The Decline of Career Employment

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With a contracting retirement income system and increased life expectancy, working longer has emerged as perhaps the most effective lever for improving retirement income security.  More work at older ages should be entirely feasible for the bulk of the population, given that today’s workers are healthier and work is less onerous than in the past.  Indeed, some indication that people might be willing to work longer comes from the fact that the century-long downward trend in the labor force participation of older men has clearly ceased, with participation rising slightly since the mid-1990s.  But the changes to date fall far short of what is required to offset declining Social Security benefits and modest 401(k) balances – an increase in the average retirement age from the current 63 to an estimated 67.

A variety of impediments, however, stand in the way of such a response.  First, perhaps 15 to 20 percent of older workers are not healthy enough to remain in the workforce that long.  Second, Social Security benefits are available at age 62, and the majority of workers essentially claim benefits as soon as they become available.  Third, career employment – meaning employment with a single employer from middle age to retirement – is no longer the norm.  So if workers are to remain in the labor force into their late 60s, most will face the difficult task of finding a new job in their 50s and 60s…