Working Longer

The Solution to the Retirement Income Challenge

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 labor force 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.

Praise for Working Longer:

"This book is a badly needed wake-up call. With lifetime pension plans dwindling and employer health benefits to retirees shrinking drastically, Americans--especially the Boomer generation--need to face the reality that Munnell and Sass describe: longer lives, higher costs, and inadequate savings in their 401k plans and elsewhere. This means that average Americans are going to have to work longer or face poverty in their so-called golden years."
—Hedrick Smith, correspondent, PBS Frontline

"The United States has a retirement income problem. This remarkable book examines one potential solution to the problem: increased work by older Americans. Munnell and Sass provide thoughtful answers to the key questions. This is a lucid, thorough, and thought-provoking contribution to a very important debate."
—Robert Hutchens, Cornell University

"We have made remarkable progress in improving health and longevity. Now we need to figure out how to finance the substantially longer retirements these gains have produced. In Working Longer, Munnell and Sass make a strong case for moving the average age at retirement from 62 to 65 or 66;and thereby safeguarding the future of most retirees. Anyone who is interested in preparing our country for a better retirement future should read this elegant essay."
—John H. Biggs, former chairman and CEO, TIAA-CREF