The trend toward longer working careers is beginning to show results in terms of retirement financial security, according to information provided to the Senate Select Committee on Aging.
Testimony from the Urban Institute said that over the last 20 years, and especially in recent years due to economic conditions, the participation of older workers in the workforce has reversed its prior decline.
For example, between 1948 and 1993, participation rates for men age 65 and older fell from 47 to 16 percent, but by 2012, it had bounced back up to 24 percent; working rates have risen among those aged 65 to 69, especially, from 25 to 37 percent over the past two decades. Rates are similar among women.
By continuing to work longer, people also are beginning Social Security benefits later; only 45 percent of men who turned age 62 in 2005 and 2006 began collecting benefits at that age, the first year of regular eligibility, compared with 57 percent of those who turned 62 in 1992-1996. The rate among women has fallen from 62 to 50 percent.
“Working longer and delaying retirement substantially increases financial resources in old age. Extending the work life boosts lifetime earnings, increasing Social Security credits and providing workers with additional resources that they can save for retirement. Working longer also shrinks the retirement period, so retirement savings do not have to last as long,” the organization said.
In addition, by delaying the age at which benefits begin, Social Security-covered workers increase their monthly benefits, since there is a reduction for claiming benefits before “full” retirement age, which is now 66. Those who collect at the earliest eligibility age of 62 now receive just 75 percent of the full benefits they would receive if they waited until 66. There is an additional 8 percent per year increase in benefits for delaying the start past age 66, up to starting at age 70.
“One study found that working one additional year would increase annual retirement income by 9 percent, while working five additional years would increase annual retirement income by 56 percent,” the organization said.
