The Retirement Wave
Jane Norris | FederalNewsRadio
Predictions have been made about a coming wave of retirements as baby boomers reach their 60’s. Census Bureau estimates show that 78 million baby boomers were born between 1946 and 1964 and they are now beginning to hit early retirement eligibility. But a funny thing has happened on the way to retirement. Inside the Federal Government and in workplaces all across America, people are simply not retiring when they reach the age of eligibility.
Part of the reason is the economy, but according to a Pew Research Center study, there’s more to the story. Pew Executive VP, Paul Taylor talked about the America’s Changing Workforce study which shows that 93% of the growth in the Labor force from 2006 to 2016 will be among workers ages 55 and older. And this shift has been developing for some time.
Why aren’t people retiring?
The reasons might surprise you. According to Pew, 54% of workers ages 65 and older say the main reason they work is that they want to. Just 17% say the main reason is that they need the paycheck.
The same trends show up in Government retirement projections too. The Office of Personnel Management numbers show that in 2009 almost 60,000 Federal Employees were eligible for retirement and more than 50,000 workers will reach retirement eligibility each year through 2018.
But eligibility doesn’t necessarily mean workers decide to retire, according to a 2008 OPM report that analyzed the issue. Former OPM Director Linda Springer discussed the delay in government retirements with me and says that while retirements from the Federal service might not occur in the exact year of eligibility, retirements do occur in a fairly steady stream.
The OPM report produced while she was the Director showed that the employees stayed with the Government for four more years on average after becoming eligible for retirement and almost 25% remained for nine years or more.
So when older workers stay on the job longer, does it cause an imbalance in the labor force? Former Chief Economist for the Labor Department, Dianna Furchtgott Roth, now Director of Employment Policy at the Hudson Foundation says the opposite is true. When older workers stay in the workplace, it’s a benefit because they continue to contribute to the overall economy. According to Furchtgott-Roth, workers in Japan and the United States stay on the job beyond the average age of retirement while retirees in European countries often leave the workforce much earlier.