Gordon B. T. Mermin

Why Do Boomers Plan to Work so Long

Recent changes in retirement trends and patterns have raised questions about the likely retirement behavior of baby boomers, the large cohort born between 1946 and 1964. This study compares the retirement expectations of workers ages 51 to 56 in 2004 (who were born between 1948 and 1953, the leading edge of the baby boom) and 1992 (born between 1936 and 1941). Data come from the Health and Retirement Study. Work expectations increased significantly over the period. Between 1992 and 2004, the mean expected probability of working full-time past age 62 among workers ages 51 to 56 increased from 47 percent to 51 percent. The increase was even more rapid for the expected mean probability of full-time work after age 65, which grew from 27 percent to about 33 percent over the period. Controlling for other factors, self employment, education, and earnings increased work expectations at older ages, while defined benefit pension coverage, employer-sponsored retiree health benefits, and household wealth reduced expectations. Lower rates of retiree health insurance offers from employers, higher levels of educational attainment, and lower rates of defined benefit pension coverage accounted for most of the increase between 1992 and 2004 in expected work probabilities after ages 62 and 65. These trends suggest that the boomers will remain at work longer than the previous generation. The recent uptick in average retirement ages appears to be the leading edge of a new long-term trend. Lengthier careers will likely promote economic growth, increase government revenue, and improve individual financial security at older ages.

Minimum Benefits in Social Security

In 1998, the bipartisan National Commission on Retirement Policy advanced a reform proposal that contained a minimum benefit within Social Security. Since then, numerous congressional proposals have included minimum benefits as part of a package of reforms, and a commission President George W. Bush set up during his first term also recommended one. Little effort, however, has been made to develop the rationale for a minimum benefit or to examine alternative designs.1 As a consequence, the design of a minimum benefit — or, for that matter, of almost all redistributive formulas within Social Security — has seldom been based on any theoretical or empirical notion of exactly what goals are sought and what types of formulaic adjustments would best achieve them.