Work in the New Retirement

Transcription

1 Work in the New Retirement Society of Actuaries Building the Foundation for New Retirement Systems A Retirement 20/20 Conference September 28-29, 29, 2006 Sara E. Rix, Ph.D. AARP Public Policy Institute

2 More Older Americans Are At Work Labor Force Participation Rates of Selected Older Age Groups 80% 64.2% 72.0% % 52.5% 43.8% 40% 29.0% 20% 18.4% 0% Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings, January 1986 and January 2007

3 Pre-retirees retirees Expect to Work in Retirement* 100% 95% 80% 79% 50% 67% 69% 68% 65% Age 53+ Boomers, 1998 Boomers, 2003 Age Age Age Age 25+ 0% *Percent saying they plan to work in retirement. Source: AARP, 1998, 2002, 2003, 2004; Taylor, 2002; Yakoboski and Dickemper, 1997.

4 Why People Expect to Work in Retirement Workers Aged 50 70* Stay Mentally Active Stay Physically Active 87% 85% Be Productive/Useful Do Something Fun Need Health Benefits 66% 71% 77% Help Other People Be Around Others Need the Money Learn New Things 59% 58% 54% 50% Pursue a Dream 32% *Pre-retirees who plan to work in retirement. Source: AARP, Staying Ahead of the Curve 2003: The AARP Working in Retirement Study, 2003.

5 Financial Reasons Top the List of Reasons for Working in Retirement The One Major Factor in the Decision to Work* Need Money Need Health Benefits Stay Mentally Active Be Productive/Useful Stay Physically Active Help Others Do Something Fun Pursue a Dream 4% 10% 3% 5% 5% 5% 7% 6% 8% 9% 22% 17% 15% 14% 14% 35% Working Retirees Pre-retirees Who Plan to Work in Retirement 0% 10% 20% 30% 40% *Mentioned by at least 5 percent of either working retirees or pre-retirees aged Source: AARP, Staying Ahead of the Curve, 2003: The AARP Working in Retirement Study, 2003.

6 Boomer Men and Women Have Different Expectations About Work in Retirement Men Women 34% 27% 31% 23% 19% 18% 16% 11% Work Part-time for Enjoyment Work Part-time for Income Start a Business Not Work Source: AARP, Baby Boomers Envision Retirement II, 2004.

7 Two Out Of Five Retirees Forced to Stop Working Earlier than Planned At Expected Age 36% Later 7% Percent Retiring Early Other Reasons 17% Forced Early 40% Source: McKinsey & Company, Cracking the Consumer Retirement Code, 2006.

8 *Excludes disability conversions. Source: Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2007 (forthcoming), Table 6.B5. Early Retirement Benefits Remain a Temptation Social Security Retired Worker Benefits Awarded to Men by Age of Award, 1985 and 2005* 60% 52.3% 53.8% % 20% 9.4% 8.2% 13.3% 11.2% 20.9% 23.2% 4.1% 3.7% 0%

9 Not Everyone Is Excited about the Prospect of Working Longer Percent of Boomers Agreeing that they Can't Wait to Retire 43% 42% Won't Want to Stop Working 37% 37% Source: AARP, Baby Boomers Envision Retirement II, 2004.

10 Many Older Workers* Anticipate Barriers to Finding the Work They Want Obstacles to Finding the Desired Retirement Work Health Problems Lack of Money to Start a Business Physical Demands of the Work The Work Doesn't Pay Enough Lack of Jobs With Flexible Hours Lack of Job Opportunities Age Discrimination Caregiving Responsibilities 35% 33% 33% 32% 31% 31% 30% 30% Lack of Skills/Education 19% *Workers aged Source: AARP, Staying Ahead of the Curve, 2003: The AARP Working in Retirement Study, 2003.

11 Questions Should the full and/or early retirement age be increased? Indexed to life expectancy? Vary by occupation? What incentives, if any, are needed and appropriate for employers to hire and retain more older workers? What additional incentives, if any, are needed to encourage older workers to postpone retirement? What role can/should government play in promoting employment opportunities for older workers? How can phased retirement programs be designed to meet the needs of workers and protect employers from age discrimination charges? Does the ADEA need to be amended? If people save more, will they work less? How do we protect workers who cannot postpone retirement?

12 References AARP Boomers Look Toward Retirement. Washington, DC: AARP. AARP Staying Ahead of the Curve: The AARP Work and Career Study. Washington, DC: AARP. AARP Staying Ahead of the Curve 2003: The AARP Working in Retirement Study. Washington, DC: AARP. AARP Baby Boomers Envision Retirement II. Washington, DC: AARP. AARP Boomers Turning 60. Washington, DC: AARP. Employee Benefit Research Institute (February). The 2002 Retirement Confidence Survey: Summary of Findings, Source: Helman, Ruth, VanDerhei, Jack, and Copeland, Craig (April). The Retirement System in Transition: The 2006 Retirement Confidence Survey. EBRI Issue Brief No McKinsey & Company Cracking the Consumer Retirement Code. New York: McKinsey & Company. umer%20retirement%20code.pdf#search=%22mckinsey%202006%20%22consumer%20retire ment%20survey%22%22. Social Security Administration, Office of Policy (forthcoming). Annual Statistical Supplement to the Social Security Bulletin, Washington, DC: U.S. Government Printing Office. Taylor, Humphrey (May 15). The New Vision of Retirement Is Very Different than the Traditional Image of Retirement. The Harris Poll #23,

13 References Continued from previous slide U.S. Department of Labor, Bureau of Labor Statistics (January). Employment and Earnings. Washington, DC: U.S. Government Printing Office. U.S. Department of Labor, Bureau of Labor Statistics (August). Worker Displacement, News. USDL U.S. Department of Labor, Bureau of Labor Statistics (January). Employment and Earnings. Washington, DC: U.S. Government Printing Office. Yakoboski, Paul and Dickemper, Jennifer (November). Increased Saving but Little Planning: Results of the 1997 Retirement Confidence Survey. EBRI Issue Brief No Washington, DC: Employee Benefit Research Institute.

14 Appendix

15 Expected Retirement Age Is Rising Mean Anticipated Age of Full Retirement 65.5 Years Source: AARP, Baby Boomers Envision Retirement II, 2004.

16 Things Don t t Always Work Out as Planned Planned Retirement Age of Workers and Actual Retirement Age of RetireesR 30% Planned Actual 25% 27% 24% 21% 20% 10% 7% 14% 10% 10% 7% 11% 13% 15% 11% 3% 0% Before Other* *Never Retire/Never Worked; Don t know. Source: Ruth Helman, Jack VanDerhei, and Craig Copeland, The Retirement System in Transition: The 2006 Retirement Confidence Survey, EBRI Issue Brief No. 304, April 2007.

17 *Workers displaced between January 2003 and December Source: U.S. Department of Labor, Bureau of Labor Statistics, Worker Displacement, , USDL , August 17, Displacement Propels Many Older Workers Out of the Labor Force Total Displaced Workers* by Age and Employment Status in January y % 63.8% 72.3% Employed 58.8% Not in the Labor Force 55.8% 26.1% 31.1% 15.8% 16.5% 12.2% Total,

18 Older Workers* Perceive Age Discrimination in the Workplace as a Problem No 31% Yes 67% Don't Know 2% *Ages 45 74, Percent agreeing that based on what you have seen or experienced, do you think workers face age discrimination in the workplace today? Source: AARP, Staying Ahead of the Curve: The AARP Work and Career Study, 2002.