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Retirement patterns have changed substantially in the United States in the last 30 years. During the period from 1900 to 1980, there was a continuous decline in the labor force participation of older individuals. However, this trend has reversed since the 1980s. Americans are now retiring later and expect to continue doing so. Recent research suggests a number of significant changes that have increased the labor force participation of older workers. These include the following:

• Americans are more educated and are living longer. Significant increases in educational access were experienced throughout the last century. At the same time, life expectancies have increased steadily since 1900 and are predicted to continue rising.
• Congress eliminated mandatory retirement. In the 1970s, about half of Americans were covered by mandatory-retirement provisions requiring that they leave their jobs no later than a certain age, usually 65. In 1986, Congress abolished mandatory retirement by amending the Age Discrimination in Employment Act.
• Social Security raised the full retirement age (FRA). The last major reform of the Social Security system occurred in 1983, when the Social Security Amendments (P.L. 98-21) gradually increased the FRA from age 65 to age 67 for workers born after 1937.
• Employers have changed pension work plans. Increases in the delayed retirement credit and a move from defined-benefit pensions to defined-contribution plans such as 401(k)s have decreased work disincentives.
• Employer-sponsored post-retirement health coverage has declined. Due to increases in health care costs, fewer firms are providing post-retirement health insurance, and when they do, the retiree has to pay a higher premium.

Within the brief, researchers describe the increasingly complex patterns emerging between older workers and their labor force participation. Findings are based on a comprehensive review of studies released between 2010 and 2015.

Key Takeaways

• Career-to-career job changes have become increasingly common.
• Bridge employment is on the rise. Bridge jobs are usually part-time, part-year, or short-term jobs that workers engage in between a full-time career job and withdrawal from the labor force.
• Older workers are more likely to become self-employed.
• Reentry jobs are more common. Reentry jobs are jobs that follow a period of full retirement. They include encore jobs, in which older individuals provide a community or societal service and may be paid or unpaid.
• Phased retirement continues to be unpopular in the United States. Phased retirement allows seasoned workers to move gradually from full-time employment to full retirement by reducing hours and responsibilities.

Citation

Nanda, N., Gasperini, B., Patterson, L. (2015). IMPAQ International. Older Workers’ Labor Force Transitions from Work to Retirement: Findings from Recent Studies. Chief Evaluation Office, U.S. Department of Labor.

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The Department of Labor’s (DOL) Chief Evaluation Office (CEO) sponsors independent evaluations and research, primarily conducted by external, third-party contractors in accordance with the Department of Labor Evaluation Policy and CEO’s research development process.