The increasing number of older Americans in the labour force is likely being driven by the need to obtain affordable employment-based health insurance and the need to continue to accumulate savings in employment-based defined contribution(DC)plans, says a paper by the Employee Benefit Research Institute.
The percentage of those ages 55 or older in the workforce increased to 44.9% last year from 37.7% in 1993. The percentage also increased to 29% in 2006 from 18.4% in 1985 for those aged 65 to 69.
“This trend is likely being driven by the expense of health insurance, which is far more expensive and sometimes unavailable on an individual basis compared with employment-based coverage,” according to the paper.
Furthermore, it says the private-sector shift to DC plans and away from defined benefit(DB)plans is also a likely factor, as individuals may not have accumulated enough funds in their account or do not feel comfortable tapping into their retirement account, but instead need to continue to work to further build up assets or delay tapping into these funds.
“Both trends of increased labor force participation and increased full-time, full-year work are likely to continue,” says the paper, “since private-sector employers have been phasing out retiree health insurance for younger workers and are continuing to shift out of defined benefit pensions and into defined contribution retirement plans.”
To read the paper in a PDF format from the EBRI’s website, click here.
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