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With the oldest Baby Boomers reaching 65 in just eight years, a burning question for people who market goods and services to seniors is this: Will Boomers retire around age 65, like their predecessors, or will they keep working?

Several converging trends suggest that we are about to witness a major shift in retirement patterns, due largely to Boomer women — born in 1946 to 1964 — who may opt in the future to stay in the labor force past the traditional retirement age. And while older men are also likely to keep working longer than their fathers did, their participation in the labor force is expected to increase at a lower rate than that of women. Overall, more than a third of men and women, who in the past would have retired in their mid-60s, are likely to keep working.

The big increase during the next 10 to 20 years in the number of working women over the age of 55, combined with a significant rise in their income, will likely pump billions of dollars into the consumer economy and perhaps even keep the Social Security trust funds solvent a while longer. According to projections from the Bureau of Labor Statistics (BLS), the number of women 55 and older in the work force will increase by a whopping 52 percent between 2000 and 2010, to 10.1 million from 6.4 million. Part of this increase can be attributed just to the growing number of older people over the next seven years. But another significant reason for this trend is that Boomer women are better educated and far more attached to the labor force than their female predecessors.

Today, more than half of women ages 55 to 64 (52 percent), and more than three quarters of women ages 45 to 54 (77 percent), work full- or part-time. Only a small percentage of women ages 65 to 74 (16 percent) continue to work. These participation rates have been steadily increasing for years and are likely to keep doing so in the future. During this decade, there will be a significant increase in the number of highly paid working women in the youngest age cohort (55 to 64). But between 2010 and 2020, the full force of the Baby Boom will hit the 65-to-74 age cohort, resulting in at least a 50 percent jump in the number of working women in that group.

Two factors likely to cause more older women to stay in the labor force are that their jobs are physically easier than service or factory jobs and that they pay more. This was not always so. In past years, when a greater percentage of working women had demanding and low-paying jobs in factories or in food-service establishments, retiring after 30 years or so was not only desirable, but probably a necessity. Now that an increasing number of women spend their working years in an office setting, they are more likely to be well paid and to work at a professional, managerial or technical job well into their 60s or 70s.

Boomer women can also expect a longer professional life because it's estimated they'll live four to five years longer, on average, than women of previous generations. If present mortality trends continue, Boomer women will live at least 20 years beyond their 65th birthday.

But why choose to work after the age of retirement rather than, say, take a trip around the world? One reason is that Boomer women are more likely to have better jobs than their mothers or grandmothers. In fact, among working women ages 45 to 54, nearly one-third (31 percent) are college graduates, compared with 19 percent of women 65 to 74. As a result, almost 40 percent of working women in this younger group are employed in a managerial or professional occupation, compared with 22 percent of working women in the older group.

A college education definitely pays off. College-educated working women in the 65-to-74 age group have average annual earnings of nearly $40,000, versus earnings of about half — $22,000 — for those without a college degree. The Census Bureau's 2002 Current Population Survey also found that 28 percent of working women ages 55 to 64 were college graduates. That figure is 10 percentage points higher than a decade earlier. Over the next decade we can expect a similar increase in educational attainment for women 65 to 74 years old.

Additional education might not necessarily translate into a higher income were it not for a rising demand for skilled workers. The BLS projects that six of the top 10 fastest-growing occupations between 2000 and 2010 will require a college degree and be ranked in the top quarter in terms of pay (annual earnings of $39,700 and higher).

Among the additional factors driving the higher work-force participation rate for older women — and for older men — are changes in when a retiree can collect a Social Security check and how pensions are structured. For Baby Boomers, as well as for subsequent generations, government retirement checks will arrive later in life. Before 2000, those who turned 62 could receive 80 percent of their full Social Security check and full benefits at age 65. But in 2005, that figure will drop to 75 percent, and the age for getting full benefits will rise to 66. As a result, 43-year-old Baby Boomers cannot expect full benefits until they are 67 years old.

Private pension plans are not likely to be as generous as in the past, either. Employer-funded pension plans are shifting from defined-benefit schemes, which encourage early retirement, to defined-contribution plans, which push people to retire later, particularly if they are getting a poor return on their investments.

The fact that so many more women have been employed in high-paying managerial and professional jobs during the past 20 years has transformed the market for consumer goods and services for families with children. Over the next 20 years, there is likely to be an equally large change in the market for goods and services for seniors, because so many more women are likely to stay in those well-paid occupations — such as lawyer, doctor and engineer — and therefore will have more disposable income.

Traditional marketing to retirees is likely to give way to far more sophisticated and segmented appeals to older people, many of whom will have busy lives at work. The image of retired grandmothers watching a lot of television, playing bingo and living in near poverty is likely to become as obsolete as the description of a single woman as a spinster.

Peter Francese is the founder of American Demographics. He can be reached at [email protected].


Despite the big increase in the number of highly paid working women in the 55- to 64-year-old age group, women over 65 have mostly low-paying jobs.

45-54 15.6M 39% 7% 6% 23% 24% $32,300
55-64 7.5M 25% 6% 8% 30% 31% $29,000
65-74 1.6M 23% 5% 12% 27% 33% $19,400
Source: Census Bureau, 2002 Current Population Survey
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