work longer than the previous generation. The recent uptick in average retirement ages appears to be the leading edge of a new long-term trend. Lengthier careers will likely promote economic growth, increase government revenue, and improve individual financial security at older ages.

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File URL: http://crr.bc.edu/working-papers/why-do-boomers-plan-to-work-so-long/
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Bibliographic Info

Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2006-19.

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Length: 27 pages
Date of creation: Nov 2006
Date of revision: Nov 2006
Handle: RePEc:crr:crrwps:wp2006-19

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Keywords: baby boomers; retirement trends; defined benefit; pension coverage; retiree health benefits; household wealth; education;

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References

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  1. Leora Friedberg & Anthony Webb, 2003. "Retirement and the Evolution of Pension Structure," NBER Working Papers 9999, National Bureau of Economic Research, Inc.
  2. repec:crr:crrwps:2004-30 is not listed on IDEAS
  3. Leora Friedberg, 1999. "The Labor Supply Effects of the Social Security Earnings Test," NBER Working Papers 7200, National Bureau of Economic Research, Inc.
  4. James H. Stock & David A. Wise, 1990. "The Pension Inducement to Retire: An Option Value Analysis," NBER Chapters, in: Issues in the Economics of Aging, pages 205-230 National Bureau of Economic Research, Inc.
  5. Richard W. Johnson & Amy J. Davidoff & Kevin Perese, 2003. "Health insurance costs and early retirement decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(4), pages 716-729, July.
  6. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, vol. 6(2), pages 179-202, June.
  7. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, vol. 18(2), pages 173-193, April.
  8. B. Douglas Bernheim, 1987. "Social Security Benefits: An Empirical Study of Expectations and Realizations," NBER Working Papers 2257, National Bureau of Economic Research, Inc.
  9. Gary Burtless & Joseph F. Quinn, 2000. "Retirement Trends and Policies to Encourage Work Among Older Americans," Boston College Working Papers in Economics 436, Boston College Department of Economics.
  10. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.
  11. Kathleen McGarry, 2004. "Health and Retirement: Do Changes in Health Affect Retirement Expectations?," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
  12. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
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Cited by:
  1. 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.
  2. Richard W. Johnson & Janette Kawachi, 2007. "Job Changes at Older Ages: Effects on Wages, Benefits, and Other Job Attributes," Working Papers, Center for Retirement Research at Boston College wp2007-04, Center for Retirement Research, revised Feb 2007.
  3. Henkens, C.J.I.M. & Dalen, H.P. van, 2011. "The employer’s perspective on retirement," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4807650, Tilburg University.
  4. Owen Haaga & Richard W. Johnson, 2012. "Social Security Claiming: Trends and Business Cycle Effects," Working Papers, Center for Retirement Research at Boston College wp2012-5, Center for Retirement Research, revised Feb 2012.
  5. John Karl Scholz & Ananth Seshadri, 2012. "The Interplay of Wealth, Retirement Decisions, Policy and Economic Shocks," Working Papers wp271, University of Michigan, Michigan Retirement Research Center.
  6. Robert Clark & Melinda Morrill, 2013. "Increasing Work Life: The Role Of The Employer," Discussion Papers 13-016, Stanford Institute for Economic Policy Research.
  7. Diana Warren, 2008. "Retirement Expectations and Labour Force Transitions: The Experience of the Baby Boomer Generation," Melbourne Institute Working Paper Series wp2008n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  8. Christian Westermeier & Anika Rasner & Markus M. Grabka, 2012. "The Prospects of the Baby Boomers: Methodological Challenges in Projecting the Lives of an Aging Cohort," SOEPpapers on Multidisciplinary Panel Data Research 440, DIW Berlin, The German Socio-Economic Panel (SOEP).

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