Working Longer: The Solution to the Retirement Income Challenge »

Alicia H. Munnell is the Peter F. Drucker Professor of Management Sciences at Boston College s Carroll School of Management and director of the Center for Retirement Research at Boston College. A former member of the president s Council of Economic Advisers, she has written or edited numerous books, including Coming Up Short:The Challenge of 401(k) Plans, with Annika Sundén (Brookings, 2004). Steven A. Sass is associate director of the Center for Retirement Research. His books include The Promise of Private Pensions: The First Hundred Years (Harvard, 1997). Sass has also coauthored Social Security and the Stock Market: How the Pursuit of Market Magic Shapes the System, with Alicia Munnell (Upjohn Institute, 2006) and The Social Security Fix It Book, with Andrew Eschtruth (Center for Retirement Research, 2007).

Daily headlines warn American workers that their retirement years may be far from golden. The average worker needs more retirement income than ever, due to increased life expectancy and soaring health care costs. But the main components of the retirement income system—Social Security and employer-provided pensions—are on the decline. What's more, fewer employers are providing retiree health insurance, forcing households to purchase their own coverage or do without.

This bleak picture has inspired calls to fix Social Security, shore up employer pensions, and redesign 401(k) plans. But as Alicia Munnell and Steven Sass show in this thought-provoking book, the most effective response to the retirement income challenge lies elsewhere—in remaining in the workforce longer. At first blush, it may seem almost Orwellian to suggest that saving retirement requires reducing its length. But working longer does not mean working forever. By staying on the job for another two to four years, retirees in 2030 can be as well off as those in the current generation.

Working Longer investigates the prospects for moving the average retirement age from 63, the current figure, to 66. The authors ask whether future generations of workers will be healthy enough to work beyond the current retirement age, as well as whether older men and women are willing to do so. They examine companies' incentives to employ older workers and ask what government can do to promote continued participation in the workforce. Finally, they consider the challenge of ensuring a secure retirement for low-wage workers and those who are unable to continue to work.

Spending a few additional years in the laborforce can make a big difference. By continuing to work until their mid-60s or beyond, most individuals should be able to secure a reasonably comfortable retirement. Implementing such a change on a large scale will not be simple, however. It requires thought and planning on the part of individuals, employers, and the government. In Working Longer, Munnell and Sass explain what each of these groups can and should do to keep the American dream of retirement alive.

1 Introduction 1

2 Will Older People Be Healthy Enough to Work Longer? 16

3 Will Older Men Want to Work Longer? 35

4 Will Older Women Want to Work Longer? 61

5 Will Employers Want to Employ Older Workers? 92

6 What Can Be Done? 117

7 Rounding Out the Picture 142

Notes 149

References 179

Index 201