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April 1995, Vol. 118, No. 4
W ith average life expectancy increasing by over 7 years and birth rates decreasing by more than one-third between 1950 and 1990, the U.S. population has grown older. Compared with earlier generations, this older population has better overall health and a greater number of choices as to how to spend their later years. Legislation against mandatory retirement in 1986 opened the labor market to today's older people, permitting them to stay employed, if they so choose, well beyond the retirement age of their counterparts 20 or 30 years earlier. At the same time, today's older Americans have greater employment opportunities compared with earlier generations, resulting from expansion in the service sector and overall job growth. Thus, while retiring earlier has become more prevalent in the United States, many older Americans continue to work.
With the expanded options and new opportunities come a number of questions, such as: What factors enter into the decision to retire? How are benefits affected once employees turn 65 and continue to work full-time? How are benefits different for part-time employees? Is sufficient retirement income available, and how does it vary by age at retirement?
This article explores these questions. It discusses choices available to older workers and the possible effects of these choices on income and benefits. Data sources include the Bureau of Labor Statistics' Employee Benefits Survey,1 which reveals, for example, that the amount of financial security an employer-provided retirement plan can afford varies significantly depending on work history, plan provisions, and age at retirement. Working 10 years longer may in some cases double the percent of preretirement income that a pension will replace.
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1 The survey provides data on such benefits as paid and unpaid time off; life, health, and disability insurance; retirement benefits; and a variety of other benefits financed, at least in part, by employers. Data are provided for full and part-time employees and for three broad occupational groups. Data for small private establishments (fewer than 100 employees) and for State and local governments are collected in even number years; data for medium-size and large private establishments (100 employees or more) are collected in odd-numbered years.
Lump-sum benefits available from savings and thrift plans. June 1993.
Factors affecting retirement income. March 1993.
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