The Changing Causes And Consequences Of Not Working Before Age 62
According to data from the Bureau of Labor Statistics, nearly one in three men between ages 55 and 61 did not work in January 2011 (US). This statistic includes men who were unemployed and looking for work, as well as those who were no longer in the labor force or never worked. Although the share of nonworking older men increased dramatically because of job losses created by the Great Recession, it has been steadily on the rise since 1990 when only around one in four older men was not working.
This trend is particularly alarming, considering that most adults ages 55 to 61 are not yet eligible for Social Security or pension benefits, and most do not qualify for disability benefits. So who is in this growing group of older nonworkers, and how are they supporting themselves? Prior research has concentrated on issues related to labor force retirement, both voluntary and involuntary, as well as Social Security benefit claiming at both the early entitlement and full retirement ages. Only one previous study we identified focused exclusively on nonworking older adults.
Our paper updates and extends this previous analysis using data from the Health and Retirement Study (HRS) to deepen our understanding of nonworking older adults and how they support themselves before qualifying for Social Security benefits. We examine their characteristics, including demographics, health status, and lifetime labor force attachment. We analyze the effects of various factors on the likelihood of not working and how those have changed over time. Finally, we address the consequences of not working between ages 55 and 61 by examining poverty rates, Social Security claiming age, and overall retirement satisfaction later in life.
It is important for policymakers to understand who stops working early and how they support themselves. Nonworkers may be more likely to apply and qualify for Social Security disability and Supplemental Security Income (SSI) benefits. Also, more than any other group, nonworkers will be adversely impacted by any increases to the early entitlement age. Finally, nonworkers are especially vulnerable in retirement because they are likely to have lower savings, Social Security benefits, and pensions than workers.