Publications on Retirement/Pensions

Older men who expect high health care costs for themselves or their spouses after age 65 retire about 13 months later than those who expect low costs. The difference for women is 12 months. For those receiving health insurance from their employers, continued work reduces the risk of high out-of-pocket health care costs. Working longer also increases retirement incomes, making health care costs more affordable.

Increasing older people's employment rates could reduce the economic pressures of an aging population, and many older adults say they want to delay retirement. Yet, numerous public policies and private practices continue to encourage early retirement. The Urban Institute, with support from the Alfred P. Sloan Foundation, sponsored an October 2007 roundtable to examine the value of older adults' work. Researchers, practitioners, employers, and policymakers discussed the potential supply of and demand for older workers, the benefits of working longer, barriers to continued employment, and policy solutions to encourage work at older ages. This document summarizes the issues and discussion.

About 7 percent of American workers held highly physically demanding jobs in 2006, and 35 percent held highly cognitively demanding jobs. The share of the workforce in physically demanding jobs fell by about one-sixth between 1971 and 2006, while the share in cognitively demanding jobs increased by more than one-third. Stressful occupations also grew rapidly over the past 35 years. The decline in physically demanding occupations will likely improve employment prospects for older adults, but the growth in cognitive demands may limit options for some older people, especially those with limited education.

People think of retirement security as balancing on a three-legged stool, with income from assets, private pensions, and Social Security as the legs. However, despite growing awareness about the importance of saving for retirement, many elderly people cannot rely on their financial assets. According to data from the 2004 Health and Retirement Study, lower-income adults age 65 and older rely less on income from assets and traditional defined-benefit pensions than their higher-income counterparts. Instead, older adults with lower income rely primarily on Social Security and public transfers for their retirement security.

Rising health care costs threaten financial security at older ages and lead many older Americans to delay retirement. Continued work reduces the risk of high out-of-pocket health care costs for workers receiving health benefits from their employers. Working longer also increases retirement incomes, making health care costs more affordable. This report shows that men with very high expected health care costs after age 65 retire 11 months later than those with very low health care costs. For women, the difference is 12 months.