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David Bank

David Bank

Posted: October 24, 2010 04:13 PM

There's no need to force people to work longer by raising Social Security's retirement age. Many Americans already are doing so -- by choice.

President Obama's debt commission appears set to recommend a gradual increase in Social Security's retirement age, perhaps to 70, to help bring the system's finances into long-term balance. But why use sticks when carrots could do? Making it easier and more appealing for more people to keep working could help balance the system's books while minimizing any benefit cuts.

The continued tax revenue from longer working lives makes such a voluntary initiative a serious policy option. Raising the median age at which Americans actually leave the workforce to 67 -- already Social Security's "normal retirement age" for those born in 1960 or later - would cut Social Security's long-term shortfall nearly in half, according to Stephen Goss, Social Security's chief actuary.

Of course, most people won't extend their working lives in order to rescue Social Security. They'll stay on the job, or find a new one, to bolster their personal financial security. Or to stay connected, make a contribution or pursue a passion.

The trend is well underway. In 1988, about 55 percent of Americans aged 55 to 64 were still in the labor force; now, nearly 65 percent are. Among people aged 65 to 74, the percentage who are still working (or seeking to) has climbed from 16 to 25.

"Folks are making these employment arrangements already," Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, said at a hearing in July on "Choosing to Work During Retirement and the Impact on Social Security" that was called to "examine whether we can make it easier for these arrangements to happen."

Unlike an across-the-board increase, a voluntary initiative would take advantage of the increased longevity and better health that allows many people to work longer, without disadvantaging those who can't or don't want to.

Small changes in Social Security could nudge people to re-up rather than retire. Employers could adopt more flexible arrangements that allow employees to work part-time or part-year. Reformed pension rules could enable people to draw partial benefits as they reduce their hours.

New "encore career" opportunities that last seven, 10 or even 15 years could boost the average retirement age even more dramatically. Investments in career-transition programs at community colleges and new financial services -- call them "Individual Purpose Accounts" -- could help people prepare for their encore transitions. "Encore fellowships," such as those authorized in last year's Edward M. Kennedy Serve America Act and those already offered by a handful of companies could help people make the switch.

A public-private encore career initiative could catalyze accessible and attractive work opportunities by making the talent and experience of older Americans central to fulfilling national priorities in health, education, energy and other areas. Patient navigators, adjunct teachers, job trainers, youth mentors and the like could help reduce health care costs, increase graduation rates, cut energy use and meet other common goals.

By emphasizing personal satisfaction and social contribution, encore careers help redefine working longer as an aspiration, not a punishment. The debt commission, which is due to issue its report in December, can accelerate the beneficial trends by calling a generation to its encore.

The commission may understandably be loath to credit any revenue windfall from such a dramatic shift in social behavior. But what if the commission let us put our labor where our mouths are? By delaying any recommended hike in the retirement age, policymakers could see whether Americans are indeed opting to work longer on their own.

By choosing to work longer, those who are able and willing could help themselves and their communities, and help preserve Social Security as well.

David Bank is vice president of Civic Ventures, a think tank on boomers, work and social purpose.