Employment at Older Ages

One-quarter of workers ages 51 to 55 develop work disabilities before age 62. Disabilities often force people to curtail their work hours, derailing retirement preparations. However, protections built into Social Security, including disability and spouse benefits and the system's tilt toward workers with low lifetime earnings, cushion the impact of midlife health problems. After other factors are controlled for, the onset of health-related work limitations between ages 51 and 61 reduces Social Security retirement benefits at ages 63 to 67 by only about 2 percent, much less than the impact on other retirement savings.

The slumping stock market, falling housing prices, and weakening economy have serious repercussions for older Americans who are approaching retirement or already retired. Seniors have little time to recoup the values of their homes, 401(k) plans, and individual retirement accounts-all important parts of their retirement nest eggs. More and more older adults are working to bolster their retirement incomes, but the rising unemployment rate limits their prospects. This fact sheet examines the impact of the ongoing economic turmoil on retirement savings, home values, and retirement decisions.

Employment is now less physically demanding and less likely to entail difficult working conditions than before, a trend that might spur employment at older ages. However, the shift to a knowledge-based economy has increased cognitive demands and placed a premium on mastering the latest technical skills. Between 1971 and 2006 the share of workers in cognitively demanding jobs (requiring such skills as reasoning, writing, and decisionmaking) increased from 25.7 to 34.8 percent. This development may curtail opportunities for older workers with limited education or those who lack recent training.

Boomers will probably want to work longer than earlier cohorts, but their continued work requires that employers hire and retain them. Employers value older workers for their maturity, experience and work ethic, but worry about out of date skills and high costs. Slower overall labor supply growth will increase demand for older workers and occupations with higher shares of older workers will increase modestly as a share of all jobs. Future jobs will require less physical demands and more cognitive and interpersonal skills, trends that favor educated older workers, but job opportunities for less educated older workers may remain limited.

The occupations that already employ above-average shares of workers age 55 and older rely on an educated workforce and are expected to grow at least 20 percent by 2016, double the 10 percent rate forecast for the national labor force. A new study examines how changes in the nature of work, different occupations, the characteristics of older workers, and overall labor force growth might affect future job prospects for older Americans.