Retirement Concern: As U.S. Population Ages, Labor Force Grows Older and Healthcare Needs Rise
November 1, 2006
By Valerie Orleans
Just as baby boomers begin to retire in this country, life expectancy
is increasing and economic, social and healthcare issues are on the rise
for seniors.
America now must address these issues, experts say.
“With more people growing old in this century than ever before, there
is no question that this will have a dramatic impact on society,” said
Davina Ling, assistant professor of economics and director of the university’s
Center for
the Study of Economics of Aging & Health. “As an economist,
I am always looking at the impact this kind of change will bring on our
economy, as well as our society.
“Medicare spending is projected to increase from 2.6 percent of gross
domestic product (2005) to about 9.2 percent in 2050. This is occurring
not only because there are greater numbers of Medicare beneficiaries but
there are more expensive medical innovations on the market.”
According to the U.S. Census
Bureau’s Current Population Survey,
there were 18.4 million workers older than 55 in 2000. The U.S.
Bureau of Labor Statistics has predicted that by 2015, there will be 31.9 million
workers older than 55. In other words, older workers will make up about
20 percent of the labor force.
“We do need to re-think our ideas about retirement,” said Pauline
Abbott, director of the Institute
of Gerontology at Cal State Fullerton.
She was a delegate at the 2005
White House Conference on Aging, held last
December.
“When we settled on the age of 65 back in 1935, people didn’t
tend to live much longer than 70 or 75,” Abbott said. “Today,
however, it is quite likely that a retiree can live 20, 25, 30 years past
retirement. And, there’s a good likelihood they will run out of money
during that time.
“Their pensions will remain static while prices go up. Also, they
will likely require more healthcare assistance in terms of drugs, hospital
stays and treatments, therapy and so on. Even though retirees today are
healthier than they’ve ever been, there are still going to be significant
expenses for other Americans.”
Retiring at age 65 may not be in anybody’s best interest, agree Abbott,
Ling and Joseph Weber, associate professor of sociology and gerontology
program coordinator.
“Many seniors want to stay in their jobs or work,” Weber said. “Working
allows them to be engaged and involved. When you remove people from their
jobs, it often cuts off their social network. Also, for many, their identities
are tied up in what they do — it’s linked to their titles:
doctor, teacher, manager, accountant, engineer.”
Another benefit of working longer is that more money is accrued while
senior workers postpone tapping into their pensions or Social Security.
In addition, postponing retirement often is valuable to employers. Employers
often lose valued employees with years of experience and knowledge when
workers retire. This “brain drain” could have devastating effects
on the economy and society, Weber said.
“What we hear from seniors is that they’d like to work but
many would prefer a part-time option,” he said.
According to the American Association of
Retired Persons (AARP), nearly
70 percent of those who plan to retire in the next five to 10 years plan
to work at least part-time during their retirement years. Nearly half foresee
working into their 70s and beyond with a need for money being the primary
reason behind such a decision.
“We are going to have to rethink how we deal with our senior workers,” Weber
said. “Right now, part-time options aren’t readily available.
There are Wal-Mart greeters, of course, but I don’t think that’s
what most people have in mind. They are looking for jobs where they can
use their minds and skills.”
Companies are starting to pay attention.
“Employers are realizing that they don’t want to lose some
of their most valuable employees so they will have to develop some options
and flexibility to retain an older workforce,” Ling said.
Seniors want the option to travel, spend time with family and friends
(and especially grandchildren) and pursue outside interests that may have
been put aside during their years of working and raising children, Weber
said. Part-time work offers the flexibility to pursue such interests while
retaining an experienced workforce.
“Many places are going to have to change the way they conduct business
if they want to keep senior employees,” Weber said. “Flexibility — not
necessarily a trait of many American businesses — will have to become
more engrained in our country’s business practices.”
Produced by the Office of Public Affairs at California State University, Fullerton.