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Older Americans Staying Longer in the Work Force
February 18, 2010
The labor-force participation rate is increasing for older Americans (those age
55 and older) as older workers are faced with higher health costs and
economic losses, according to a study published today by the nonpartisan
Employee Benefit Research Institute (EBRI).
For those ages 55--64 (the "near elderly"), the increase is being driven
almost exclusively by the increase of women in the work force; the male
participation rate is flat to declining. However, among those age 65 and older
(the elderly), labor-force participation is increasing for both male and
females, says the study.
As the study suggests, workers increasingly are facing more responsibility in
paying for their retirement expenses: Private-sector workers who have access to
an employment-based retirement plan most commonly have a defined contribution
plan (typically a 401(k) plan, financed at least partially with workers' own
contributions), and retiree health insurance is becoming increasingly scarce.
Even for those who do have retiree health insurance, caps on what the employer
will pay annually for the coverage are being reached and/or surpassed.
Consequently, the study says, workers today have greater incentives to stay
in the work force, such as the ability (and in some cases the need) to continue
to accumulate assets in defined contribution plans and to have access to
employment-based health insurance coverage, instead of having to tap into their
savings to pay for their expenses.
The study, based on U.S. Census Bureau data, includes these additional
points:
- The percentage of civilian noninstitutionalized Americans age 55 or older
who were in the labor force declined from 34.6 percent 1975 to 29.4 percent in
1993. However, since 1993, the labor-force participation rate has steadily
increased, reaching 39.4 percent in 2008--the highest level over the 1975--2008
period.
- Education is a strong factor in an individual's participation in the labor
force at older ages: Individuals with higher levels of education are
significantly more likely to be in the labor force than those with the lower
levels of education.
- The upward trend among the working near elderly and elderly is not
surprising and is likely to continue because of workers' need for access to
employment-based health insurance and for more earning years to accumulate
assets in defined contribution (401(k)-type) plans--especially after the 2008
downturn in the stock market and economy.
- While some older Americans have a greater need to work to help make their
retirement assets last longer or to continue to build up assets, monetary
incentives are not the only motivating factor. There also is an increased desire
among Americans to work longer, particularly among those with more education,
for whom more meaningful jobs may be available that can be done well into older
ages.
About EBRI
EBRI is a private, nonprofit research institute based in Washington, DC, that
focuses on health, savings, retirement, and economic security issues. EBRI does
not lobby and does not take policy positions. More information on
EBRI and this study is at http://www.ebri.org.
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