Older workers: employment and retirement trends

As members of the " baby-boom " generation begin to retire and collect Social Security, pension, and other benefits, many changes to both the public and private retirement systems may occur, such as raising the ages of eligibility, creating more flexible pension plans, and introducing " phased retirement " D eciding when to retire is a choice that will affect an individual's economic circumstances for the rest of his or her life. In addition to affecting the lives of individuals, the retirement decisions of older workers have an impact on the Nation's economy. The number of people retiring each year affects the size of the labor force, which has a direct impact on the economy's capacity to produce goods and services. Other things being equal, fewer retirements in any given year would result in a greater supply of experienced workers available to employers and fewer people relying on savings, pensions, and Social Security as their main sources of income. Consequently, changes in the age profile of the population and in the average age at which people choose to retire have implications for both national income and the size and composition of the Federal budget. To understand the factors that affect the retirement decision, one must first know what it means to " retire. " Retirement is most often defined with reference to two characteristics: nonparticipation in the paid labor force and receipt of income from pensions, Social Security, and other retirement plans. An individual who does not work for compensation and who receives income only from pensions, Social Security , and financial assets would meet this definition of retirement; an individual who works for compensation and receives no income from pensions or Social Security would not meet this definition. Between these two extremes, however, are those who might be considered retired under one definition but not the other. For example, individuals who have retired from careers in law enforcement or the military—both of which typically provide pensions after 20 years of service—often work for many years at other jobs, while at the same time also receiving pensions from prior employment. In such cases, having retired from a particular occupation does not necessarily mean that one has retired from the workforce. On the other hand, many people who retire from full-time employment continue to work part time to supplement the income they receive from pensions and Social Security. If the majority …