According to the US Bureau of Statistics’ “Older Workers: Employment and Retirement Trends”, the number of people between 55 and 64 will rise by 11 million by 2025. The number of people between 25 and 54, however, will only rise by five million. With more workers leaving the workforce then entering it, the burden of social security and other benefit issues will surely rise. Men and women are both working longer into old age (with employment rates for those over 62 rising steadily after 1995), but this will still not completely mitigate the impending crisis.
The rate of people employed over the age of 55, the CRS report states, is influenced by general economic conditions, Social Security eligibility, and the design of employer-sponsored retirement plans. The move away from defined benefit plans, the report says, is influencing the career length of employees. As defined contribution plans become more prevalent, employees are working longer, no longer reaping the benefit of the defined benefit plans.
As more workers get older, employers may try to induce them to stay on the job, the report says. This ‘phased retirement’ can be done as job-sharing or reduced work hours, but some forms of job-sharing require complicated approaches due to legal constraints surrounding benefit payouts. Some of these approaches require the employee to legally separate from the firm and then be rehired in order for the employee to garner some pension benefits.
Also, the report finds that some employers would like to pay partial pensions to some workers at the plan’s early retirement age while limiting the involvement of other workers in phased retirement schemes. However, this often violates provisions prohibiting plans from discriminating in favor of highly-compensated individuals.