crease in the physical demands of most jobs bode well for continued labor force participation at older ages.

Will There Be Enough Jobs for the Young If People Work Longer?

Some have expressed concern that if older members of the population work longer, they will take jobs away from the young. Yet this did not happen in the past nor has it occurred in other nations (Chapter 5). The committee thus concludes this is not a substantive concern for the United States in the future. In normal times, except for deep business cycle recessions, the overall number of jobs is determined primarily by the size of the labor force. If anything, an increase in older workers is predicted to slightly increase the wage rates of young workers.

Are Current Workers Saving Adequately for Retirement?

With a larger number of people in retirement and living longer, it would be useful to determine whether they will have adequate living standards during their retirement years. Over the last half-century, much of the worst poverty among the elderly has been reduced, in part owing to government transfer programs. Using updated measures, the poverty rate of the elderly is similar to that of the rest of the population;10 it is much below that of the nonelderly if in-kind government transfers (such as Medicare) are taken into account.

Looking prospectively, the committee has considered whether saving during the worklife will be sufficient to support an adequate living standard in retirement, taking into account expected future government benefits. This question raises several issues concerning the structure of saving (particularly the changing nature of employer-sponsored pension plans), the rate of return on pension savings, and the prospective impact of demographic aging on rates of return.

Changing Nature of Pension Plans

About half of the U.S. workforce is covered by an employer-sponsored retirement plan, and this has been true for the last half-century. But the structure of pension plans has changed dramatically over this time. In the 1970s, most employer-sponsored pension plans were of the defined benefit (DB) variety, where payouts were based on an employee’s earnings history,

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10The standard poverty measure shows lower poverty rates among the elderly, but the new Census Bureau Supplemental measure makes several adjustments that change the picture completely (see Short, 2011).



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