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-- Programs and Services -- Contact Information "Older workers and their retirement income"
By Robert P. Dean, Executive Director
In September, we celebrate National Employ Older Workers Week, which honors workers age 55 and over, and the wisdom and experience that they bring to the workplace. In Massachusetts, older workers will comprise an increasing proportion of the labor force over the next two decades because the percentage of prime-age workers (those age 55 and under) is expected to decline. This could be good news for older workers if it causes employers to view them as an increasingly important source of labor and to create new opportunities for them in the workplace. These opportunities could include career changes starting at older ages, more part-time work, more gradual retirements, new types of careers, and other changes reflective of the needs of an older workforce that would enhance job satisfaction, productivity, and retention. A key factor in determining a person’s job prospects is the ability to learn new skills or update existing skills. A common employer perception is that older workers are not as able to adapt to changing skills requirements. Elder Services offers a program that provides experience and training to older workers. The Senior Community Service Employment Program (SCSEP) assists persons age 55 or over who meet eligibility criteria to learn new job skills, obtain meaningful employment. SCSEP also provides on the job training and job placement.
Unfortunately, many Americans age 65 or older (the older-older workers) continue to work because they can’t afford to retire. A 2004 report published by The Massachusetts Institute for a New Commonwealth found that many older Americans face retirement with an over reliance on Social Security, a lack of sufficient personal savings, and without any sort of pension or 401(k) plan. One-third of all full-time workers in Massachusetts lack any form of pension or 401(k) coverage, while personal savings in the United States (as a percentage of disposable personal income) has steadily declined over the last 20 years. In regards to Social Security, when the program was enacted in 1935, men were expected to live 12 years after the Social Security age of 65, while women were expected to live 13 years. Today, a man who reaches age 65 has an average life expectancy of 81, while a woman who reaches age 65 has an average life expectancy of 84. As a result of this increased longevity, the normal retirement age for Social Security is being increased over time from age 65 to age 67. This means that people will have to work longer to receive the maximum amount to which they are entitled under Social Security, which remains the primary source of retirement income for most elders, and accounts for 90% of the income of at least 33% of all elders.
In regards to retirement income, the federal government’s Administration on Aging reports that in 2002 the median income of older persons age 65 or older was $19,436 for males and $11,406 for females. Alarmingly, this same study revealed that almost 17% of elders were living near or at the federal poverty level. According to the 2003 Federal Poverty Guidelines, an individual with an annual income of $8,980 or less is considered to be at the poverty level, while an individual with an annual income of $11,225 or less is considered “near poor.” In 2002, 3.6 million (or 10.4% of) Americans age 65 or older lived below the poverty level, while another 2.2 million (or 6.4%) were classified as “near poor.” Statistically, older woman are at a much greater risk of old-age poverty than older men. This is primarily because the retirement system is based on earnings, and many older women had lower earnings because they had lower wages, were more likely to work part time, and spent fewer years in the work force. Additionally, many older women eventually become widows. Women age 65 or older outnumber older men 20.8 million to 14.8 million while half of all women age 75 or older live alone. When a male spouse dies, Social Security may be cut between one-third and one-half, and the couple’s private pension may either disappear completely or be reduced, causing the retirement income of the surviving female spouse to drop significantly.
As we celebrate National Employ Older Workers Week and the collective wisdom and experience that older workers bring to the work place, we would do well to remember that retirement is not an option for many Americans age 65 and older, and that they must continue to work out of financial necessity. Elder Services encourages employers to consider older workers when job opportunities become available.