How to Think About Recent Trends in the Average Retirement Age?

After nearly a century of decline, work activity among older men stabilized in the 1980s and began to increase in the 1990s. This turnaround reflected changes in Social Security, retirement plans, and the nature of work, improvements in educational attainment, the need to wait for Medicare coverage, and a number of other factors. In response, the average retirement age has increased by about three years. The goal of this brief is to put this three-year increase in context by: 1) comparing current labor force activity to that before the mid-1980s; and 2) assessing the extent to which the forces causing upswing may have played themselves out. Context is important when considering whether the recent increase in the average retirement age provides any rationale for changing Social Security, Medicare, and other programs that affect the well-being of older Americans. This discussion proceeds in three steps. The first section describes reasons for the long-run decline in labor force participation of men since the 1880s, and the second section discusses the factors responsible for the turnaround that began in the early 1990s. The third section takes a closer look at labor force activity among both older men and older women and constructs a measure of the average retirement age. The fourth section looks once again at the factors behind the recent turnaround to assess their likely future impact, finding that, for the most part, they have played themselves out. The final section concludes that while the labor force activity of older individuals has increased significantly in recent decades, participation is still below where it was when Medicare was enacted in 1965 and further increases in the average retirement age seem relatively unlikely. In short, the recent turnaround provides little basis for changing the parameters of Social Security or Medicare.