Patrick Purcell
WP2004-11
Abstract —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. Other things 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 or the average age at which people retire have implications for both national income and the size and composition of the federal budget. This chapter describes the aging of the US population and summarizing historical data older workers labor force participation. Next, we turn to information on older persons employment and receipt of pension income, which are discussed in the context information on the proportion of workers who claim retired-worker benefits before the full retirement age (65 years and 4 months for people who reach age 65 in 2004). A final section discusses recent proposals to promote phased retirement through amendments to sections of the Internal Revenue Code that govern the taxation of pension income.