Working Longer To Enhance Retirement Security

Brief #1 from the series Older Americans' Economic Security

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Our longer life span represents one of history's great achievements, but threatens to bankrupt Social Security. Because the typical retirement age has fallen over the last century while life spans have grown rapidly, retirees now collect benefits longer than ever before. If left unchanged, the system will soon pay out more than it collects, forcing policymakers to raise taxes on workers or cut benefits to retirees.

Encouraging older Americans to delay retirement would ease the economic pressures created by an aging population. Improved health and less-physical jobs mean that most of today's older adults can work longer than earlier generations. Increasing the average retirement age would expand the pool of productive workers and promote economic growth, generating additional goods and services to raise living standards for all Americans. Delaying retirement would also increase lifetime earnings and retirement savings for workers, improving their financial security at older ages.

Improving Health, Declining Job Demands Increase Work Capacity at Older Ages

Improved health and technological change enhance the ability to work at older ages. Between 1982 and 2002, the share of adults age 65 to 74 who described their health as fair or poor declined from 34 percent to 22 percent (National Center for Health Statistics 2005). These self-reported trends are consistent with other evidence of improved health at middle age and beyond over the past 25 years.

The decline of manufacturing jobs over the past 50 years and the computerization of the workplace have reduced the physical demands of work. Between 1950 and 1996, the share of workers in physically demanding jobs dropped from 20 to 7 percent (Steuerle, Spiro, and Johnson 1999). Between 1992 and 2002, the share of workers age 55 to 59 whose jobs never required physical effort increased from 32 to 38 percent (Johnson 2004).

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