Brief #13 in the Older Americans' Economic Security series.

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Abstract

Although recent evidence suggests baby boomers intend to work longer than previous generations, some demographic groups appear less likely to delay retirement. On average, African Americans expect to work less at older ages than other racial groups, even after considering differences in education, health, wealth, and other factors. Possible explanations include labor market discrimination, family care responsibilities, and lower levels of job satisfaction. African American boomers risk jeopardizing their retirement security if they leave the labor force at relatively young ages.

Introduction

Although recent evidence suggests baby boomers intend to work longer than previous generations, some demographic groups appear less likely to delay retirement. On average, African Americans expect to work less at older ages than other racial groups, even after considering differences in education, health, wealth, and other factors. Possible explanations include labor market discrimination, family care responsibilities, and lower levels of job satisfaction. African American boomers risk jeopardizing their retirement security if they leave the labor force at relatively young ages.

Working Longer Would Help Secure Boomers' Retirements

Retirement prospects for the baby boomers—the large cohort born between 1946 and 1964—are uncertain. Studies suggest that, while the boomers are likely to have more wealth and higher incomes in retirement than earlier generations, they may not retire with the same prosperity they enjoyed as workers (Butrica and Uccello 2004; Congressional Budget Office 2003). And high-risk groups, including African Americans, will remain vulnerable. For instance, 22 percent of African American boomers are projected to have incomes below twice the poverty level at age 67, compared to 12 percent of white boomers (Butrica and Uccello 2004).

Working longer would brighten the boomers' retirement outlook. Those who delay retirement avoid early retirement cuts to their Social Security and defined-benefit pension benefits, accumulate more savings, and reduce the period when savings must be tapped. By working until age 67 instead of retiring at age 62, for example, a typical worker could gain about $10,000 in annual income at age 75, significantly reducing the likelihood of falling into poverty at older ages (Butrica et al. 2005).

Note: This report is available in its entirety in PDF Format.

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