America Needs to Rethink Retirement
March 18, 2014
America's retirement model is becoming increasingly unsuitable for economic growth, say Nicholas Eberstadt, a resident scholar at the American Enterprise Institute, and Michael W. Hodin, executive director of the Global Coalition on Aging.
The number of Americans over age 60 is growing much faster than the number of young, working-age Americans. The median age is 43 years old in Europe (up from 34 years old three decades ago) and 38 years old in the United States.
Research indicates that gross domestic product (GDP) is boosted when older workers are engaged in the economy.
- A 2005 study of Japan found that increasing the retirement age from 60 years old to 65 years old could raise per capita GDP by 10 percent by the year 2025.
- In the United Kingdom, the International Longevity Centre determined that increasing the number of workers over age 65 by 2.6 percent annually could increase per capita output by up to 6 percent in 2037, adding £1.7 trillion to the economy.
- Studies also indicate that working later in life leads to better health and satisfaction.
Eberstadt and Hodin suggest three reforms that the United States should seek to implement:
- The current unemployment rate only measures those who are actually seeking work but cannot find it. Instead, Americans in their 60s and 70s should be considered eligible for work, and that should be incorporated into labor market indicators.
- Tax credits for firms that invest in training and education for older workers would encourage entrepreneurship among older Americans. Nearly half of all entrepreneurs in the United States are over age 45.
- Corporations should change their approach to hiring and training in order to capitalize on the skills of older workers.
Older Americans are "a great untapped economic resource," say Eberstadt and Hodin. By leveraging this resource, the United States could see another hundred years of strong economic growth.
Source: Nicholas Eberstadt and Michael W. Hodin, "America Needs to Rethink 'Retirement'," Wall Street Journal, March 10, 2014.
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