Who Pays? More on the Impact of Raising the Medicare Eligibility Age

In a post last week, I wrote about the Congressional Budget Office’s new projection that raising the age of eligibility for Medicare from 65 to 67 could save the federal government $113 billion over the next decade. But I missed a big part of the story: that this savings might be far outweighed by increased costs to senior citizens, employers, and state governments.

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Raising Retirement Age Could Save $230 Billion Over Next Decade

In 1950, there were 7 people of working age – 20 to 64 – for every person 65 or older. That ratio is currently below 5 and will fall below 3 by 2030. – CBO, 2012

The current age at which someone becomes eligible for Medicare, the federal government’s health insurance program for seniors, is 65. Guess what the age was when Medicare was created in 1966? Continue reading

Myth-busting: The Recession Didn’t Destroy Retirement

After the stock and housing markets bottomed out three years ago, many older Americans saw their nest eggs disappear and had to delay their plans to retire. Or at least that’s the story that news outlets have been reporting for a while. New data show, however, that a larger share (17%) of individuals over age 62 retired between 2008 and 2010 than during any other two year period in the past decade.

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Young Adults Hit By Unemployment As Older Workers Avoid Retirement

“For every member of the millennial generation frustrated that she can’t start a career, there may be a baby boomer frustrated that he can’t end one.”

Writing in the National Journal, Ronald Brownstein explores an interesting dynamic of the recession: young adults are facing devastating unemployment rates while older worker have barely been affected.

The employment rate among older Americans (55+) is almost exactly what it was before the recession (see the graph below). The main cause: many older workers saw their retirement savings evaporate during the crisis and aren’t ready to leave the work force yet. Meanwhile, the recession hit young adults harder than any other age group, in part because of the decrease in job openings made available by older people leaving the work force.

Graph by The Brookings Institution

Some unemployed young adults are using this down time to increase their education and skills base. But Brownstein says we’ve also seen a concerning increase in “idleness” – young people who are neither working nor in school. Workers of all ages, if they want to receive Social Security checks and other benefits in the future, have an interest in ensuring young adults get off into working life on the right foot.

“Upside Down: Why millennials can’t start their careers and baby boomers can’t end theirs.”
National Journal // Ronald Brownstein // June 9, 2011