Closing the Deficit

Closing the Deficit: How Much Can Later Retirement Help?

Henry J. Aaron
Gary Burtless
Copyright Date: 2013
Pages: 135
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  • Book Info
    Closing the Deficit
    Book Description:

    For the past two decades Americans over age 60 have increasingly delayed their withdrawal from the workforce, a reversal of a century-old trend toward early retirement. For instance, from 1991 to 2010 the employment rate increased by more than half among 68-year-old men and by about two-thirds among women of the same age.

    Using data from the Current Population Survey,Working Our Way out of the Deficitexplores the historical trajectory of retirement and the labor force participation rate of older men and women. Who chooses to delay retirement? Have older workers delayed their departure from career jobs? How will working longer affect the outlook for the federal budget?

    Brookings economists Henry Aaron and Gary Burtless join with renowned colleagues to examine the impact of extended employment against the backdrop of the federal deficit problem. They posit that working longer could help reduce the soaring costs of entitlement programs including Social Security and Medicare.

    Aaron and Burtless have also developed new evidence on the role of career jobs. This evidence suggests that lengthening the careers of older workers who have held their jobs for a decade or more significantly contributes to the trend toward later retirement.

    As the nation faces a prolonged jobs gap,Working Our Way out of the Deficitprovides an important work on a crucial segment of the employment market and guides us toward a path for future recovery.

    eISBN: 978-0-8157-0442-3
    Subjects: Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
  4. Introduction
    (pp. 1-10)

    Americans past the age of 60 are delaying their withdrawal from the labor force. This trend is relatively recent and only became detectable in the 1990s. It reverses a century-long trend toward earlier retirement that began in the late nineteenth century. Along with gradually increasing life-expectancy, the historical trend toward early retirement meant that, during the first nine decades of the twentieth century, successive generations of workers spent a growing portion of their lives in retirement.

    Since the introduction of Social Security in the 1930s and Medicare and Medicaid in the 1960s, the government has assumed a growing role in...

  5. 1 Who Is Delaying Retirement? Analyzing the Increase in Employment among Older Workers
    (pp. 11-35)

    Americans past age 60 are delaying their withdrawal from the workforce. This development reverses a trend toward early retirement that lasted longer than a century. The trend toward earlier labor force exit came to an end for U.S. men between the mid-1980s and mid-1990s.¹ After reaching a low point in the 1985–95 decade, the labor force participation rate of 60–64-year-old men has increased more than 6 percentage points (about one-eighth), and the participation rate among 65–69-year-old men has increased about 13 percentage points (more than half). Participation rates among American women in the same age groups have...

  6. 2 Future Labor Force Participation among the Aged: Forecasts from the Social Security Administration and the Author
    (pp. 36-45)

    The labor force participation rates of Americans past age 60 have been increasing since the mid-1980s among women and since the early 1990s among men. The Social Security Administration (SSA) expects these trends to continue, although at a slower pace, over the next three decades. Each year the Social Security Administration Board of Trustees publishes an annual report to Congress on the financial status of the federal Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds. To assess the actuarial status of the trust funds, the SSA must develop estimates of future Social Security revenues and outlays. This assessment requires the...

  7. 3 Impact of Higher Retirement Ages on Public Budgets: Simulation Results from DYNASIM3
    (pp. 46-71)

    The graying of America is often described as an aging crisis. Actually, it presents an enormous opportunity and is a cause for celebration. The elderly population is growing because longevity has soared. Americans are now living longer and healthier than ever before. The challenge is to harness the talents of an increasingly capable group of older citizens to support the nation’s continued prosperity. This chapter examines how increased labor force participation by people over age 55 might affect household and government budgets.¹

    The long-term fiscal outlook, now rather bleak, would improve if older workers delayed retirement. Over the next fifty...

  8. 4 Nudged, Pushed, or Mugged: Policies to Encourage Older Workers to Retire Later
    (pp. 72-120)

    Policies to encourage people to defer retirement are increasingly attractive for several reasons. Life expectancy is rising. Projected increases in budget deficits are traceable largely to anticipated growth of spending on pension and health benefits for the elderly and disabled. Within the federal budget, social insurance trust funds have their own funding gaps.

    Increasing the labor supply of older people and those with impairments would ameliorate each of these challenges, provided that such increases can be achieved at reasonable cost. Delays in retirement may even be good for the health of those affected.¹ The policy challenge is to identify services...

  9. 5 Thoughts on Working Longer and Retirement
    (pp. 121-136)

    Let me start by questioning whether people really are working to older ages today than they were twenty years ago or that properly computed age-specific labor force participation rates have gone up over the same period. To return to an old theme of mine,¹ it depends on how you measure age. The remaining life expectancy of the average retiree has not gone down over the past twenty years. The mortality of people at retirement has not gone up. The average duration of retirement has increased, not fallen. So, in a very real sense people are not working to “older ages.”...

  10. Contributors
    (pp. 137-138)
  11. Index
    (pp. 139-142)
  12. Back Matter
    (pp. 143-144)