Saturday, February 11, 2012

Research: Increased in Earned Income Attributable to Increased Labor Participation by Older Workers

A report from the Division of Economic Research, Office of Research, Evaluation, and Statistics, Office of Retirement and Disability Policy, Social Security Administration, shows that higher labor force participation rates for people aged 62–79 are associated with a dramatic increase in the share of their total money income attributable to earnings. According to "The Increasing Labor Force Participation of Older Workers and its Effect on the Income of the Aged", by Michael V. Leonesio, Benjamin Bridges, Robert Gesumaria, and Linda Del Bene, for persons aged 65–69, the earnings share increased from 28% in 1980 to 42% percent in 2009.

They also found that while, two decades ago, Social Security benefits and earnings were roughly equal shares of total money income (about 30%), the earnings share is now more than 12 percentage points larger. The marked increase in the importance of earnings as an income source is also evident throughout the 62–79 age range among Social Security beneficiaries.

In reviewing the many factors that have likely contributed to the increase in late-life earnings, the authors note, among other things, legislative changes such as bans on age discrimination, the low private savings rates in the United States, increasing cost of health care, a healthier older population, and changes in social security rules for earned income.

Source: U.S. Social Security Administration Social Security Bulletin Vol. 72, No. 1 (February 2012)

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