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Retirement Trends and Policies to Encourage Work Among Older Americans

  • Gary Burtless

    ()

    (Brookings Institution)

  • Joseph F. Quinn

    ()

    (Boston College)

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 womens' 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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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
Contact details of provider: Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA
Phone: 617-552-3670
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  1. Alan L. Gustman & Thomas L. Steinmeier, 1994. "Employer-provided health insurance and retirement behavior," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(1), pages 124-140, October.
  2. 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.
  3. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
  4. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
  5. Joseph F. Quinn, 1999. "Has the Early Retirement Trend Reversed?," Boston College Working Papers in Economics 424, Boston College Department of Economics.
  6. 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.
  7. Joseph F. Quinn, 1993. "The Future Of Retirement," Boston College Working Papers in Economics 249, Boston College Department of Economics.
  8. Alicia Munnell, 1997. "Social Security: it ain't broken," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 41(Jun), pages 297-303.
  9. 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, November.
  10. Alan Krueger & Jorn-Steffen Pischke, 1989. "The Effect of Social Security on Labor Supply: A Cohort Analysis of the Notch Generation," Working Papers 635, Princeton University, Department of Economics, Industrial Relations Section..
  11. 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.
  12. J. E. Stiglitz, 1999. "Introduction," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 28(3), pages 249-254, November.
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