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Working Longer

Working Longer: The Solution to the Retirement Income Challenge

Alicia H. Munnell
Steven A. Sass
Copyright Date: 2008
Pages: 207
  • Book Info
    Working Longer
    Book Description:

    Daily headlines warn American workers that their retirement years may be far from golden. The main components of the retirement income system -Social Security and employer-provided pensions and health insurance -are in decline while the amount of income needed for a comfortable retirement continues to rise.

    InWorking Longer, Alicia Munnell and Steven Sass suggest a simple solution to this problem: postponing retirement by two to four years. By following their advice, the average worker retiring in 2030 can be as well off as today's retirees. Implementing this solution on a national scale, however, may not be simple.

    Working Longerinvestigates the prospects for moving the average retirement age from 63, the current figure, to 66. Munnell and Sass ask whether future generations will be healthy enough to work beyond the current retirement age and whether older men and women want to work. They examine companies' incentives to employ older works and ask what government can do to promote continued participation in the workforce. Finally, they consider the challenge of ensuring a secure retirement for low-wage workers and those who are unable to continue to work.

    The retirement system faces very real challenges. But together, workers, employers, and the government can keep this vital piece of the American dream alive.

    eISBN: 978-0-8157-0145-3
    Subjects: Finance, Marketing & Advertising, Business, Political Science

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-viii)
  4. 1 Introduction
    (pp. 1-15)

    Every morning more than 100 million Americans wake up and head out to work. They grab a bite, get the news, then turn their attention to the issues they’ll face that day. At times, however, it becomes necessary to look beyond this workaday routine and deal with issues that could disrupt one’s life if not addressed. This is one of those times, and the issue is retirement.

    A wake-up call regarding one’s retirement should come as no surprise. The press is filled with calls to fix Social Security, shore up employer pensions, and make 401(k) plans work better. Indeed, Social...

  5. 2 Will Older People Be Healthy Enough to Work Longer?
    (pp. 16-34)

    As recently as the mid-1960s, the median retirement age for men—the age at which half of all men are no longer in the labor force—was 66. Today, it is 63. But given the scheduled decline in Social Security replacement rates, increased longevity, and the relatively low balances in 401(k) accounts, Americans risk serious income shortfalls, especially at older ages, if they continue to retire at age 63. As discussed in the introduction, a rational response is to move the average retirement age back to 66 or even older. A key consideration is whether people will be healthy enough...

  6. 3 Will Older Men Want to Work Longer?
    (pp. 35-60)

    This chapter summarizes what is known about the labor supply of older men, defined as those 55 and over. As discussed in the introduction, a greater proportion of older individuals will need to work than do at present, because retirement income systems are contracting and life expectancy is increasing. Working longer is the best way for most—especially for the baby boomers, who have little time to boost their saving—to ensure financial security in old age. The topic is also of great interest because older individuals will compose a much greater portion of the population, so their labor supply...

  7. 4 Will Older Women Want to Work Longer?
    (pp. 61-91)

    The previous chapter explores the extent to which men are likely to remain in the labor force longer and thereby offset the effect of the contracting retirement income system. On the one hand, elimination of incentives for early retirement, rising labor force participation of married women, improving health, better education, and the shift from goods- to service-producing industries should increase the likelihood of continued employment. On the other hand, a decline in job stability among older men and the lower wages they may face may discourage employment. Much of the recent upsurge in labor activity among older men involves the...

  8. 5 Will Employers Want to Employ Older Workers?
    (pp. 92-116)

    Whether Americans will be able to work into their mid- to late 60s is not a decision they can generally make on their own. Most Americans work for an employer, not for themselves. So their employers also have a say. And employers have not shown themselves especially receptive to employing older workers.

    Retirement from employment was to a significant degree the work of employers. They dismissed or eased out older employees whose strength and acuity declined; later they created retirement policies that forced workers out at a specified age. To facilitate orderly exits, large employers gave the workers they retired...

  9. 6 What Can Be Done?
    (pp. 117-141)

    Americans will need to work two to four years longer than they do at present to ensure a reasonably comfortable old age. As the average retirement age for men has been 63 for the past quarter century, they must now remain employed until their mid-to late 60s. In many respects, this is a reasonable objective. Most men worked to at least age 66 as recently as 1960. The physical demands of work have since declined. Work has also become much more personally and socially rewarding.

    There are signs that Americans will indeed stay in the labor force longer. Most Americans...

  10. 7 Rounding Out the Picture
    (pp. 142-148)

    The retirement income system is contracting. Social Security will replace less of preretirement income in the future than it does today, and one-third of households are totally dependent on Social Security as their only source of retirement income. The remaining two-thirds of households have traditionally supplemented Social Security with income from employer-sponsored plans. But these plans have changed from defined benefit plans, where the employer guarantees an income for life, to 401(k) plans, where, to date at least, balances are quite modest. And households tend to save very little on their own.

    At the same time that the retirement system...

  11. Notes
    (pp. 149-178)
  12. References
    (pp. 179-200)
  13. Index
    (pp. 201-208)
  14. Back Matter
    (pp. 209-209)