Older workers: employment and retirement trends.As members of the "baby-boom" generation begin to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. and collect Social Security, pension, and other benefits, many changes to both the public and private retirement systems may occur, such as raising the ages of eligibility, creating more flexible pension plans, and introducing "phased retirement"
Deciding when to retire is a choice that will affect an individual's economic circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or for the rest of his or her life. In addition to affecting the lives of individuals, the retirement decisions of older workers have an impact on the Nation's economy. The number of people retiring each year affects the size of the labor force, which has a direct impact on the economy's capacity to produce goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. . Other things being equal, fewer retirements in any given year would result in a greater supply of experienced workers available to employers and fewer people relying on savings, pensions, and Social Security as their main sources of income. Consequently, changes in the age profile of the population and in the average age at which people choose to retire have implications for both national income and the size and composition of the Federal budget.
To understand the factors that affect the retirement decision, one must first know what it means to "retire." Retirement is most often defined with reference to two characteristics: nonparticipation nonparticipation The nonacceptance by a physician of the fees paid by Medicaid, or less commonly by Medicare. See Medicaid. Cf Participation. in the paid labor force and receipt of income from pensions, Social Security, and other retirement plans. An individual who does not work for compensation and who receives income only from pensions, Social Security, and financial assets Financial assets
Claims on real assets. would meet this definition of retirement; an individual who works for compensation and receives no income from pensions or Social Security would not meet this definition.
Between these two extremes, however, are those who might be considered retired under one definition but not the other. For example, individuals who have retired from careers in law enforcement or the military--both of which typically provide pensions after 20 years of service--often work for many years at other jobs, while at the same time also receiving pensions from prior employment. In such cases, having retired from a particular occupation does not necessarily mean that one has retired from the workforce. On the other hand, many people who retire from full-time full-time
Employed for or involving a standard number of hours of working time: a full-time administrative assistant.
full employment continue to work part time to supplement the income they receive from pensions and Social Security. If the majority of their income is provided by Social Security, pensions, and savings, economists This is an alphabetical list of notable economists. Economists are experts in the science of economics. There is also a list of politicians and statesmen with economic training. typically classify clas·si·fy
tr.v. clas·si·fied, clas·si·fy·ing, clas·si·fies
1. To arrange or organize according to class or category.
2. To designate (a document, for example) as confidential, secret, or top secret. them as retired, even though they continue to engage in paid employment. As these examples suggest, not everyone who receives pension income is retired, and some who work for pay actually are retired.
This article begins by describing the change in the age distribution of the U.S. population that will occur between 2000 and 2010 and summarizing the historical data on the labor force participation of older workers. This discussion is followed by an analysis of recent data from the Current Population Survey on employment and receipt of pension income among persons aged 55 years and older during the mid- mid-
Middle: midbrain. to late 1990s. Employment trends among older workers are then discussed in the context of data from the Social Security Administration on the proportion of workers who claim retired-worker benefits before the full retirement age (currently age 65). The final section of the article discusses recent proposals to promote "phased retirement" through amendments to the sections of the Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. that govern the taxation of pension income.
The aging labor force, 2000-2010
As members of the baby-boom generation--persons born between 1946 and 1964--approach retirement age, the demographic See demographics. profile of the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of population will undergo a profound change. According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the Bureau of the Census Noun 1. Bureau of the Census - the bureau of the Commerce Department responsible for taking the census; provides demographic information and analyses about the population of the United States
Census Bureau , the proportion of the U.S. population aged 65 and older will increase from 12.6 percent in 2000 to 20.2 percent by 2030.(1) The age profile of the working-age population, however, already is undergoing a substantial shift toward a greater number of older workers and a relative scarcity Scarcity
The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently. of new entrants to the labor force. In 2000, the oldest baby boomers See generation X. will be aged 54 years, while the youngest members of the group will be aged 36 years. These 78 million individuals today make up approximately ap·prox·i·mate
1. Almost exact or correct: the approximate time of the accident.
2. 55 percent of the U.S. population aged 25 to 54. Their sheer Sheer and similar can mean:
The data presented in Table 1 show how the age profile of the U.S. population will change over the next 10 years. According to the Bureau of the Census, the number of Americans aged 25 years or older will reach 178 million in 2000. Over the next 10 years, this number will increase by about 10 percent to 195 million. Over that same period, however, the number of persons aged 25 to 54--the ages when labor force participation rates are at their highest--is projected to increase by only 1.5 million (1.2 percent). At the same time, the number of persons between the ages of 55 and 64 is projected to increase by 11.3 million, or more than 47 percent. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , while the number of persons aged 25 to 64 is expected to increase by about 12.8 million over the next 10 years, almost 90 percent of this increase is projected to occur among persons aged 55 to 64.
Table 1. U.S. Population aged 25 and older by age and sex, 2000, 2010
[Numbers in thousands]
Age and sex 2000 2010 Total 25 years and older 177,594 195,067 25 to 34 years 37,234 38,291 35 to 44 years 44,659 38,520 45 to 54 years 37,030 43,565 55 to 64 years 23,962 35,284 65 years and older 34,709 39,407 Men 25 years and older 84,586 93,116 25 to 34 years 18,535 18,990 35 to 44 years 22,181 18,993 45 to 54 years 18,092 21,325 55 to 64 years 11,433 16,922 65 years and older 14,345 16,886 Women 25 years and older 93,008 101,951 25 to 34 years 18,699 19,301 35 to 44 years 22,478 19,527 45 to 54 years 18,938 22,240 55 to 64 years 12,529 18,362 65 years and older 20,364 22,521 Age and sex Level change Percent change Total 25 years and older 17,473 9.8 25 to 34 years 1,057 2.8 35 to 44 years -6,139 -13.7 45 to 54 years 6,535 17.6 55 to 64 years 11,322 47.2 65 years and older 4,698 13.5 Men 25 years and older 8,530 10.1 25 to 34 years 455 2.5 35 to 44 years -3,188 -14.4 45 to 54 years 3,233 17.9 55 to 64 years 5,489 48.0 65 years and older 2,541 17.7 Women 25 years and older 8,943 9.6 25 to 34 years 602 3.2 35 to 44 years -2,951 -13.1 45 to 54 years 3,302 17.4 55 to 64 years 5,833 46.6 65 years and older 2,157 10.6
SOURCE: Jennifer Jennifer became a common first name for females in English-speaking countries during the 20th century. The name Jennifer is a Cornish variant of Guinevere, deriving ultimately from Proto-Celtic *windo-seibaro- "white ghost", via Brythonic *wino-hibirā (cf. Cheeseman Cheeseman is a surname, and may refer to:
Labor force participation rates
The labor force participation rate--the percentage of a given population that is either working or looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. work--varies by age and gender. Moreover, within specific age and gender categories, the rates have changed over time, as workers have responded to various economic developments, and as societal so·ci·e·tal
Of or relating to the structure, organization, or functioning of society.
Adj. values regarding the employment of women and the retirement of older workers have changed. Also, as the United States has moved from a largely manufacturing-based economy to one in which producing and distributing information is perhaps the most important industrial activity, there has been an increase in demand for highly educated workers, and relatively less demand for workers who can perform physically demanding labor. At the same time that the economy has been producing jobs for workers of more varied physical abilities, the two-earner couple and the "working mom (1) (Messaging-Oriented Middleware) See messaging middleware.
(2) (Microsoft Operations Manager) Software that monitors and captures system and application events throughout the network. " have become the rule, rather than the exception they were 30 or 40 years ago. With near universal coverage by Social Security and widespread participation in pensions and retirement savings plans Noun 1. retirement savings plan - a plan for setting aside money to be spent after retirement
pension account, pension plan, retirement account, retirement plan, retirement program, retirement savings account , more workers can anticipate retirement as an opportunity for leisure and recreation, rather than as a time of financial dependency dependency
In international relations, a weak state dominated by or under the jurisdiction of a more powerful state but not formally annexed by it. Examples include American Samoa (U.S.) and Greenland (Denmark). on their children.
Men aged 55 years and older are much less likely to participate in the labor force today than were their counterparts half a century ago.(2) According to data from the Current Population Survey (CPS (1) (Characters Per Second) The measurement of the speed of a serial printer or the speed of a data transfer between hardware devices or over a communications channel. CPS is equivalent to bytes per second. )--a monthly survey conducted by the Bureau of the Census for the Bureau of Labor Statistics Bureau of Labor Statistics (BLS)
A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices and many other variables. (BLS See Bureau of Labor Statistics. )--in the 1950s, about 5 in 6 men aged 55 to 64 participated in the labor force--that is, they were either working or actively looking for work.(3) (See table 2.) By the 1990s, only 2 in 3 men in that age group participated in the labor force. Most of the historical decline occurred over a relatively brief period, from about 1970 to the mid-1980s. Among men 65 and older, the decline began earlier, but it appears to have ended around 1985. Between 1950 and 1985, the labor force participation rate for men 65 years and older fell from 46 percent to about 16 percent. Since the mid-1980s, labor force participation rates among men aged 55 to 64 years have remained in the range of 66 percent to 68 percent, while the rate for those aged 65 and older has remained between 16 percent and 17 percent.
Table 2. Labor force participation rates by age and sex, 1950-2008
Men Year 25 to 54 55 to 64 65 years years years and older 1950 96.5 86.9 45.8 1955 97.4 87.9 39.6 1960 97.0 86.8 33.1 1965 96.7 84.6 27.9 1970 95.8 83.0 26.8 1975 94.4 75.6 21.6 1980 94.2 72.1 19.0 1985 93.9 67.9 15.8 1990 93.4 67.8 16.3 1995 91.6 66.0 16.8 1998 91.8 68.1 16.5 1999 91.7 67.9 16.9 2008(1) 91.3 69.4 17.8 Women Year 25 to 54 55 to 64 65 years years years and older 1950 36.8 27.0 9.7 1955 39.8 32.5 10.6 1960 42.9 37.2 10.8 1965 45.2 41.1 10.0 1970 50.1 43.0 9.7 1975 55.1 40.9 8.2 1980 64.0 41.3 8.1 1985 69.6 42.0 7.3 1990 74.0 45.2 8.6 1995 75.6 49.2 8.8 1998 76.6 51.2 8.6 1999 76.8 51.5 8.9 2008(1) 79.7 57.7 9.1
(1) Data for 2008 are from the Office of Employment Projections, Bureau of Labor Statistics.
From 1950 to the present, women's labor force participation rates have moved steadily upward. Among women aged 55 to 64, the rate rose from 27 percent in 1950 to 45 percent in 1990, and 52 percent in 1999. Among women 65 and older, however, the labor force participation rate has changed very little over the last 50 years, remaining between 8 percent and 11 percent over the 1950-99 period.
The stability of labor force participation rates among men aged 55 years and older since the mid-1980s is likely attributable attributable
emanating from or pertaining to attribute.
see attributable risk (below).
attributable risk to several factors. First, Social Security coverage has been expanded and now covers virtually all private sector nonfarm employment in the United States.(4) The earliest age of eligibility for Social Security retired-worker benefits was set at age 62--in 1956 for women and in 1961 for men--and has not changed since. Second, in the private sector, the expansion in pension coverage that occurred in the 1950s and 1960s had ended by 1980--about half of all workers were covered by a pension plan in 1996, virtually the same percentage as were covered in 1980. Finally, most traditional defined-benefit pension plans defined-benefit pension plan
A pension plan in which retirement benefits rather than contributions into the plan are specified. Thus, a retired employee who has reached a certain age with a given number of years of service and has earned a certain income is have minimum-age and length-of-service requirements that must be met before pension benefits can be paid. These provisions, in effect, establish a minimum age below which retirement is not a viable option for most workers. According to the BLS Employee Benefits Survey, more than 90 percent of employees in medium and large firms who had pension coverage in 1997 were covered by a plan with a minimum age requirement for retirement benefits, and more than 80 percent of these workers were covered by plans that had a minimum retirement age of 55 years or older.(5)
Recent employment trends
Data from the March CPS indicate that, from 1994 to 2000, employment increased among both men and women aged 55 to 64.(6) (See table 3.) Moreover, the increases occurred among both 55- to 61-year-olds, who are not eligible for Social Security retirement benefits, and 62- to 64-year-olds, who are eligible for reduced Social Security benefits. The employment-population ratio--the proportion of a given population that is employed--among men aged 55 to 61 rose from 68.5 percent in March 1994 to 73.3 percent in March 1999, before declining to 71.3 percent in March 2000. Among those aged 62 to 64, the ratio rose from 40.9 percent to 47.1 percent over the same period. The employment-population ratio also increased for women. Among 55- to 61-year-olds, it rose from 53.3 percent to 58.0 percent over the period, and among 62- to 64-year-olds, it increased from 31.2 percent to 34.6 percent.
Table 3. Employed persons aged 55 years and older by age and sex, 1994-2000
[Numbers in thousands]
Men Age and year Employed of survey Population Percent of Total population 55 to 61 years: 1994 7,047 4,828 68.5 1995 6,993 5,035 72.0 1996 7,409 5,349 72.2 1997 7,523 5,404 71.8 1998 7,855 5,664 72.1 1999 8,174 5,990 73.3 2000 8,204 5,649 71.3 62 to 64 years: 1994 2,869 1,172 40.9 1995 2,879 1,206 41.9 1996 2,681 1,159 43.2 1997 2,733 1,255 45.9 1998 2,812 1,283 45.6 1999 2,785 1,297 46.6 2000 2,927 1,380 47.1 65 to 69 years: 1994 4,225 1,056 25.0 1995 4,395 1,169 26.6 1996 4,522 1,237 27.4 1997 4,321 1,150 26.6 1998 4,286 1,085 25.3 1999 4,298 1,136 26.4 2000 4,376 1,330 30.4 70 years and older: 1994 8,493 953 11.2 1995 8,607 970 11.3 1996 8,738 989 11.3 1997 9,083 1,063 11.7 1998 9,238 970 10.5 1999 9,429 1,030 10.9 2000 9,510 1,169 12.3 Men Women Age and year Percent employed: of survey Percent of Population Full time Part time 55 to 61 years: 1994 90.7 9.3 7,676 1995 91.5 8.5 7,716 1996 91.2 8.8 7,947 1997 90.6 9.4 8,142 1998 91.4 8.7 8,515 1999 91.7 8.3 8,743 2000 92.3 7.7 9,041 62 to 64 years: 1994 76.1 23.9 3,129 1995 79.0 21.0 3,162 1996 77.8 22.2 3,044 1997 79.2 20.8 3,069 1998 80.9 19.1 3,065 1999 78.4 21.6 3,199 2000 77.9 22.1 3,209 65 to 69 years: 1994 57.9 42.1 5,365 1995 54.7 45.3 5,263 1996 56.7 43.3 5,224 1997 56.8 43.2 5,180 1998 57.0 43.0 5,075 1999 55.7 44.3 5,022 2000 60.5 39.5 4,976 70 years and older: 1994 49.7 50.3 12,678 1995 44.9 55.1 13,001 1996 44.2 55.8 13,174 1997 45.7 54.3 13,294 1998 48.0 52.0 13,464 1999 44.8 55.2 13,646 2000 48.5 51.5 13,759 Women Age and year Employed Percent employed of survey Percent of Total population Full time Part time 55 to 61 years: 1994 4,089 53.3 73.1 26.9 1995 4,196 54.4 74.1 25.9 1996 4,314 54.3 74.5 25.5 1997 4,582 56.3 77.1 22.9 1998 4,896 57.5 77.7 22.9 1999 4,904 56.1 76.8 23.2 2000 5,240 58.0 77.2 22.8 62 to 64 years: 1994 975 31.2 60.6 39.4 1995 975 30.8 58.3 41.7 1996 968 31.8 59.3 40.7 1997 1,047 34.1 62.5 37.5 1998 1,040 33.9 61.2 38.8 1999 1,102 34.4 60.1 39.9 2000 1,109 34.6 61.3 38.7 65 to 69 years: 1994 891 16.6 37.4 62.6 1995 919 17.5 36.3 63.7 1996 865 16.6 40.4 59.6 1997 936 18.1 42.1 57.9 1998 941 18.5 44.5 55.5 1999 941 18.7 40.9 59.1 2000 983 19.8 44.2 55.8 70 years and older: 1994 682 5.4 32.9 67.1 1995 650 5.0 30.4 69.6 1996 681 5.2 30.3 69.7 1997 639 4.8 32.8 67.2 1998 740 5.5 31.9 68.1 1999 807 5.9 35.0 65.0 2000 816 5.9 36.4 63.6
SOURCE: Author analysis of the annual income supplement to the Current Population Survey.
Much of the increase in employment among persons aged 55 years and older during the mid- to late- 1990s probably was due to the strength of the economy during these years. Between 1993 and 1999, for example, the unemployment rate for workers of all ages declined from 6.9 percent to 4.2 percent. Over the same period, the Nation's real gross domestic product (GDP GDP (guanosine diphosphate): see guanine. ) grew at an average annual rate of 3.7 percent.(7) It is possible, however, that at least part of the increase in employment was due to the trend of workers choosing to remain in the labor force rather than taking early retirement, as well as the effects of long-term Long-term
Three or more years. In the context of accounting, more than 1 year.
1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. trends away from defined-benefit pension plans, which often include early-retirement subsidies, toward defined contribution plans Defined contribution plan
A pension plan whose sponsor is responsible only for making specified contributions into the plan on behalf of qualifying participants. Related: Defined benefit plan , which are age neutral in their design. The Employee Benefits Survey, for example, indicates that between 1993 and 1997, the proportion of full-time employees in medium and large private establishments who were covered by a defined-benefit pension plan fell from 56 percent to 50 percent. At the same time, the proportion of employees in these firms who were covered by defined-contribution plans Defined-Contribution Plan
A retirement plan wherein a certain amount or percentage of money is set aside each year for the benefit of the employee. There are restrictions as to when and how you can withdraw these funds without penalties. rose from 49 percent to 57 percent.(8)
Pensions among older workers
An important consideration for an individual deciding whether to retire from the workforce is whether the sources of income available in retirement will be adequate to maintain his or her desired standard of living. Table 4 shows the proportion of men and women aged 55 and older who reported in the CPS that they received pension income of some kind during the calendar year prior to the survey. In this table, "pension income" includes employer-sponsored pensions (including military retirement), veterans' pensions, and periodic payments from annuities, insurance policies, individual retirement accounts, 401 (k) accounts, and Keogh plans A retirement account that allows workers who are self-employed to set aside a percentage of their net earnings for retirement income.
Also known as H.R. 10 plans, Keogh plans provide workers who are self-employed with savings opportunities that are similar to those under for the self-employed self-em·ployed
Earning one's livelihood directly from one's own trade or business rather than as an employee of another.
Table 4. Population aged 55 years and older by age, sex, and pension receipt status, 1994-2000
[Numbers in thousands]
Age and year Men of survey Population Pension recipients Percent 55 to 64 years: 1994 9,916 2,351 23.7 1995 9,872 2,303 23.3 1996 10,090 2,279 22.6 1997 10,256 2,177 21.2 1998 10,667 2,152 20.2 1999 10,959 2,195 20.0 2000 11,131 2,174 19.5 65 years and older: 1994 12,717 6,299 49.5 1995 13,001 6,108 47.0 1996 13,260 6,206 46.8 1997 13,404 6,316 47.1 1998 13,524 6,317 46.7 1999 13,727 6,457 47.0 2000 13,886 6,358 45.8 Age and year Women of survey Population Pension recipients Percent 55 to 64 years: 1994 10,805 1,336 12.40 1995 10,878 1,316 12.10 1996 10,991 1,164 10.60 1997 11,210 1,287 11.50 1998 11,580 1,253 10.80 1999 11,943 1,403 11.70 2000 12,250 1,439 11.70 65 years and older: 1994 18,043 5,259 29.10 1995 18,264 5,252 28.80 1996 18,398 5,025 27.30 1997 18,474 4,933 26.70 1998 18,559 5,114 27.60 1999 18,668 5,186 27.80 2000 18,735 5,513 29.40
NOTE: Retirement plans may include a traditional pension, a retirement savings plan, or both.
SOURCE: Author analysis of the annual income supplement to the Current Population Survey.
Not surprisingly, the proportion of men and women who receive income from a pension or other retirement plan increases with age. In 1999, only 20 percent of men aged 55 to 64 received any income from a pension or other retirement plan; among those 65 years and older, however, 46 percent had income from private pensions or retirement savings plans. The patterns among women are similar: only 12 percent of 55 to 64-year-old women received income from private pensions or retirement savings plans in 1999, while 29 percent of those aged 65 years and older received such income.
The proportion of men aged 55 to 64 years who were receiving pension income declined from 24 percent in 1993 to 20 percent in 1999. Over the same period, the proportion receiving pension income fell from 50 percent to 46 percent among men aged 65 and older. The proportion of women aged 55 to 64 years with pension income was more stable, at 11 percent to 12 percent throughout the 1993-99 period. Among women 65 and older, 29 percent received income from private pensions and retirement plans in 1999, the same percentage as in 1993.
Work by Pension Recipients. Among men aged 55 to 64 who received income from a private pension or retirement savings plan during 1999, about 37 percent were employed either full or part time in March 2000--an increase of more than four percentage points over the comparable rate in 1994, when it was 32.5 percent. (See table 5.) Relatively few men aged 65 or older who receive income from private pensions and retirement savings plans also engage in paid employment: only 10 to 12 percent were employed, on average, over the 1994-2000 period. Women who receive pension income are even less likely than men to be employed. Among 55- to 64-year-old women who received income from a private pension or retirement savings plan in 1999, just 31 percent were employed in March 2000. Among women aged 65 years and older, only 6 to 8 percent, on average, were employed during the 1994-2000 period.
Table 5. Employment among retirement income recipients aged 55 years and older by age and sex, 1994-2000
[Numbers in thousands]
Men Age and year of survey Pension Number Percent recipients employed employed 55 to 64 years: 1994 2,351 763 32.5 1995 2,303 864 37.5 1996 2,279 831 36.5 1997 2,177 832 38.2 1998 2,152 778 36.2 1999 2,195 870 39.6 2000 2,174 799 36.8 65 years and older: 1994 6,299 637 10.1 1995 6,108 727 11.9 1996 6,206 726 11.7 1997 6,316 724 11.5 1998 6,317 648 10.3 1999 6,457 706 10.9 2000 6,358 739 11.6 Women Age and year of survey Pension Number Percent recipients employed employed 55 to 64 years: 1994 1,336 369 27.6 1995 1,316 410 31.2 1996 1,164 324 27.8 1997 1,287 416 32.3 1998 1,253 363 29.0 1999 1,403 370 26.4 2000 1,439 442 30.7 65 years and older: 1994 5,259 345 6.6 1995 5,252 326 6.2 1996 5,025 281 5.6 1997 4,933 277 5.6 1998 5,114 404 7.9 1999 5,186 426 8.2 2000 5,513 401 7.3
NOTE: Retirement plans may include a traditional pension, a retirement savings plan, or both.
SOURCE: Author analysis of the annual income supplement to the Current Population Survey.
Social Security retirement benefits
Currently, the age of full retirement under Social Security is 65 years. Retired-worker benefits are first available at age 62, but benefits that begin before the full retirement age are subject to a permanent actuarial ac·tu·ar·y
n. pl. ac·tu·ar·ies
A statistician who computes insurance risks and premiums.
[Latin reduction equal to approximately 0.6 percent for each month below age 65. A worker retiring at age 62 would receive benefits equal to 80 percent of the amount he or she would have received at age 65. As a result of the Social Security Amendments of 1983 (P.L. 98-21), the full retirement age is being increased to 67 incrementally over a 22-year period. Reduced benefits will continue to be available at age 62, but when the full retirement age reaches 67, the benefit payable at 62 will be 70 percent of the amount that would have been paid if not for the reduction for early retirement.
Most people choose to begin receiving Social Security retirement benefits before age 65. The data presented in Table 6 show that approximately 75 percent of men and 80 percent of women who began receiving benefits between 1989 and 1998 applied for benefits before age 65. Among women, this percentage has remained steady over the past decade,(9) while among men, there was a slight increase in the proportion of applicants younger than 65 years.
Table 6. Social Security retired-worker benefits awards by age and sex, 1989-98
Men Age in year benefits began Number of Percent of awards awards 62 to 64 years: 1989 616,200 73.2 1990 618,900 73.8 1991 639,800 73.3 1992 641,800 74.2 1993 646,100 75.3 1994 607,600 76.1 1995 596,500 75.6 1996 581,900 76.0 1997 586,300 75.4 1998 586,800 75.7 65 years: 1989 173,700 20.6 1990 160,300 19.1 1991 172,200 19.7 1992 166,100 19.2 1993 159,400 18.6 1994 145,500 18.2 1995 145,900 18.5 1996 135,200 17.7 1997 137,300 17.7 1998 136,300 17.6 66 years and older: 1989 52,100 6.2 1990 58,900 7.0 1991 61,300 7.0 1992 57,600 6.7 1993 52,100 6.1 1994 45,600 5.7 1995 47,000 6.0 1996 48,300 6.3 1997 53,800 6.9 1998 52,100 6.7 Women Age in year benefits began Number of Percent of total awards awards 62 to 64 years: 1989 490,700 80.6 1990 487,800 79.6 1991 489,100 79.0 1992 510,600 80.1 1993 502,800 79.5 1994 504,600 81.5 1995 486,200 79.5 1996 488,100 80.4 1997 486,500 66.7 1998 497,500 75.9 65 years: 1989 87,500 14.4 1990 86,900 14.2 1991 95,400 15.4 1992 89,900 14.1 1993 97,100 15.4 1994 82,600 13.3 1995 88,900 14.5 1996 86,500 14.3 1997 86,500 11.9 1998 92,500 14.1 66 years and older: 1989 30,700 5.0 1990 38,200 6.2 1991 34,400 5.6 1992 36,600 5.7 1993 32,200 5.1 1994 31,600 5.1 1995 36,300 5.9 1996 32,200 5.3 1997 156,600 21.5 1998 65,800 10.0
NOTE: Special outreach Outreach is an effort by an organization or group to connect its ideas or practices to the efforts of other organizations, groups, specific audiences or the general public. programs by the Social Security Administration resulted in an above-average number of conversions of nondisabled widows to retired worker benefits in 1997 and 1998. Initial awards exclude conversions from disabled worker benefits to retired worker benefits.
SOURCE: Annual Statistical Supplement to the Social Security Bulletin, (Social Security Administration, various years).
The data presented in table 3 indicate that the proportion of 55- to 64-year-olds engaged in paid employment rose steadily through the mid- to late-1990s. The data also show, however, that a much smaller proportion of 62- to 64-year-olds were employed than among those aged 55 to 61. One reason for the sharp decline is that age 62 is the earliest age of eligibility for Social Security retirement benefits.(10) The availability of (actuarially reduced) benefits at age 62 allows many people who otherwise would have continued working to retire from the labor force.
The Social Security system also can affect the decision of when to retire from the labor force through the delayed retirement credit and the earnings test. The delayed retirement credit provides a permanent increase in benefits for workers who delay receipt of Social Security benefits until after age 65--thus creating an incentive for older workers to remain in the labor force in order to receive full benefits. The earnings test reduces the Social Security benefits of recipients under the normal retirement age whose earnings exceed specific thresholds. TM For example, a Social Security recipient One who receives. The person to whom an e-mail message is sent is the recipient.
(communications) recipient - One who receives; receiver. E.g. "No recipient of the e-mail message will know about the other addressees who were listed in the BCC header." under age 65 in 2000 can earn up to $10,080 without having his or her benefit reduced, but benefits are cut by $1.00 for each $2.00 earned in excess of that amount. This creates a financial incentive for these individuals to keep their earnings below the threshold The point at which a signal (voltage, current, etc.) is perceived as valid. .(11) Congress has at times altered both the delayed retirement credit and the earnings test to encourage workers to stay in the labor force.
Retired worker beneficiaries as a percentage of each age category. If more workers chose to delay receipt of Social Security benefits until age 65, this delay would eventually show up as a declining percentage of 62- to 64-year-olds who are receiving such benefits. The data presented in table 7 show that there was a decline of about two percentage points between 1995 and 1998 in the proportion of men aged 62 to 64 who were receiving benefits. This coincided with the rising employment-population ratio among men in this age group. The lower rate among 62- to 64-year-old men during this period may have been caused by robust economic growth, or it may reflect a trend toward later retirement, independent of economic conditions. More time will be needed before firm conclusions can be drawn. Among women aged 62 to 64, the proportion who were receiving Social Security benefits fluctuated between 34 percent and 36 percent from 1989 to 1998, with no clearly discernible dis·cern·i·ble
Perceptible, as by the faculty of vision or the intellect. See Synonyms at perceptible.
dis·cerni·bly adv. trend.
Table 7. Social Security retired-worker beneficiaries by age and sex, 1989-98
[Numbers in thousands]
Men Age in year benefits began Number of Percent beneficiaries of age group 62 to 64 years: 1989 1,330 44.0 1990 1,336 43.6 1991 1,345 43.7 1992 1,351 43.9 1993 1,350 44.3 1994 1,353 44.8 1995 1,320 44.8 1996 1,293 44.6 1997 1,278 43.0 1998 1,286 42.5 65 to 69 years: 1989 3,841 82.5 1990 3,898 84.0 1991 3,896 83.6 1992 3,937 84.3 1993 3,946 84.5 1994 3,906 83.6 1995 3,900 83.8 1996 3,871 84.3 1997 3,836 84.8 1998 3,783 84.2 70 years and older: 1989 7,546 89.3 1990 7,751 89.2 1991 7,985 89.7 1992 8,186 89.9 1993 8,354 89.4 1994 8,536 89.5 1995 8,694 89.7 1996 8,848 89.4 1997 9,012 89.6 1998 9,138 89.5 Women Age in year benefits began Number of Percent beneficiaries of age group 62 to 64 years: 1989 1,180 34.8 1990 1,167 34.2 1991 1,150 33.7 1992 1,137 33.7 1993 1,126 33.9 1994 1,139 34.5 1995 1,128 35.0 1996 1,126 35.7 1997 1,131 35.1 1998 1,156 35.3 65 to 69 years: 1989 3,019 54.7 1990 3,067 55.8 1991 3,062 55.7 1992 3,098 56.6 1993 3,104 57.2 1994 3,065 56.9 1995 3,058 57.3 1996 3,046 58.0 1997 3,053 59.2 1998 3,036 59.4 70 years and older: 1989 7,399 54.4 1990 7,607 54.7 1991 7,836 55.3 1992 8,037 55.8 1993 8,218 56.1 1994 8,404 56.6 1995 8,570 57.1 1996 8,715 57.4 1997 8,972 58.5 1998 9,112 59.0
SOURCE: Annual Statistical Supplement to the Social Security Bulletin, various years.
Older workers and phased retirement
In the traditional view of retirement, a worker moves from full-time employment to complete withdrawal from the labor force in a single step. In fact, however, some workers choose to continue working after they have retired from their "career" jobs. The data in table 5, for example, show that 37 percent of men and 31 percent of women aged 55 to 64 who received income from private pension plans in 1999 were employed in March 2000. The process of retiring often occurs gradually grad·u·al
Advancing or progressing by regular or continuous degrees: gradual erosion; a gradual slope.
n. Roman Catholic Church
1. over a number of years, with many workers retiring from year-round, full-time employment and moving to part-time part-time
For or during less than the customary or standard time: a part-time job.
part or part-year work at another firm, often in a different occupation.
As members of the baby-boom generation begin retiring in the coming decades, millions of skilled and experienced workers will exit the labor force. As this occurs, employers may find it necessary to alter their employment practices and pension plans to induce in·duce
1. To bring about or stimulate the occurrence of something, such as labor.
2. To initiate or increase the production of an enzyme or other protein at the level of genetic transcription.
3. some of those who would otherwise retire completely to remain on the job, perhaps on a part-time or part-year schedule. This process is sometimes referred to as phased retirement. No statutory definition of phased retirement exists, but one analyst has described it as "the situation in which an older individual is actively working for an employer part time or [on] an otherwise reduced schedule as a transition into full retirement. [It] may also include situations in which older employees receive some or all of their retirement benefits while still employed."(12)
Advocates of phased retirement contend that more pension-eligible individuals would choose to continue working if employers could offer them the opportunity to collect pension benefits while remaining on the employer's payroll payroll
a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. . Under current law, this option may be offered only to employees who have reached a pension plan's normal retirement age. Some employers have suggested that phased retirement would be embraced by more firms if this option could be offered to employees at the plan's early retirement age. Employers generally would prefer the freedom to offer these "in-service in-service In-service training adjective Referring to any form of on-the-job training noun In-service training of an employee " pension distributions only to selected categories or classifications of plan participants Plan participants
Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan. .(13) In order for either of these actions to occur, however, the Internal Revenue Code and the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. (ERISA See Employee Retirement Income Security Act.
See Employee Retirement Income Security Act (ERISA). ) would need to be amended a·mend
v. a·mend·ed, a·mend·ing, a·mends
1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive.
Current approaches to phased retirement A study conducted by the benefits consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee
business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a Watson Wyatt Worldwide found that 16 percent of the 586 firms participating in the survey offered some form of phased retirement to their employees.(15) The firms surveyed by Watson Wyatt described a number of strategies that employers can use to retain the services of valued employees who are eligible for retirement, and who might be lost to the firm if the only options available are full-time employment or full-time retirement. Although the firms participating in the survey may not be representative of all employers, their practices with respect to phased retirement offer some insights into the strategies that firms have been able to employ under current law and regulations to promote phased retirement among their employees.(16)
According to the data collected by Watson Wyatt, many firms rehire Re`hire´
v. t. 1. To hire again. retired employees on a part-time or temporary basis: 75 percent of the firms having a phased retirement arrangement said that they rehire employees after they retire, usually as part-time or temporary workers. In addition, 42 percent said they contracted with retired employees to be consultants. (Some firms had both kinds of arrangements with retired employees.) Of the firms with phased retirement, 60 percent said that their approach included allowing retirement-eligible employees to work fewer days per week or fewer hours per day. Other policies include allowing employees who are not ready to fully retire to transfer to other jobs within the firm (32 percent had such policies), extended leaves of absence (23 percent), and job sharing job sharing
an arrangement by which a job is shared by two part-time workers
job sharing job n → Jobsharing nt, Arbeitsplatzteilung f (19 percent).
As the variety of these arrangements indicates, several approaches to phased retirement can be accommodated under current law. It is important to note, however, that two of the most popular arrangements--hiring retired former employees on a part-time or temporary basis and hiring retirees as contractors--require the individual to separate from the firm before returning under an alternative work arrangement. This introduces considerable uncertainty into the process for both the retiree and the employer, because once the employment relationship is severed sev·er
v. sev·ered, sev·er·ing, sev·ers
1. To set or keep apart; divide or separate.
2. To cut off (a part) from a whole.
3. , neither party is legally bound to renew it.
Another popular approach to phased retirement is to allow employees to reduce the number of days per week or hours per day that they work for a period of months or years before they cease employment altogether. Unless the employee has reached the pension plan's normal retirement age, however, the plan cannot pay retirement benefits to the individual while he or she remains employed by the firm, even if only on a part-time basis. A plan that pays benefits to an employee that has not yet reached the plan's normal retirement age could lose its tax-qualified status.(17) In order to qualify for the favorable fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
3. tax status granted to tax-qualified pension plans, the plan must pay benefits only on condition of death, disability, termination of employment "Fired" and "Firing" redirect here. For other uses, see Fired (disambiguation) and Firing (disambiguation).
“Gross misconduct” redirects here. For the ice hockey term, see Penalty (ice hockey). , plan termination Plan termination for ERISA defined benefit pension plans, is either the voluntary act of a pension plan sponsor who no longer believes that the costs of providing the pension outweighs its benefits, or the involuntary termination by the PBGC when the federal pension agency believes , or at the normal retirement age.(18)
An employee who has reached the pension plan's normal retirement age can begin to receive distributions from the plan, even if he or she continues to be employed by the firm.(19) Likewise, an employee who has reached the plan's early retirement age can begin to receive distributions from the plan upon separation from the firm, provided that he or she has met the required number of years of service stipulated by the plan. If a participant Participant
A party of a funding. It usually refers to the lowest rank or smallest level of funding. has separated from the employer and has begun to receive distributions from the plan at the early retirement age, he or she can continue to receive these distributions, even if at some future date the participant becomes re-employed by the plan sponsor.
Policy issues. Some employers see the statutory prohibition prohibition, legal prevention of the manufacture, transportation, and sale of alcoholic beverages, the extreme of the regulatory liquor laws. The modern movement for prohibition had its main growth in the United States and developed largely as a result of the on making in-service pension distributions to employees who have not yet reached normal retirement age as an obstacle to establishing phased retirement plans because some older workers would find it financially impractical im·prac·ti·cal
1. Unwise to implement or maintain in practice: Refloating the sunken ship proved impractical because of the great expense.
2. to cut back to a part-time or part-year work schedule if they were unable to supplement their earnings with pension income. One way for a firm to offer phased retirement to these workers under current law, without jeopardizing the tax-qualified status of its pension plan, would be to lower the normal retirement age. For example, if the normal retirement age under the plan is 62 years and the early retirement age is 55 years, the Years, The
the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109]
See : Time firm could reduce the normal retirement age to some age between 55 and 61. From the employer's point of view, there would be at least two potential drawbacks to such an approach: It could result in an unintended exodus of workers into retirement--because all eligible plan participants would be able to receive full pension benefits at an earlier age than previously--and it could result in a dramatic increase in the cost of funding the plan--because full benefits would be payable at a younger age.
Rather than reduce the normal retirement age in their pension plans, some employers would prefer that Congress amend the Internal Revenue Code to allow in-service pension distributions to employees who have reached the plan's early retirement age (or some age between the early and normal retirement ages).(20) Some observers believe, however, that such a policy would be contrary to the main purpose of pension plans, which is to replace wage income during retirement. These critics say that if employers were permitted to pay pension benefits to individuals still engaged in gainful gain·ful
Providing a gain; profitable: gainful employment.
gainful·ly adv. employment, the benefits would become a tax-subsidized supplement to wages, paid to individuals who are still able to work; they argue that the benefits were intended to be a substitute for wages, paid to retired workers. Permitting in-service distributions to current employees who have not reached the plan's normal retirement age might allow employers to compensate current employees with pension funds, effectively reducing their operating expenses Operating expenses
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by shifting some of the cost of wages to the pension fund.
In 1999, about 2.4 million workers in the United States were receiving pension payments from a former employer--more than a million were under the age of 65. (See table 5.) Current law allows for an individual who has separated from a firm and is receiving pension distributions under an early retirement provision of the plan to become re-employed by that firm, while continuing to receive those benefits. Some employers have argued that it should be permissible per·mis·si·ble
Permitted; allowable: permissible tax deductions; permissible behavior in school.
per·mis to allow eligible employees to receive partial distributions under an early retirement provision without first having to separate from the employer and then be rehired. Such an option would require an amendment to the tax code. However, plan sponsors currently have the option of setting the normal retirement age at any age not greater than 65, and the early retirement age at any age under the normal retirement age, provided that the plan complies with the statutory requirements with respect to benefit accrual accrual,
n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. , vesting Vesting
The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account.
Notes: of benefits, nondiscrimination non·dis·crim·i·na·tion
1. Absence of discrimination.
2. The practice or policy of refraining from discrimination.
non on the basis of age, and other plan characteristics.
An amendment to the tax code permitting in-service distributions at the early retirement age would alter incentives to work or retire, as well as how much to work and for whom to work. Consequently, it would affect both labor force participation and hours worked among affected employees. The net effect of these changes in labor force participation and hours worked would be almost impossible to predict. Some workers who would otherwise have fully retired before the plan's normal retirement age would choose instead to continue working for their current employer on a reduced schedule, because they would be able to take partial pension distributions while still employed. This would tend to increase labor force participation. Other workers who would have taken early retirement and then sought other employment might choose instead to remain with their current employer on a reduced schedule. The effect of this change in behavior on hours worked might be close to neutral, depending on the wages available from alternative employment and the income received from pension distributions. Finally, some employees who otherwise would have chosen to continue working until reaching the plan's normal retirement age might instead reduce their work schedule and supplement their earnings with partial distributions from the retirement plan. This would tend to reduce total hours worked.
Distributions from 401(k) plans. Coverage under defined contribution plans, such as those authorized au·thor·ize
tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es
1. To grant authority or power to.
2. To give permission for; sanction: under section 401(k) of the Internal Revenue Code, grew rapidly during the 1990s. Between 1991 and 1997, the proportion of workers in medium and large private-sector establishments (those with 100 or more employees) who participated in defined contribution retirement plans increased from 49 percent to 57 percent.(21) The trend among small establishments (those with fewer than 100 employees) was similar. In 1996, 38 percent of employees in small private establishments participated in defined contribution retirement plans, compared with 28 percent in 1990.(22)
In-service distributions from defined contribution plans that occur before the participant reaches age 59 1/2 are subject to a 10 percent excise tax Excise Tax
1. An indirect tax charged on the sale of a particular good.
2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS.
1. in addition to ordinary income taxes. Distributions may begin as early as age 55, however, if the employee separates from his employer under an early retirement plan. Distributions in the form of a lifelong annuity annuity: see insurance.
Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. are permissible at any age. Some advocates of phased retirement arrangements have suggested that the minimum age for in-service distributions from defined contribution plans should be lowered to age 55.(23) The effect on labor force participation of such a change in tax policy would likely be very similar to the effect of allowing in-service distributions from a defined benefit plan Defined benefit plan
A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan at the plan's early retirement age. Some workers who might have fully retired from the labor force earlier than age 59 1/2, so that they could begin taking distributions from the plan, would be induced induced /in·duced/ (in-dldbomacst´)
1. produced artificially.
2. produced by induction.
adj artificially caused to occur.
induction. to work longer. Others who would have taken early retirement and then sought work elsewhere would remain with their current employers, because they would be able to combine wages from part-time work with distributions from the retirement plan. Finally, some employees who otherwise would have chosen to continue working until age 59 1/2 or later would reduce their work schedules and supplement their earnings with distributions from the retirement plan.
Flexibility versus nondiscrimination. Pension plans that provide benefits mainly to the owners of a firm or to highly paid employees do not qualify for favorable tax treatment under the Internal Revenue Code.(24) The tax code defines specific tests that must be applied to a pension plan to determine whether or not it meets these requirements for nondiscrimination in favor of upon the side of; favorable to; for the advantage of.
See also: favor highly compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. employees.(25) These tests consist mainly of mathematical computations of the percentage of plan participants who are highly compensated employees and the percentage of contributions to the plan or benefits paid by the plan that are made on behalf of highly compensated employees.
It is a relatively common practice for firms to establish separate nonqualified retirement plans for the company owners or senior executives. However, if a plan that was originally established as a tax-qualified plan is subsequently found to discriminate dis·crim·i·nate
v. dis·crim·i·nat·ed, dis·crim·i·nat·ing, dis·crim·i·nates
a. in terms of coverage or benefits in favor of highly compensated employees, it could lose its tax-qualified status. In most of these cases, the only viable options available to the plan sponsor would be to remove the discriminatory dis·crim·i·na·to·ry
1. Marked by or showing prejudice; biased.
2. Making distinctions.
dis·crim provisions of the plan or terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. the plan. Covering rank-and-file Rank-and-file may mean:
A retirement plan that does not meet the IRS requirements for favorable tax treatment. usually would not be practical because of the substantial tax liability that would result for both the plan sponsor and plan participants.
In general, employers would prefer the flexibility to offer phased retirement to some--but not all--pension plan participants. Some analysts have suggested that, even if Congress were to amend the Internal Revenue Code to allow in-service distributions from pension plans before the normal retirement age, it would do little to spur the growth of phased retirement unless employers also were permitted to limit eligibility for this benefit to employees with particular skills or abilities. However, a phased retirement option that offered in-service distributions only to managerial or professional employees could result in the plan failing to meet the nondiscrimination requirements of the Internal Revenue Code by altering the distribution of benefits among plan participants in a way that favored the highly compensated group.(26) In contrast, a phased retirement option that offered in-service distributions to all participants meeting specified spec·i·fy
tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies
1. To state explicitly or in detail: specified the amount needed.
2. To include in a specification.
3. age and length-of-service requirements would not conflict with the IRC (Internet Relay Chat) Computer conferencing on the Internet. There are hundreds of IRC channels on numerous subjects that are hosted on IRC servers around the world. After joining a channel, your messages are broadcast to everyone listening to that channel. antidiscrimination requirements.
Section 410(b) of the Internal Revenue Code prescribes specific tests for determining if a pension plan's coverage or benefits discriminate in favor of highly compensated employees. These tests are mathematical calculations that reveal the proportion of plan participants who are highly compensated employees and the proportion of contributions or benefits that are made on behalf of highly compensated employees. Some plan sponsors who would like to implement phased retirement programs would prefer to have these tests for nondiscrimination replaced by the more subjective subjective /sub·jec·tive/ (sub-jek´tiv) pertaining to or perceived only by the affected individual; not perceptible to the senses of another person.
1. method of testing that was in effect until 1994, which was based on the "facts and circumstances" surrounding sur·round
tr.v. sur·round·ed, sur·round·ing, sur·rounds
1. To extend on all sides of simultaneously; encircle.
2. To enclose or confine on all sides so as to bar escape or outside communication.
n. the operation of the plan. In some cases, a phased retirement option that fails the mathematical tests for nondiscrimination that are required under current law might not fail if it could be tested under the earlier (pre- pre- word element [L.], before (in time or space).
1. Earlier; before; prior to: prenatal.
2. 1994) approach.
Legislation in the 106th Congress. Only July July: see month. 19, 2000, the U.S. House of Representatives passed the Comprehensive Retirement Security and Pension Reform Act. Among many other pension reforms, this act would authorize To empower another with the legal right to perform an action.
The Constitution authorizes Congress to regulate interstate commerce.
authorize v. to officially empower someone to act. (See: authority) the Secretary of the Treasury to, in some cases, employ a test based on facts and circumstances.(27) Earlier in July, the Phased Retirement Liberalization lib·er·al·ize
v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es
To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . . Act (H.R. 4837; S. 2853) was introduced, which would amend the Internal Revenue Code to permit in-service (preretirement) distributions from a defined benefit or defined contribution plan when the participant has either reached the plan's normal retirement age, reached age 59 1/2, or has completed 30 years of service, whichever comes first. Currently, such distributions cannot be made from a defined benefit plain before the participant has reached the plan's normal retirement age or from a defined contribution plan before age 59 1/2.
Policy responses to an aging population
In a free market economy, individual employers decide how much compensation to offer and whether that compensation will include benefits like pensions and health insurance. Employees decide whether they will work, where they will work, and how much they will work at least in part on the basis of the compensation offered by prospective employers. The terms of these labor market transactions can be influenced through direct regulation--such as ERISA, the Age Discrimination in Employment Act The Age Discrimination in Employment Act of 1967, Pub. L. No. 90-202, 81 Stat. 602 (Dec. 15, 1967), codified as Chapter 14 of Title 29 of the United States Code, through (ADEA), prohibits employment discrimination against persons 40 years of age or older in the United States (see ). , and minimum wage legislation--through social insurance programs--such as Social Security and Medicare--and through the financial incentives created for both employers and employees by the Internal Revenue Code.
Social insurance programs and the tax code differ from direct regulation in that their primary objectives are, respectively, to provide benefits to individuals and to collect revenue for government operations This article aims to describe the financial expenditure associated with the operations and processes of world governments of all levels. Size of economic footprint
Sanctions involving countries:
intr.v. im·pend·ed, im·pend·ing, im·pends
1. To be about to occur: Her retirement is impending.
2. retirement of the baby-boom generation are likely to affect the supply of labor and the productive capacity of the economy, both the Social Security Act and the tax code may be amended to provide incentives for people to work longer.
The rules that govern eligibility for Social Security benefits can have a substantial influence on workers' decisions about when to retire. Empirical em·pir·i·cal
1. Relying on or derived from observation or experiment.
2. Verifiable or provable by means of observation or experiment.
3. evidence indicates that more retirements occur at age 62--the earliest age at which reduced retired worker benefits are available--and at age 65--the earliest age at which full retired worker benefits are available--than at other ages. The "earnings test," which reduces benefits for some Social Security beneficiaries who work, and the "delayed retirement credit," which increases benefits for workers who defer de·fer 1
v. de·ferred, de·fer·ring, de·fers
1. To put off; postpone.
2. To postpone the induction of (one eligible for the military draft).
v.intr. their benefits until after age 65, also may influence one's decision to work (and how much to work) after becoming eligible for Social Security. At times each of these provisions has been amended to provide greater incentives for individuals who are eligible for Social Security to continue working.
The Social Security Amendments of 1983 mandated a gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. increase in the age at which individuals are eligible for full retirement benefits from its current level of 65 years to 67 years in 2022. As a result, the actuarial reduction in Social Security benefits for those who retire at 62 will increase from 20 percent to 30 percent, creating a financial incentive to delay receipt of Social Security and continue working. The 1983 amendments also provided for an increase in the delayed retirement credit (DRC DRC Democratic Republic of Congo
DRC Down (Stage) Right Center
DRC Director(ate) of Reserve Components
DRC Disability Rights Commission (United Kingdom) ) for workers who defer their application for Social Security benefits until after age 65. In 1977, Congress set the DRC at 3 percent, meaning that benefits were permanently increased by 3 percent for each year that a worker delayed receipt of Social Security beyond age 65. The 1983 amendments provided for a gradual increase in the DRC beginning in 1990. When fully phased-in, the DRC will be 8 percent per year for people who turn age 65 in 2008 or later, which will result in a DRC that is close to being "actuarially fair" for the average worker.
The Social Security Act was recently amended to repeal The Annulment or abrogation of a previously existing statute by the enactment of a later law that revokes the former law.
The revocation of the law can either be done through an express repeal the earnings test for beneficiaries who are 65 or older. As a result of Public Law 106-182 (April 7, 2000), the earnings test has been eliminated for people at the full retirement age (currently 65 years) or older, effective January January: see month. 1, 2000. The earnings test remains in effect, however, for beneficiaries who are under the full retirement age. In 2000, Social Security recipients under age 65 will have their benefits reduced by $1 for each $2 of earnings in excess of $10,080.
Some employers are calling on Congress to amend the tax code to allow employers greater flexibility in designing phased retirement programs for their employees. One proposed amendment would permit pension in-service distributions to employees who have not reached the pension plan's normal retirement age. This, employers say, would allow them to offer older employees the chance to cut back their work schedules to part time, while supplementing their reduced salaries with pension income. Under current law, such an arrangement would be permissible only for plan participants who have reached the plan's normal retirement age.
The Phased Retirement Liberalization Act would allow in-service pension distributions to begin when a participant has reached the earliest of the plan's normal retirement age (59 1/2 years), or the completion of 30 years of service. This might promote continued employment among older workers who--if given the choice between working full time and taking early retirement--would otherwise have chosen to retire. A more complicated issue, not addressed by this legislation but likely to arise in the future, is whether an employer may offer such an option only to specific categories of workers.
(1) Current Population Reports, series P-25, no. 1130, reproduced in Statistical Abstract of the United States The Statistical Abstract of the United States is a publication of the United States Census Bureau, an agency of the United States Department of Commerce. Published annually since 1878, the statistics describe social and economic conditions in the United States. : 1999 (Bureau of the Census, 1999), table 17, p. 17.
(2) For more on this trend, see Joseph F. Quinn Joseph F. Quinn (1857-1929) was the first Irishman appointed to the bench in Massachusetts where he served on the Essex County Superior Court. He lived in Salem and was the son of an immigrant from the days of the potato famine. Judge Quinn was associated with John F. , Retirement Patterns and Bridge Jobs in the 1990s, Issue Brief 206 (Washington Washington, town, England
Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , DC, Employee Benefit Research Institute, February February: see month. 1999).
(3) Labor force participation rates are annual averages from the monthly CPS data. The CPS, a scientifically designed survey of about 50,000 households, is conducted monthly by the Bureau of the Census on behalf of BLS. Using data derived de·rive
v. de·rived, de·riv·ing, de·rives
1. To obtain or receive from a source.
2. from the CPS, BLS publishes numerous labor force statistics by a variety of economic, social, and demographic characteristics. For more information on the CPS, see BLS Handbook
This article is about reference works. For the subnotebook computer, see .
(4) Approximately one-quarter of the employees of State and local governments--about 5 million people--work for governments that have elected e·lect
v. e·lect·ed, e·lect·ing, e·lects
1. To select by vote for an office or for membership.
2. To pick out; select: elect an art course. not to participate in Social Security. This is the only remaining large group of workers not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered. by Social Security.
(5) See Employee Benefits in Medium and Large Private Establishments, 1997, Bulletin 2517 (Bureau of Labor Statistics, September September: see month. 1999), tables 136-37, pp. 108-09.
(6) Although the labor force participation rates discussed in the previous section were based on annual averages of monthly data, the employment data analyzed an·a·lyze
tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es
1. To examine methodically by separating into parts and studying their interrelations.
2. Chemistry To make a chemical analysis of.
3. in this section are from the March supplement to the CPS. They show employment in the week prior to the March CPS interview. The March CPS files were used for this analysis because they include detailed data about sources of income in the previous year. We used information about current labor force status rather than information about labor force status in the previous year, because an individual who reported that he or she both worked and received pension income during the previous year might have worked and received pension income consecutively rather than concurrently con·cur·rent
1. Happening at the same time as something else. See Synonyms at contemporary.
2. Operating or acting in conjunction with another.
3. Meeting or tending to meet at the same point; convergent. .
(7) Economic Report of the President The Economic Report of the President is a document published by the President of the United States' Council of Economic Advisers (CEA). Released in February of each year, the report reviews what economic activity was of impact in the previous year, outlines the economic goals for (Council of Economic Advisers, February 2000), table B-40, p. 354; and table B-2, p. 308.
(8) See Employee Benefits in Medium and Large Private Establishments, 1993, Bulletin 2456 (Bureau of Labor Statistics, November November: see month. 1994) table 1, p. 8; and Employee Benefits in Medium and Large Private Establishments, 1997, Bulletin 2517, table 1, p. 5.
(9) The percentage of awards to women aged 65 and older increased temporarily in 1997 and 1998 as a result of an outreach effort by the Social Security Administration to convert nondisabled widow widow n. a woman whose husband died while she was married to him and has not since remarried. A divorced woman whose ex-husband dies is not a widow, except for the purpose of certain Social Security benefits traceable to the ex-husband.
WIDOW. beneficiaries to a higher status, so they could receive benefits as retired workers.
(10) The normal retirement age also is 62 in about a quarter of private pension plans.
(11) On April 7, 2000, the President signed H.R. 5, the Senior Citizens' Freedom to Work Act (P.L. 106-182), which eliminated the earnings test for people at the full retirement age (currently age 65) or older, effective January 1, 2000. The earnings test remains in effect for Social Security recipients under the full retirement age.
(12) Testimony Oral evidence offered by a competent witness under oath, which is used to establish some fact or set of facts.
Testimony is distinguishable from evidence that is acquired through the use of written sources, such as documents.
testimony n. of Wilma K. Schopp on behalf of the Association of Private Pension and Welfare Plans before the U.S. Senate Special Committee on Aging, April 3, 2000.
(13) This discussion refers to in-service distributions under defined benefit pension plans. In-service distributions under defined contribution plans are discussed later in the article.
(14) See, for example, New Opportunities for Older Workers, (Washington, DC, Committee for Economic Development, 1999).
(15) Laurene A. Graig Graig is an electoral district (ward) and coterminous community (parish) of the city of Newport.
The ward is bounded by the Ebbw River and M4 motorway to the east, the city boundary to the north and west. and Valerie Name
Valerie is a common name for a girl in both English and French. Spelt as "Valery" or "Valeri", it is a common male name in parts of Europe (particularly in France and Russia). It means brave and courageous. Paganelli, "Phased Retirement: Reshaping the End of Work," Compensation and Benefits Management, vol. 16 no. 2 (spring 2000).
(16) The 586 firms that participated in the survey represent only about 6 percent of the 9,500 employers to whom the survey materials were sent. Thus, caution should be used when interpreting in·ter·pret
v. in·ter·pret·ed, in·ter·pret·ing, in·ter·prets
1. To explain the meaning of: interpreted the ambassador's remarks. See Synonyms at explain. the results of this survey.
(17) In a "tax-qualified" plan, employer contributions to the plan are deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). business expenses for the firm and neither the employer contributions nor investment earnings on those contributions are counted as income to the employee in the years that they occur; instead, pensions are taxed as income when the benefits are paid to plan participants in retirement. Usually, retirees are taxed at a lower marginal tax rate Marginal Tax Rate
The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate.
Many believe this discourages business investment because you are taking away the incentive to work harder. than when they worked.
(18) Code of Federal Regulations The New Deal program of legislation enacted during the administration of President franklin roosevelt established a large number of new federal agencies, which generated a shapeless and confusing mass of new regulations. , [sections] 1.401-1(b)(1)(i).
(19) If a plan participant continues to work for an employer beyond the plan's normal retirement age, the plan must meet the statutory requirements for continued benefit accruals Accruals
Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. ; see 26 U.S.C. [sections] 411 (b)(1)(H).
(20) Requirements for qualification of pension plans are defined at 26 U.S.C. [sections] 401(a).
(21) Employee Benefits in Medium and Large Private Establishments, Bulletin 2422 (Bureau of Labor Statistics, May 1993) and Employee Benefits in Medium and Large Private Establishments, Bulletin 2517 (Bureau of Labor Statistics, September 1999).
(22) Employee Benefits in Small Private Establishments, Bulletin 2388 (Bureau of Labor Statistics, September 1991) table 1, page 5; and Employee Benefits in Small Private Establishments, Bulletin 2507 (Bureau of Labor Statistics, April 1999), table 1, page 5.
(23) It might also seem reasonable that if legislation were passed to allow in-service distributions from an employer's defined benefit plan at the plan's early retirement age, then distributions from the employer's defined contribution plan should be permitted at the same age (perhaps with a lower limit of 55). However, such a policy would suffer from at least two drawbacks.
First, the minimum age for in-service distributions from defined contribution plans, which is now the same for all such plans, would differ from firm to firm, thus making the retirement planning Retirement financial planning refers to a collection of systems, methods, and processes which, in their aggregate, support a family unit's (client's) desire to achieve a state of financial independence, such that the need to be gainfully employed is optional. process even more confusing con·fuse
v. con·fused, con·fus·ing, con·fus·es
a. To cause to be unable to think with clarity or act with intelligence or understanding; throw off.
b. for workers and their families. Second, it would he administratively difficult--and in some cases, perhaps, impossible--to tie the minimum age for in-service distributions in the defined contribution plan to the early retirement age specified in the employer's defined benefit plan.
(24) 26 U.S.C. [sections] 401(a)(4) states that a qualified pension trust is one in which "the contributions or benefits provided under the plan do not discriminate in favor of highly compensated employees (within the meaning of section 414(q))." The term "highly-compensated employee" is defined at 26 U.S.C. [sections] 414(q) as a person who is at least a 5-percent owner of the firm or is paid compensation of at least $85,000 and is among the top 20 percent of employees in the firm with respect to compensation.
(25) 26 U.S.C. [sections] 410(b).
(26) Employers whose approach to phased retirement does not affect eligibility for pension distributions are less likely to violate the IRC nondiscrimination provisions. Examples would be phased retirement plans that involve only reductions in hours of work, job sharing, transfers to other duties, or that are based on rehiring retired former employees. These are conditions of employment conditions of employment
that part of an employment that sets out the duties, responsibilities, hours of work, salary, leave and other privileges to be enjoyed by persons employed, for example a veterinary nurse, in private practice. rather than characteristics of the pension plan.
(27) H.R. 1102 was ordered reported with amendments by the Senate Finance Committee on September 7, 2000.
Patrick J. Purcell Pur·cell , Henry 1659?-1695.
English composer and the leading musical figure of the baroque style in England.
Noun 1. Purcell - English organist at Westminster Abbey and composer of many theatrical pieces (1659-1695) is a social legislation specialist at the Congressional Research Service The Congressional Research Service (CRS) is a branch of the Library of Congress that provides objective, nonpartisan research, analysis, and information to assist Congress in its legislative, oversight, and representative functions. U.S. , U.S. Library of Congress.