On September 15, three panelists and roughly 100 attendees participated in a moderated discussion via Zoom on topics related to challenges presented by America’s aging population. This webinar was an outgrowth of a quarterly-issue series called “The Shape of Things to Come” and the discussion centered around the second paper in that series, “The Case for Longer Work Lives.”
The conversation focused on incentivizing longer work lives as a way to facilitate higher long-term economic growth.
As Richard Jackson, author of the paper and president of the Global Aging Institute, put it, “nothing is likely to do more to maintain economic and living standard growth in an aging America than unlocking the productive potential of the elderly.”
Jackson’s paper asserts that working longer is both a natural and a necessary response to the aging of America. Life spans and health spans have risen dramatically over the course of the postwar era but, far from rising, work spans have fallen. If a larger share of adults in their sixties and seventies were to remain employed, the benefits for the economy, the budget and individuals themselves would be immense.
The near-term economic and fiscal damage caused by the current crisis makes thinking about how to maintain the long-term growth in living standards all the more important.
During the webinar, Jackson presented the case for longer work lives, and a moderated discussion with Eugene Steuerle, a fellow at the Urban Institute, and Jason Fichtner, a senior lecturer at Johns Hopkins University, followed. Concord Coalition Policy Director, Tori Gorman, moderated.
Read key quotes from the panelists below, and watch the video to hear all the commentary.
“Most of the policy responses to the aging of America do seem to involve difficult and painful tradeoffs between higher taxes and lower benefits,” Jackson said. “There is another response that could greatly mitigate the need for either, and what we’re talking about, of course, is longer work lives.”
“Longer work lives would have substantial benefits,” he said. “On the economic front, they could very significantly offset the demographic drag on economic growth.”
“There are also fiscal benefits,” Jackson added. “There would be substantial fiscal savings on the tax side; more employment means higher FICA tax revenue, more employment means higher income tax revenue.”
“Finally, there are individual benefits,” he said. “Longer work lives make retirement, which is increasingly difficult to finance, more affordable … moreover, most gerontologists agree that continued productive engagement is good for the health of the elderly themselves.”
Steuerle said that fertility changes and mortality changes are two forces that society needs to adapt to and distinguish.
“Relative to when Social Security first started paying benefits, we live about 6 or 7 years longer on average,” he said. “Workers typically claimed benefits at about age 68; today they claim them at about 64.”
“At age 68, in those years, people had about a 13-year life expectancy; if you look for when people have a 13-year life expectancy now, it’s something like age 77,” Steuerle said. “At some point, the fact that we’re living longer, which is largely a reflection of better health in almost all studies, has some implications for how we should adjust as a society.”
“The other factor that we have to adjust to is fertility,” he said. “The decline in fertility does mean that the population is getting older.”
“On the positive side … the demand for older workers is increasing,” Steuerle said. “We need to create a system that accommodates that increased demand.”
Steuerle and Fichtner weighed in on the disparities that exist between different socioeconomic and demographic groups with regard to health and longevity. Fichtner agreed with Steuerle in that the topic is one that requires nuance and that at some point the retirement age should be indexed for longevity.
“But the problem with that is that not all income groups, not all racial groups are benefiting equally from changes in longevity,” Fichtner said.
He added that any approach that encourages longer working lives should likely allow for more delayed retirement credits and also find ways to avoid penalizing those that have to retire early.
Fichtner also said that although it is very important that we discuss and have policies that encourage longer working lives, such policies should in fact only encourage or incentivize, not mandate longer work lives.
“There’s a difference because there are some people that want to work and some people that need to work,” Fichtner said. “For those that have financial difficulties and need to work, we need to make sure social protections are there for them … but we also need to make sure that for those that want to work that we don’t have policies in place that discourage them from working.”
“Our social insurance system was not designed to have 40 years of work contributions fund 30 years of retirement, and we need to figure out what that means and how we redesign this,” he added. “And we have to change our culture … there’s something about age 65 in our culture - you retire from your job, you get a gold watch, you file for Social Security and you live your golden years - that’s not what a lot of people are doing these days; a lot of people want to continue working.”
“Not everyone can work longer,” Fichtner said. “Some people have more labor demanding jobs.”
He emphasized the need to make sure policies support those that cannot work longer as well. In fact, Fichtner said such policy changes need to be done in concert, protecting those that need to stop working early and supporting those that want to continue working later in life.
Fichtner added that policymakers need to rethink existing policies and their impacts, and even consider low-cost changes that have outsized benefits.
“For example, right now with Social Security … we don’t really have a lot of benefits for people who work after age 70, in fact we penalize them,” he said. “One thing we could do is allow for greater, delayed retirement credits for those that work past 70 … give them more of an annuity bump.”
He added that another change that is needed is the nomenclature -- start talking about minimum benefit age and maximum benefit age. “Just changing the nomenclature alone could change, in some ways, the incentives because of the framing for delayed claiming and people wanting to stay in the workforce,” Fichtner said.
Watch the video to hear more of the discussion, including questions submitted by attendees.