No doubt about it: Americans are pushing back retirement, either because they can't afford to quit working or they don't care to do so. For some, it is a bit of both.
Labor force participation rates have been rising at older ages, even among people in their 70s, and they are projected to continue increasing. This is good news for workers, giving them more time to save for retirement and fewer retirement years to finance. It's also good for employers who can capitalize on the skills and abilities of experienced workers and good for the economy because more workers mean greater income and production and thus greater economic growth.
In 2013, 11 million more people age 55 and older were working or looking for work than in 2003. These workers made up 21 percent of the labor force, up from 15 percent 10 years earlier.
Although more older Americans are at work today than 10 or 20 years ago, labor force participation still falls dramatically with age. At age 55, three-fourths of Americans are in the labor force; by age 65 that is the case for less than 40 percent, and by age 70 for under one-fourth. Participation rates may be on the uptick, but they are much lower than the rates for workers in their prime working years (ages 25 to 54).
The older population, swelling as boomers age, is growing more rapidly than the younger population. Lower participation rates for larger numbers of people have helped push down the overall labor force participation rate. In 2003, 66.2 percent of the population age 16 and older were in the labor force, compared with 63.2 percent in 2013. And the rate is projected to drop even more by 2022.
Various factors have contributed to this decline in the total labor force participation rate, including the recent Great Recession, during which some jobseekers became discouraged about their prospects for finding work and gave up looking, while others moved onto the disability rolls. And some workers, even at relatively young ages, have been leaving or staying out of the labor force for reasons that are not always clear. However, population aging explains a great deal of the overall decline. Older workers retire.
On the one hand, a shrinking participation rate is a worrisome development because of its potential adverse impact on economic growth. On the other hand, labor or skills shortages might encourage employers to think about ways to encourage more older workers to remain longer on the job and entice retirees back to the workforce. Flexible work options, phased retirement programs, schedule accommodations for caregivers and job modifications, for example, might just do the trick - at least for some workers. And that, of course, would be good for workers, employers and the economy.
Source: Bureau of Labor Statistics at http://data.bls.gov/pdq/querytool.jsp?survey=ln