Working Longer Benefits Employers and Employees

Jul 24, 2020

Research on making it easier for people to work longer has tended to focus on economic security. This paper links working longer to health and longevity. Purely age-based retirement policies have led to complications and unintended consequences including insufficient retirement resources, possible depletion of Social Security, and flawed perceptions of older workers. By working longer, older adults are better able to support themselves, remain healthier, and live longer. New data show that, when employed, older adults are as much as four times more socially engaged, offsetting deepening concerns worldwide about the adverse effects of loneliness, particularly on older populations. The very definition of retirement should be reconsidered in light of increasing data suggesting that traditional retirement can be detrimental to financial, mental and physical health.

The very concept of retirement is no more than a social construct with an arbitrarily selected age. Age 70 was designated as the appropriate age for mandatory retirement in the first state-sponsored age-based social insurance program adopted by Otto Von Bismarck in late 19th century Germany as a means of staving off calls for radical socialist responses to political unrest caused, in part, by high youth unemployment rates. The age of 70 had nothing to do with ability or anything else relevant to competence, and likely had more to do with the fact that most workers did not live to this advanced age. Germany later lowered the retirement age to 65 in 1916, an age still well beyond the life expectancy of most workers. Likewise, Social Security eligibility ages in the United States were determined based more on life expectancy in the early 20th century and the need to open up jobs for younger workers as the US was struggling to emerge from the Great Depression than on any carefully constructed policy determination about when employees should no longer work.

Retaining older adults in the workforce benefits employers. Employers always are in need of experienced, well-trained, and productive workers. As the overall population ages, the perception of what constitutes “working age” is evolving to include older adults in their late 60s and beyond. And that population is growing as a proportion of the total population faster than any other age group. Working longer is also beneficial to the economy as a whole, increasing gross domestic product (GDP), providing skilled and less skilled labor, reducing the cost and burden of caring for older adults, and helping to shore up the federal Social Security system as workers continue to make contributions through payroll taxes.

Older workers also benefit from continued participation in the workforce; work provides a means for older adults to remain engaged in their communities. In addition to reaping economic benefits from employment, they will be healthier for it, less isolated, and happier. Objective social isolation has repeatedly been found to be a risk factor for poor mental and physical health, including higher prevalence of disease and increased risk of mortality. Work provides opportunities for learning, reasoning, and social engagement, all of which help stave off the adverse effects aging can have on the brain.

You can find the full Wharton Pension Research Council paper here.

 

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