Boomers May Retire Sooner than Later
The United States' demographic destiny may be arriving sooner than some have expected. Much of the literature about U.S. retirement trends focuses on how the economy will be affected several decades from now, when the majority of the Baby Boomers (those born between 1946 and 1965) will have retired. But some experts say the retirement of the Boomers will affect the U.S. workforce much sooner than that. Within just six years, in fact, many of the oldest Boomers may start collecting Social Security and opting out of the full-time workforce.
In 2008, the oldest of the Boomers will turn 62, the age at which many Americans retire. Recent history shows that over half of new Social Security recipients choose to collect their benefits at the age of 62, and nearly 70% start collecting before they reach 65. Social Security data shows that the average age at which Americans started collecting the government benefits during the 1995-2000 period was 62.6 for men and 62.5 for women, reports Murray Gendell, a senior research associate at the Center for Population Research at Georgetown University. This is way down from the 1950-55 period, when the average retirement ages were 68.5 for men and 67.9 for women.
A big question for economists and employers alike is whether the trend toward earlier retirement is going to reverse itself. Some have argued that it has already turned around. Economist Joseph F. Quinn, dean at Boston College, has claimed that "we have entered a new era" in which people stay in the labor force longer. He cites government data showing that the percentage of people over 65 who still work has been rising since the mid-1990s. But other experts remain skeptical, saying that labor force participation rates do not necessarily correlate with average retirement ages. Gendell cites Social Security data showing that the average age of retirement actually declined during the 1990s, after having leveled off in the 1970s and 1980s.
It's tough to predict the future of this trend because so many variables are in flux. Some believe, for example, that changes in U.S. government policies will help reverse the trend. The age at which people traditionally received full benefits (65) is slowly rising and will reach 66 in 2008. In 2017, it will rise to 67. Moreover, Social Security benefits are being reduced for people who retire at age 62. Nonetheless, experts such as Prof. Dora Costa of MIT think that it's too early to tell whether such factors will actually reduce the trend toward early retirement. Her research suggests that "specific institutional details of private pension plans and of social security systems are not the primary forces driving the long-term trend." She believes that the biggest drivers of retirement trends are related to income levels and to social norms. As long as retirement remains an attractive prospect and people can afford it, she argues, the trend toward early retirement may well continue, whatever the other incentives.
Of course, this raises another question. Will the bursting of the stock market bubble, the downturn in the economy and other financial factors reduce retirement savings to such a degree that people stay in the workforce a lot longer? Some experts say yes, citing the erosion of pensions and the elimination of retiree healthcare benefits. Others say that the evidence for such delays remains mostly anecdotal and that an economic turnaround could easily reverse the conventional wisdom that many people "can't afford" to retire. It makes more sense, they argue, to assume that many Boomers will take early retirement.
Yet, relatively few companies have plans to manage Boomers who are near retirement, according to a 2001 William M. Mercer study called "Capitalizing on an Aging Workforce." The study, based on a survey of 232 large employers, found that over half of responding firms had no specific goals in regard to the employment of older workers. Fewer than a third (30%) said they have plans for retaining older workers with special expertise. It may be time for employers to more closely consider their options, because the number of Americans ages 60 to 64 is projected to jump by a whopping 51% between the years 2000 and 2010.
To read Murray Gendell's article "Boomers' Retirement Wave Likely to Begin in Just 6 Years," see
http://www.i4cp.com/EITGNn
To read an abstract of Gendell's "Retirement Age Declines Again in 1990s," please see
http://www.i4cp.com/yZt5Mq
To get the whole article in PDF format, see http://www.i4cp.com/DOYdJu
To read a debate between Dora Costa and Joseph Quinn on whether the trend toward early retirement has reversed, see
http://www.i4cp.com/1zu8y4
To read "Effective Retirement Age and Duration of Retirement in the Industrial Countries Between 1950 and 1990," see
http://www.i4cp.com/MRtAG9
To see the homepage of the Center for Retirement Research, go to
http://www.i4cp.com/lvHrYu
To read an abstract of Gendell's "Trends in Retirement Age in Four Countries, 1965-95," go to
http://www.i4cp.com/CuoDk3
In 2008, the oldest of the Boomers will turn 62, the age at which many Americans retire. Recent history shows that over half of new Social Security recipients choose to collect their benefits at the age of 62, and nearly 70% start collecting before they reach 65. Social Security data shows that the average age at which Americans started collecting the government benefits during the 1995-2000 period was 62.6 for men and 62.5 for women, reports Murray Gendell, a senior research associate at the Center for Population Research at Georgetown University. This is way down from the 1950-55 period, when the average retirement ages were 68.5 for men and 67.9 for women.
A big question for economists and employers alike is whether the trend toward earlier retirement is going to reverse itself. Some have argued that it has already turned around. Economist Joseph F. Quinn, dean at Boston College, has claimed that "we have entered a new era" in which people stay in the labor force longer. He cites government data showing that the percentage of people over 65 who still work has been rising since the mid-1990s. But other experts remain skeptical, saying that labor force participation rates do not necessarily correlate with average retirement ages. Gendell cites Social Security data showing that the average age of retirement actually declined during the 1990s, after having leveled off in the 1970s and 1980s.
It's tough to predict the future of this trend because so many variables are in flux. Some believe, for example, that changes in U.S. government policies will help reverse the trend. The age at which people traditionally received full benefits (65) is slowly rising and will reach 66 in 2008. In 2017, it will rise to 67. Moreover, Social Security benefits are being reduced for people who retire at age 62. Nonetheless, experts such as Prof. Dora Costa of MIT think that it's too early to tell whether such factors will actually reduce the trend toward early retirement. Her research suggests that "specific institutional details of private pension plans and of social security systems are not the primary forces driving the long-term trend." She believes that the biggest drivers of retirement trends are related to income levels and to social norms. As long as retirement remains an attractive prospect and people can afford it, she argues, the trend toward early retirement may well continue, whatever the other incentives.
Of course, this raises another question. Will the bursting of the stock market bubble, the downturn in the economy and other financial factors reduce retirement savings to such a degree that people stay in the workforce a lot longer? Some experts say yes, citing the erosion of pensions and the elimination of retiree healthcare benefits. Others say that the evidence for such delays remains mostly anecdotal and that an economic turnaround could easily reverse the conventional wisdom that many people "can't afford" to retire. It makes more sense, they argue, to assume that many Boomers will take early retirement.
Yet, relatively few companies have plans to manage Boomers who are near retirement, according to a 2001 William M. Mercer study called "Capitalizing on an Aging Workforce." The study, based on a survey of 232 large employers, found that over half of responding firms had no specific goals in regard to the employment of older workers. Fewer than a third (30%) said they have plans for retaining older workers with special expertise. It may be time for employers to more closely consider their options, because the number of Americans ages 60 to 64 is projected to jump by a whopping 51% between the years 2000 and 2010.
To read Murray Gendell's article "Boomers' Retirement Wave Likely to Begin in Just 6 Years," see
http://www.i4cp.com/EITGNn
To read an abstract of Gendell's "Retirement Age Declines Again in 1990s," please see
http://www.i4cp.com/yZt5Mq
To get the whole article in PDF format, see http://www.i4cp.com/DOYdJu
To read a debate between Dora Costa and Joseph Quinn on whether the trend toward early retirement has reversed, see
http://www.i4cp.com/1zu8y4
To read "Effective Retirement Age and Duration of Retirement in the Industrial Countries Between 1950 and 1990," see
http://www.i4cp.com/MRtAG9
To see the homepage of the Center for Retirement Research, go to
http://www.i4cp.com/lvHrYu
To read an abstract of Gendell's "Trends in Retirement Age in Four Countries, 1965-95," go to
http://www.i4cp.com/CuoDk3