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August 1998, Vol. 121, No. 8
Knowing the average age at retirement for a given population provides important information for administering and analyzing public and private pension programs. Yet, very little data are available on this topic. Indeed, aside from the Social Security Administrations time series of the mean age at initial award of the Social Security retirement benefit, there have been few efforts to measure the average age at retirement in the United States. Similarly, studies of retirement age trends in other countries have rarely sought to measure the average retirement age.
For this article, a cohort method of measuring the elderlys average age at exit from the labor force for specified periods has been used. The average age at exit from the labor force provides a reasonable indication of the age at which older workers retire. As such, it has provided a more precise measure of the trend in the average age at retirement in recent decades in the United States than, with the exception of the Social Security Administrations time series, has been previously available. The cohort method of measuring the average age at exit from the labor force also provides a more accurate description of the trend in the average age at retirement for women than did earlier studies, many of which relied on a cross-sectional analysis of changes in elderly womens labor force participation rates.1
Constructing a time series of the average age at exit from the labor force permits one to see not only the direction of the trend in retirement age, but also the magnitude and pace of its change. Doing so also enables one to estimate changes in the average duration of retirement (life expectancy after exiting the labor force). The ratio of the average number of years of work (from working life tables) to the average duration of retirement has considerable relevance for financial planning in funded pension plans and systems, partly determining pension accumulation and disbursement. In pay-as-you-go systems, the support ratio (workers/pensioners) partly determines the balance between system receipts and expenditures, and the average age at exit from the labor force is a determinant of the support ratio. Thus, measuring the trend in the average age at exit from the labor force has considerable value for pension planning for individuals as well as organizations, public and private.
This excerpt is from an article published in the August 1998 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 See Murray Gendell and Jacob S. Siegel, "Trends in retirement age by sex, 19502005," Monthly Labor Review, July 1992, pp. 2229; and Murray Gendell and Jacob S. Siegel, "Trends in Retirement Age in the United States, 19551993, by Sex and Race," Journal of Gerontology: Social Sciences, May 1996, pp. S132S139.
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