[Senate Report 110-71]
[From the U.S. Government Publishing Office]



110th Congress 
 1st Session                     SENATE                          Report
                                                                 110-71


 
                     ECONOMIC DEVELOPMENTS IN AGING



                               __________

                             A R E P O R T

                                 of the

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE






                  May 23, 2007.--Ordered to be printed

                              ______
                   
                   U.S GOVERNMENT PRINTING OFFICE
                         WASHINGTON : 2007


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                       SPECIAL COMMITTEE ON AGING

                     HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon                    GORDON SMITH, Oregon, Ranking 
BLANCHE L. LINCOLN, Arkansas             Member
EVAN BAYH, Indiana                   RICHARD SHELBY, Alabama
THOMAS R. CARPER, Delaware           SUSAN COLLINS, Maine
BILL NELSON, Florida                 MEL MARTINEZ, Florida
HILLARY RODHAM CLINTON, New York     LARRY E. CRAIG, Idaho
KEN SALAZAR, Colorado                ELIZABETH DOLE, North Carolina
ROBERT P. CASEY, Jr., Pennsylavania  NORM COLEMAN, Minnesota
CLAIRE McCASKILL, Missouri           DAVID VITTER, Louisiana
SHELDON WHITEHOUSE, Rhode Island     BOB CORKER, Tennessee
                                     ARLEN SPECTER, Pennsylvania
                      Julie Cohen, Staff Director
            Catherine Finley, Ranking Member Staff Director
  

                         LETTER OF TRANSMITTAL

                              ----------                              

                                       U.S. Senate,
                                Special Committee on Aging,
                                              Washington, DC, 2007.
Hon. Dick Cheney,
President, U.S. Senate,
Washington, DC.
    Dear Mr. President: Under authority of Senate Resolution 50 
agreed to February 16, 2005, I am submitting to you a report of 
the U.S. Senate Special Committee on Aging entitled: Economic 
Developments in Aging.
    Senate Resolution 4, the Committee Systems Reorganization 
Amendments of 1977, authorizes the Special Committee on Aging 
``to conduct a continuing study of any and all matters 
pertaining to problems and opportunities of older people, 
including but not limited to, problems and opportunities of 
maintaining health, of assuring adequate income, of finding 
employment, of engaging in productive and rewarding activity, 
of securing proper housing and, when necessary, of obtaining 
care and assistance.'' Senate Resolution 4 also requires that 
the results of these studies and recommendation be reported to 
the Senate annually.
    This report, written by Senator Gordon Smith's staff while 
he was Chairman during the 109th Congress, describes the 
Committee's work over the past 10 years on the economics of 
retirement.
    On behalf of the members of the Committee and its staff, I 
am pleased to transmit this report to you.
            Sincerely,
                                                Herb Kohl, Chairman
                            C O N T E N T S

                                                                   Page
Economic Developments In Aging...................................     1
The Challenges of the Retiring Baby Boomers and Global Aging.....     2
    Global Aging: Opportunity or Threat for the U.S. Economy?....     2
    Retiring Baby Boomers: Meeting the Challenges................     3
Social Security..................................................     4
    Exploring the Economics of Retirement........................     4
    Social Security: Do We Have To Act Now?......................     4
    Strengthening Social Security: What Can Personal Retirement 
      Accounts Do For Low-Income Workers?........................     5
    Strengthening Social Security: What Can We Learn From Other 
      Nations?...................................................     5
    Social Security: Whose Trust Will Be Broken?.................     6
    Analyzing Social Security: GAO Weighs the President's 
      Commission's Proposals.....................................     7
    Straight Shooting on Social Security: The Trade-Offs of 
      Reform.....................................................     7
    Income Taxes: The Solution to the Social Security and 
      Medicare Crisis?...........................................     8
    The Impact of Social Security Reform on Women................     9
    Social Security Reform: Is More Money the Answer?............     9
    Women and Social Security Reform: Are Individual Accounts the 
      Answer?....................................................    10
    The Stock Market and Social Security: The Risks and the 
      Rewards....................................................    10
    Preparing for the Retirement of the Baby Boom Generation.....    11
    A Starting Point for Reform: Identifying the Goals of Social 
      Security...................................................    11
    2010 and Beyond: Preparing Social Security for the Baby 
      Boomers....................................................    12
Retirement Planning..............................................    12
    Managing Retirement Assets: Ensuring Seniors Don't Outlive 
      Their Savings..............................................    12
    Bridging the Gender Gap: Eliminating Retirement Income 
      Disparity for Women........................................    13
    Retirement Planning: Do We Have a Crisis in America?.........    14
    Settling for Silver in the Golden Years: The Special 
      Challenges of Women in Retirement Planning and Security....    14
    Learning to Save: Innovations in the Pursuit of Income 
      Security...................................................    14
    Preparing Americans for Retirement: The Roadblocks to 
      Increased Savings..........................................    15
Pensions/Retirement Savings......................................    16
    The Role of Employer-Sponsored Retirement Plans..............    16
    America's Pensions: The Next Savings and Loan Crisis?........    16
    The Cash Balance Conundrum: How to Promote Pensions without 
      Harming Participants.......................................    17
    Shortchanged: Pension Miscalculations........................    17
Older Workers....................................................    18
    Living Stronger, Earning Longer: Redefining Retirement in the 
      21st Century Workplace.....................................    18
    Breaking the Silver Ceiling: A New Generation of Older 
      Americans Redefining the New Rules of the Workplace........    18
    Mandatory Retirements: Do They Still Make Sense?.............    19
    Overcoming Obstacles and Crafting Opportunity for Older 
      Workers....................................................    19
    Hearing on Now Hiring: The Rising Demand for Older Workers...    20
110th Congress                                                   Report
                                 SENATE
 1st Session                                                     110-71

======================================================================




                     ECONOMIC DEVELOPMENTS IN AGING

                                _______
                                

                  May 23, 2007.--Ordered to be printed

                                _______
                                

 Mr. Kohl, from the Special Committee on Aging, submitted the following

                              R E P O R T

                              ----------                              




                     ECONOMIC DEVELOPMENTS IN AGING

    America is in the midst of a significant demographic shift 
with the aging of the population. The first of the Baby Boomers 
turned age 60 in 2006. And in a few short years, a huge wave of 
Americans will begin to retire. Between 2010 and 2030, the 
number of people age 65 and older is projected to increase by 
76 percent. By 2050, just over one in every five persons, or 
20.6 percent, of the total U.S. population will be age 65 and 
older.
    America's changing demographic profile will impact a wide 
range of social and economic issues. For example, the aging 
population may result in labor shortages in future years--which 
could hurt both the competitiveness of many American businesses 
and the nation's economic growth as a whole. Furthermore, there 
also is a concern with the ``brain drain'' that may occur. The 
U.S. workforce will be losing some of its most experienced 
workers--many of whom have skills that simply are not 
replaceable.
    The aging of America's population is placing significant 
strains on the senior entitlement programs of Social Security, 
Medicare and Medicaid.
    Under current law, entitlement program benefits will grow 
much more rapidly than revenues because of the increase in the 
number of retirees versus workers. For example, in 1950, there 
were about 16 workers for every Social Security recipient. 
Today this ratio has fallen to about three workers per retiree. 
By 2030, there will only be two workers for every retiree 
receiving benefits. The Social Security system simply cannot be 
sustained in its current form with a two to one ratio.
    In addition, federal spending on entitlement programs will 
increase considerably over the next few years. In 2004, Social 
Security and Medicare spending accounted for about six percent 
of gross domestic product. By 2030, it is projected to increase 
to about nine percent.
    To keep pace with the growing aging population, 
strengthening entitlement programs is necessary to ensure the 
sustainability of the programs. However, it is critical that 
Congress does so in a thoughtful manner that preserves benefits 
for those in need.
    The Senate Special Committee on Aging (referred to as the 
``Committee'' hereinafter) has a long history of leading the 
Senate in investigating and debating issues of importance to 
America's aging population. The Committee has initiated 
discussions on ways to strengthen Medicare, Medicaid and 
public/private retirement programs and to expose companies that 
prey upon seniors using marketing scams. This report will focus 
on the work of the Committee on the subject of the economics of 
retirement.
    The report compiles relevant high-level summaries of 
Committee hearings over the past 10 years. These summaries 
demonstrate the ongoing debate within Congress as to the best 
approach to take for reform.
    The report is broken into the following categories: The 
Challenges of the Retiring Baby Boomers and Global Aging, 
Social Security, Retirement Planning, Pensions/Retirement 
Savings and Older Workers.

      THE CHALLENGES OF THE RETIRING BABY BOOMERS AND GLOBAL AGING


Global Aging: Opportunity or Threat for the U.S. Economy?
Chairman Larry Craig; Ranking Member John Breaux
February 27, 2003
Serial No. 108-4

    This hearing explored the impact of global aging on the 
U.S. economy. Alan Greenspan, Chairman of the Federal Reserve 
System, testified that the world's population is growing older 
because of both a declining fertility rate and increasing life 
expectancy. These trends manifest themselves in two important 
ways: a more slowly growing population and labor force and an 
increase in the ratio of the elderly to the working-age 
population. Mr. Greenspan concluded that the aging of the 
population is bound to bring with it many changes to the 
economy. However, although the challenges may seem great, the 
necessary adjustments likely will be smaller than those 
required in most other developed countries. He stated further 
that the U.S. economy is uniquely well suited to make the 
necessary adjustments.
    Sylvester Schieber, Vice President of Watson Wyatt 
Worldwide, also concluded that the U.S. is in a better position 
to weather the aging of its population than virtually any other 
country in the developed world. He stated that the U.S. should 
remain an attractive market for investment for much further 
into the global aging phenomenon than most other developed 
countries and should continue to see foreign flows of capital 
into the economy.
    Paul Hewitt, the Program Director of the Global Aging 
Initiative at the Center for Strategic and International 
Studies (CSIS), reported on the CSIS Commission on Global 
Aging's findings. He stated that the commission's central 
finding was that the challenge posed by global aging is 
pervasive. Global aging will generate important economic 
opportunities, but also will create unprecedented dangers. And 
whether opportunities or dangers prevail depends on the course 
of policy reform over the next few years, both in the U.S. and 
abroad.
    Gary Geipel, Vice President of the Hudson Institute, 
presented a four-part equation for understanding the impact of 
global aging in the workforce. He first discussed the 
challenges in general of global aging for the workforce. The 
second and third parts of the equation were factors specific to 
countries that either exacerbate or mitigate the more general 
challenges and the policy levers that are available to help 
ease some of the workforce challenges. The final piece of the 
equation was the wild cards that could either worsen or better 
the situation. For example, the problem of global aging could 
disappear due to exponential breakthroughs in medical care, 
such that age 65 becomes middle age with life spans extending 
beyond age 100.

Retiring Baby Boomers: Meeting the Challenges
Chairman Charles E. Grassley; Ranking Member John Breaux
March 6, 1997
Serial No. 105-2

    This hearing outlined the challenge of maintaining the 
financial stability and retirement options for the large 
impending population of retirees. Projections have shown that 
resources will run out in the coming 30 to 40 years. Therefore, 
plans need to be made, by both individuals and the federal 
government, to make sure retirees will be compensated and cared 
for as they retire. Short term funding is available and will 
suffice to meet the needs of current retirees, but by the time 
the Baby Boomers begin to retire, changes will be needed to 
provide future generations with financial security and health 
care in retirement.
    Several solutions were proposed during the hearing, 
including an increase in national savings, tax reform and 
better public education about the issue. Additionally, 
witnesses proposed changes in capital gain taxes, as well as 
adoption of a consumption tax, as a means to alleviate the 
burden of maintaining financial independence in retirement. 
Baby Boomers were encouraged to do all they could to help 
themselves through retirement. Witnesses advised future 
generations to save money and warned of the risk of relying on 
Social Security if they were in a higher income bracket as they 
inevitably would garner less of a safety net provided by Social 
Security. The hearing concluded with witnesses urging Americans 
to take responsibility for their own retirement funding issues 
and not to rely solely on the government, which would not be 
able to offer the expected amount of support to the large Baby 
Boom generation.

                            SOCIAL SECURITY


Exploring the Economics of Retirement
Chairman Gordon H. Smith; Ranking Member Herb Kohl
March 15, 2005
Serial No. 109-3

    The purpose of this hearing was to continue a bipartisan 
dialogue on the Social Security system. Chairman Alan Greenspan 
addressed the Committee because of his unique and valuable 
experience as both the current Chairman of the Board of 
Governors of the Federal Reserve System and the Chairman of the 
National Commission on Social Security Reform from 1981 to 
1983. During that period, the last major reforms of the Social 
Security system were enacted. Mr. Greenspan discussed the issue 
of Social Security in the context of the need for national 
savings in order to prepare for the aggregate economic demands 
of a rapidly aging population.
    Mr. Greenspan discussed the issues of population aging and 
retirement. He concluded that a thorough review of the nation's 
commitments is urgently needed--and the necessary adjustments 
will become ever more difficult and larger the longer they are 
delayed. He stated further that reforms will involve making 
tradeoffs among valued alternatives and in doing so, Congress 
must consider not only the distributional effects of policy 
changes but also the broader economic effects on labor supply, 
retirement behavior and national saving.

Social Security: Do We Have To Act Now?
Chairman Gordon H. Smith; Ranking Member Herb Kohl
February 3, 2005
Serial No. 109-2

    The purpose of this hearing was to examine the long-range 
financial problems of Social Security and the various means by 
which they can be resolved to assure greater retirement 
security for generations to come.
    The Social Security system faces significant long-range 
financial deficits. The Social Security trustees' report, 
released in March 2004, projected that the trust fund will 
exhaust their balances in 2042. At that point, day-to-day tax 
receipts would presumably cover only 73 percent of promised 
benefits. By 2078, they would cover only 68 percent. Under 
current law, as long as the trust fund has a balance recorded 
to them, the benefits must be paid with whatever cash the 
Treasury has on hand. Technically, once the trust fund is 
exhausted, only Social Security tax receipts still coming in 
then could be used to provide benefits.
    In addition, at the time of the hearing, Social Security 
tax receipts from the public--now in excess of the program's 
expenditures--were projected to fall below expenditures 
beginning in 2018, and under the trustees' projections, the 
shortfall would grow indefinitely. At the point when tax 
receipts fall below expenditures, trust fund balances and the 
interest thereon would have to be drawn upon. The question this 
poses is where the Treasury would get that money.
    Thus, while the trust fund appears to be healthy for nearly 
40 years into the future, the stress the program may place on 
the Treasury could begin in 15 years or sooner if shrinking 
yearly surpluses starting in 2009 limit what is available to 
meet the other expenses of the government.
    During this hearing, the witnesses, including Congress' own 
non-partisan support agencies and groups prominently engaged in 
the public debate, addressed the solvency issue and the 
necessity and timing of congressional action.

Strengthening Social Security: What Can Personal Retirement 
Accounts Do For Low-Income Workers?
Chairman Larry Craig; Ranking Member John Breaux
June 15, 2004
Serial No. 108-37

    The purpose of this hearing was to discuss how the addition 
of personal retirement accounts will impact low-income workers. 
The hearing's focus was on a Government Accountability Office 
(GAO) study on how selected Social Security reform proposals 
might affect the distribution of benefits and taxes.
    The Social Security program's distributional effect 
reflects both program features and demographic patterns among 
its recipients. In addition to the benefit formula, disability 
benefits favor lower earners because disabled workers are more 
likely to be lower lifetime earners. In contrast, certain 
household patterns reduce the system's tilt toward lower 
earners--for example, when lower earners have high-earner 
spouses. The advantage for lower earners also is diminished by 
the fact that they may not live as long as high earners, and 
therefore, would get benefits for fewer years on average.
    Proposals to alter the Social Security program would have 
different distributional effects depending on their design. 
Model 2 of President Bush's Commission to Strengthen Social 
Security proposed new individual accounts, certain benefit 
reductions for all beneficiaries, and certain benefit 
enhancements for selected low earners and survivors. According 
to GAO's simulations, the combined effect could result in lower 
earners receiving a greater relative share of all benefits than 
under the current system if all workers invest in the same 
portfolio.

Strengthening Social Security: What Can We Learn From Other 
Nations?
Chairman Larry Craig; Ranking Member John Breaux
May 18, 2004
Serial No. 108-35

    This hearing discussed Social Security and what America can 
learn from other nations. Japan and Europe have larger aging 
populations compared to the United States. And many nations 
have undertaken, or are in the middle of enacting, reforms to 
secure the retirement income of retirees. The pace and approach 
to reform differs with each nation. Many of the largest 
industrialized economies generally have opted to increase taxes 
and cut benefits.
    Several countries have decided to plan ahead by prefunding 
future Social Security payments and investing those funds in 
private sector securities to increase returns. In some 
countries, such as Canada, it has meant direct investment of 
the trust funds in private sector securities. In others, it has 
meant establishing personal investment accounts. About 30 
countries have implemented some type of personal account system 
as a component of their mandatory retirement insurance program. 
In addition, many countries recently have passed legislation or 
are considering reforms that include personal accounts.
    The first lesson learned from this hearing was that Social 
Security reforms are inevitable. As President Kennedy said in 
1961, ``The Social Security program plays an important part in 
providing for our families, children, and older persons in 
times of stress. But it cannot remain static. Changes in our 
populations, in our working habits, and in our standard of 
living require constant revision.'' Secondly, it is important 
to act sooner rather than later in beginning to implement 
reforms. The experience of other countries shows us that 
strengthening the Social Security program takes a long time. 
Thirdly, if personal accounts are established as part of a plan 
to strengthen Social Security, it is important to keep 
administrative costs in check. Some countries, such as the 
United Kingdom and Chile, have experienced relatively high 
costs in administering accounts, whereas Sweden's process 
appears to have been more successful in limiting administrative 
costs. Finally, the developed and developing worlds must work 
together to engage this challenge constructively.

Social Security: Whose Trust Will Be Broken?
Chairman Larry Craig; Ranking Member John Breaux
July 29, 2003
Serial No. 108-18

    This hearing focused on the future of Social Security. Over 
the long term, as the Baby Boom generation retires, Social 
Security's financing shortfall presents a major program 
solvency and sustainability challenge. Waiting for Social 
Security to reach an immediate solvency crisis will reduce 
greatly the number of options, leaving less achievable choices 
as the end result. Taking prompt action will diminish the 
likelihood that Congress will have to choose between imposing 
severe budget cuts, benefit cuts or potentially jeopardizing 
future generations' retirement.
    In 2008, the first Baby Boomers will become eligible for 
Social Security benefits, and the future costs of serving them 
are already becoming a factor in the Congressional Budget 
Office's 10-year estimation. The difference between program tax 
income and the cost of paying scheduled benefits will begin a 
permanent decline in 2009. To finance the same level of federal 
spending as in the previous year, additional revenues and/or 
increased borrowing will be in order. By 2018, Social 
Security's tax income is projected to be insufficient to pay 
currently scheduled benefits. The shift from positive to 
negative cash flow will place an increased amount of pressure 
on the federal budget to raise the resources necessary to meet 
the program's ongoing costs.
    During the hearing, GAO also discussed the results of its 
analysis of an illustrative ``Trust Fund Exhaustion'' scenario. 
Under this scenario, benefits are reduced proportionately for 
all beneficiaries by the shortfall in revenues occurring upon 
exhaustion of the combined Old-Age and Survivors Insurance and 
Disability Insurance Trust Funds. GAO's analysis illustrated 
trade-offs between achieving sustainable solvency and 
maintaining benefit adequacy. It also dramatically demonstrated 
the need for action sooner rather than later.

Analyzing Social Security: GAO Weighs the President's 
Commission's Proposals
Chairman Larry Craig; Ranking Member John Breaux
January 15, 2003
Serial No. 108-1

    This hearing, which was chaired by Ranking Member Breaux, 
was held to hear about the findings of a GAO study on the 
nations' Social Security program and how to address the 
challenges to ensure the long-term viability of the system. 
David Walker, Comptroller General of GAO, presented the 
agency's findings. Mr. Walker highlighted a number of important 
points in connection with the Social Security challenge:
       Social Security reform is part of a broader 
fiscal and economic challenge.
       Focusing on trust fund solvency alone is not 
sufficient; the program needs to be put on a path toward 
sustainable solvency.
       Solving Social Security's long-term financing 
problem is more important and complex than simply making the 
numbers add up.
       Given the current projected financial shortfall 
of the program, it is important to compare proposals to at 
least two funded benchmarks one that funds currently scheduled 
benefits and one that adjusts to current tax financing.
       Reform proposals should be evaluated as 
packages.
       Acting sooner rather than later helps to ease 
the difficulty of change.

Straight Shooting on Social Security: The Trade-Offs of Reform
Chairman John Breaux; Ranking Member Larry Craig
December 10, 2001
Serial No. 107-16

    The purpose of this hearing was to provide Congress and the 
American public with a framework in which to consider Social 
Security reform. The hearing examined some of the proposals 
contained within the Presidential Social Security Commission 
recommendations. It also provided a realistic and nonpartisan 
reminder of the very serious problems that are facing Social 
Security and a substantive examination of the cost and 
tradeoffs that are associated with real reform.
    Dan Crippen, Director of the Congressional Budget Office, 
reviewed the demographic challenges facing Social Security. The 
Baby Boom generation is about to retire and between 2010 and 
2020 will almost double the number of people in Social Security 
and other retirement programs. At the same time, the workforce 
will grow less than 10 percent, resulting in the current three 
workers per retiree to drop to two. Mr. Crippen also analyzed 
the problem in terms of the budget. Over the time period of 
2010 and 2030, Social Security, Medicare and Medicaid will make 
up at least two-thirds of the budget. That means that these 
programs will go from consuming about seven percent of gross 
domestic product to 15 percent.
    Barbara Bovbjerg, Director of Education, Workforce and 
Income Security Issues at the General Accountability Office 
(GAO), helped clarify some of the key issues Congress and the 
public will face in considering options for Social Security 
reform. She discussed the nature and timing of Social 
Security's long-term solvency problem, GAO's framework for 
evaluating reform proposals and findings from their recent 
report on Social Security's role in securing income adequacy.
    Geoffrey Kollman, a specialist on social legislation at the 
Congressional Research Service, discussed why America should 
act now rather than later. Some of his reasons included the 
fact that our society is permanently aging, due not only to the 
size of the Baby Boom generation, but the fact that people are 
living longer and the number of workers supporting them is 
going to decline. Another reason why it is crucial to act now 
is that the burden on government goes well beyond Social 
Security.

Income Taxes: The Solution to the Social Security and Medicare 
Crisis?
Chairman Charles E. Grassley; Ranking Member John Breaux
March 27, 2000
Serial No. 106-25

    This hearing focused on the use of income taxes to fund 
Social Security and Medicare. The Congressional Budget Office 
estimated that over the next decade the non-Social Security 
surplus would total more than $1.8 trillion. Witnesses pointed 
out that while the surplus seems an obvious place to look for 
funds for Social Security and Medicare, it is not ``free 
money.'' These funds come from taxing the income of Americans, 
a departure from the original designs for funding Social 
Security. Payroll taxes have been the primary source for 
previous funding, and this hearing evaluated the costs and 
benefits of increasingly relying on income taxes to fund Social 
Security and Medicare.
    Alan Greenspan, Chairman of the Federal Reserve System, 
testified that the growing number of retirees in relation to 
workers renders the pay-as-you-go Social Security program 
unsustainable in the long run. Mr. Greenspan advocated for 
increasing the total amount of goods and services produced by 
the nation's economy. The best way to do this is by diverting 
resources that would have gone directly into savings to the 
production of new capital assets, which would cumulatively 
produce an even greater quantity of goods and services to be 
consumed later. Therefore, it is necessary to increase 
America's national savings to reform Social Security. Mr. 
Greenspan and several other witnesses agreed with the 
Administration's proposal to wall off the bulk of the unified 
budget surplus to boost saving, raise the productive capital 
stock and thus help provide the wherewithal to meet future 
obligations. Additionally, witnesses stated that transferring 
moneys from the on-budget to the off-budget Social Security 
accounts is more feasible than transferring general revenues 
from the on-budget accounts to the Social Security trust fund.
    The hearing concluded with witnesses explaining that any 
general revenue transfer should not be made perpetual in 
nature, but should help finance the transition to a more 
balanced and sustainable system, or should support a program 
related to private pensions or a well-designed retirement 
savings program.

The Impact of Social Security Reform on Women
Chairman Charles E. Grassley; Ranking Member John Breaux
June 1, 1999
Serial No. 106-8

    This hearing examined the impact of Social Security reform 
on women. Many women have unique problems in dealing with 
Social Security. There are several factors that contribute to 
gender inequity in the Social Security system and this hearing 
sought to address these inequities.
    Witnesses outlined the fact that women are most dependent 
on a healthy Social Security system. Within the poorest 20 
percent of the elderly, half depend on Social Security 
entirely, and women are much more likely to be in this group. 
Due to the fact that other sources of income are not as readily 
available to women, such as pensions, which are directly tied 
to earnings, or asset incomes, which are uncommon amongst the 
female population, women rely much more on Social Security. The 
protection Social Security offers from inflation, as well as a 
progressive benefit formula that pays a higher percentage to 
lower earners, makes Social Security an essential resource for 
many women.
    The hearing recommended that any scaling back of benefit 
schedules be done progressively so that those with higher 
earnings would face higher benefit reductions. A change to 
auxiliary benefits also was proposed that would benefit women 
by requiring a minimum benefit for surviving spouses equal to 
75 percent of the total benefit the deceased spouse and 
survivor would have received. This would be necessary to 
consider since women live longer than men on average. It 
ultimately was concluded that women are a vulnerable group 
amongst the elderly, and all proposals for Social Security 
reform need to be evaluated specifically on how they may affect 
the needs of this demographic.

Social Security Reform: Is More Money the Answer?
Chairman Charles E. Grassley; Ranking Member John Breaux
March 1, 1999
Serial No. 106-2

    This hearing was held to compare and contrast the options 
for sustaining the Social Security entitlement program. With 
the dramatic increase of beneficiaries as the Baby Boom 
generation retires, funding for the program must be increased 
to address the new levels of benefits being provided. However, 
the means to do this are subject to much debate.
    The hearing first examined a proposal by President Clinton 
that involved saving the federal budget surplus by paying down 
the public debt, raising national savings and investment in 
economic growth. Other witnesses argued that the best solution 
would be to slow benefits without altering payroll taxes or 
subsidizing the system with general revenues. Still other 
witnesses advocated increasing taxes and using general revenues 
to strengthen Social Security. Ultimately, it was concluded 
that a combination of several solutions would be necessary to 
address this multifaceted problem.

Women and Social Security Reform: Are Individual Accounts The 
Answer?
Chairman Charles E. Grassley; Ranking Member John Breaux
February 22, 1999
Serial No. 106-1

    This hearing addressed the benefits women derive from the 
current Social Security program and the benefits women would 
realize under a system would include an individual account 
component.
    As witnesses pointed out, there are specific concerns 
unique to women that arise under individual accounts, such as 
investment behavior, the impact of divorce and the longer life 
span of women. Witnesses outlined the positive and negative 
impacts of individual retirement accounts for women, some 
viewing them as very beneficial to women, while other witnesses 
found individual accounts to have severe drawbacks for women. 
Ultimately, it was concluded that women's investment decisions 
in 401(k) plans are similar to those of men with similar work 
histories. As such, shifting Social Security to a system of 
individual accounts should not be rejected because of concerns 
about the quality of women's investment decisions. Also, in 
making the decision whether to adopt mandatory individual 
accounts as a central component of Social Security in the 21st 
century, Congress must consider how such a fundamental change 
in social policy will affect various economic and demographic 
groups.
    The hearing concluded that it is important to recognize 
that most gender-related concerns associated with individual 
retirement accounts can be addressed by various government 
restrictions or requirements concerning distributions, 
subsidies and investment options. If mandatory individual 
accounts are adopted, Congress must decide whether the 
advantages of such restrictions outweigh the distortions that 
they introduce into the new system of retirement income 
provisions.

The Stock Market and Social Security: The Risks and the Rewards
Chairman Charles E. Grassley; Ranking Member John Breaux
April 22, 1998
Serial No. 105-20

    This hearing focused on the role the stock market should 
have in the Social Security program. The witnesses examined the 
questions of who should invest, the government or the 
individual; how much should be invested; and whether individual 
or government investments are cost effective.
    The idea of investing all or part of the Social Security 
trust fund revenue in private markets and/or the implications 
of investing trust fund money in the stock market is one of the 
most debated elements of Social Security reform. The definition 
of Social Security trust funds is an accounting device used by 
the government in order to keep track of the money coming in 
and the money going out. Investing trust fund revenue in the 
stock market is a move toward prefunding some of the retirement 
income promises that have been made to the country's retired 
workers, disabled workers, dependents and survivors. However, 
witnesses stressed that stock market investing is only one 
option to increase the trust fund's revenue; but by itself, it 
is not the solution to Social Security's financing problem. 
Higher investment returns could extend Social Security's long-
range solvency somewhat, but their effectiveness is limited as 
long as the program remains a largely pay-as-you-go system, 
under which each current working generation pays for the 
benefits of the retired generation. Also, in exchange for the 
prospect of higher returns, the Social Security trust fund 
would have to take on greater risk. This risk/return trade-off 
would apply not only to the individual account proposals, but 
would apply to each worker individually rather than to all 
workers collectively.
    The second panel of witnesses offered a different 
perspective on the matter of individual accounts. Witnesses 
warned that participants with low account balances would be 
paying the same dollar amount in administrative expenses as 
people with high account balances. Witnesses also expressed 
concern for people who report wages on an irregular basis, like 
seasonal employees. Ultimately, the hearing concluded that 
individual retirement accounts linked to Social Security, 
patterned after the Federal retirement plan known as the Thrift 
Savings Plan, could be a viable component of retirement saving.

Preparing for the Retirement of the Baby Boom Generation
Chairman Charles E. Grassley; Ranking Member John Breaux
February 18, 1998
Serial No. 105-16

    This hearing addressed the future concerns of retirement 
for the Baby Boom generation, primarily focusing on Medicare 
and Social Security. Witnesses testified that the future 
solvency of the system depends on many factors, one of the most 
important being the impending retirement of approximately 77 
million U.S. citizens of the Baby Boom generation. The 
retirement of this generation represents an explosion of people 
into a program, which is already taxed to provide promised 
services. When the Baby Boomers begin to retire, the Medicare 
Part A Trust Fund will become insolvent. Social Security is in 
a similar situation. Although there currently are more taxes 
and revenues being taken in than benefits paid out, it was 
estimated at the time of the hearing that Social Security will 
reach insolvency by the year 2029 if it continues on its 
current trajectory.
    The hearing went on to outline recent changes enacted to 
prepare Medicare for the 21st century. President Clinton worked 
with Congress to enact a major reform of the Medicare program. 
The Balanced Budget Act extended the life of the trust fund 
another decade to 2010 and modernized the program through more 
efficient payment methodologies and new health plan choices for 
beneficiaries. The hearing concluded with witnesses 
highlighting other important changes that were created from the 
Balanced Budget Act, including providing new choices for 
beneficiaries, better information for beneficiaries, expanding 
preventative benefits, reforming the way health plans and 
providers are paid and adding new tools and new funding to 
combat fraud and abuse in the Social Security and Medicare 
programs.

A Starting Point for Reform: Identifying the Goals of Social 
Security
Chairman Charles E. Grassley; Ranking Member John Breaux
February 10, 1998
Serial No. 105-15

    This hearing addressed the sustainability of the Social 
Security system. Witnesses pointed out that while the Social 
Security and Medicare trust funds currently take in more than 
is paid out and large reserves are being accumulated, the 
reserves would be exhausted in 2029 if no changes are made to 
the program. Many retirees rely on Social Security for the 
majority of their retirement income and without it, they would 
face hardships. In fact, one in four retirees depends on Social 
Security for at least 90 percent of their income. The main goal 
of this hearing was to identify the objectives that different 
groups want to achieve through Social Security reform.
    Witnesses proposed several solutions to enhance the well-
being of tomorrow's retirees. First, Social Security reform 
should come sooner rather than later. Secondly, reform must be 
pursued on a bipartisan basis; both Republicans and Democrats 
should come together to find a solid solution. Thirdly, the 
government should not invest the Social Security funds, but 
rather move toward a system of personal retirement accounts. 
Witnesses pointed out that there will be economic growth if any 
new system encourages greater savings. Finally, the hearing 
stressed that the government needs to develop a new system that 
maintains an appropriate social safety net. Workers should be 
protected in case of disability, and both minor children and 
surviving spouses should be provided for in the event of a 
worker's death with a basic minimum benefit guaranteed.

2010 and Beyond: Preparing Social Security for the Baby Boomers
Chairman Charles E. Grassley; Ranking Member John Breaux
August 26, 1997
Serial No: 105-11

    This hearing focused on the uncertainty of Social 
Security's sustainability and the impact that uncertainty will 
have on the Baby Boom generation and others to follow. 
Americans of all ages are filled with anxiety about their 
retirement years and a plan to sustain Social Security for the 
Baby Boomers and future generations is essential.
    Witnesses estimated that Social Security will be completely 
bankrupt by the year 2031. Further, they asserted that waiting 
until the Baby Boomers start to retire to make improvements 
will be too late. Solutions proposed include an increase in the 
payroll tax, reduction of benefits or a combination of both. 
Though witnesses disagreed on the exact approach necessary, all 
agreed that early enactment of changes would allow changes to 
be phased in gradually, allowing for advanced notice to workers 
and beneficiaries so they could effectively adjust their plans 
for retirement.

                          RETIREMENT PLANNING


Managing Retirement Assets: Ensuring Seniors Don't Outlive 
Their Savings
Chairman Gordon H. Smith; Ranking Member Herb Kohl
June 21, 2006
Serial No. 109-25

    During this hearing, the Committee examined the challenges 
seniors face in managing their assets during retirement. For 
example, Americans are living longer on average, and therefore, 
need to stretch their retirement dollars over a longer period 
of time than in the past. Seniors also should be concerned that 
inflation could erode the purchasing power of their income, 
investments may yield returns that are less than expected or 
decline in value, and large unplanned expenses, such as those 
to cover health care or long-term care, may occur at some point 
during retirement.
    The hearing focused on how to manage a nest egg to provide 
a lifelong income stream. The Committee also examined the 
impact certain trends have had on retirement income, such as 
the shift to individual responsibility for both accumulating 
savings and drawing down retirement benefits.

Bridging the Gender Gap: Eliminating Retirement Income 
Disparity for Women
Chairman Gordon H. Smith; Ranking Member Herb Kohl
March 15, 2006
Serial No. 109-19

    The purpose of this hearing was to examine the unique 
struggles women face in preparing for a financially secure 
retirement. The hearing focused on the gap in retirement income 
between men and women, why women face greater financial risk 
than men, and ways to assist women in planning for retirement.
    Over their lifetimes, men and women differ in many ways 
that have consequences for their retirement income. For 
example, many women spend significant periods of time out of 
the work force raising children or taking care of elderly 
parents. Women also are more likely than men to work part-time 
and generally earn less than men.
    These differences impact what men and women receive from 
both Social Security and pensions, as well as what they are 
able to accumulate through personal savings. The result is that 
women generally have less retirement income than men and tend 
to have much higher rates of poverty in old age. These trends 
are exacerbated by the fact that women generally live longer. 
The hearing took a closer look at this problem and witnesses 
offered potential solutions.
Retirement Planning: Do We Have a Crisis in America?
Chairman Larry Craig; Ranking Member John Breaux
January 27, 2004
Serial No. 108-27

    This hearing examined whether the U.S. has a retirement 
planning crisis. Americans are living longer than ever; 
however, instead of increasing their retirement savings for a 
longer retirement, Americans are saving less than ever. A 
Commerce Department report showed that the personal saving rate 
actually had declined from 7.7 percent in 1992 to 2.3 percent 
in 2002. This decline raises the risk that many Americans may 
outlive their savings. This hearing provided members with an 
opportunity to understand the impact of the nation's declining 
personal savings rate and to examine ideas for addressing the 
decline.

Settling for Silver in the Golden Years: The Special Challenges 
of Women in Retirement Planning and Security
Chairman John Breaux; Ranking Member Larry Craig
May 23, 2002
Serial No. 107-26

    This hearing focused on the unique challenges women face in 
preparing for a secure retirement. Although both men and women 
face difficulties in navigating the challenges of retirement 
planning, for women the retirement income stool is 
significantly more wobbly. In all three legs of the retirement 
income stool, Social Security, employer-provided retirement 
plans and personal savings, women lag behind men. For example, 
in Social Security, even though women account for 60 percent of 
the programs' beneficiaries and tend to live seven years longer 
in retirement than men, women receive only about 75 percent as 
much in Social Security benefits.
    This hearing examined why women tend to have less 
retirement income than men. One of the reasons includes the 
fact that women are more likely than men to work part-time and 
in industries where retirement benefits are less common. The 
hearing also highlighted strategies and resources that women 
and their families can turn to for help. For example, the 
Women's Institute for a Secure Retirement highlighted their 
community education program to help women prepare for the 
future, POWERCenter. POWERCenter's primary goal is to educate 
the maximum number of women with information that can assist in 
retirement planning, and provide average and low-income women 
with the opportunity to take the first step toward controlling 
their financial futures.

Learning to Save: Innovations in the Pursuit of Income Security
Chairman Charles E. Grassley; Ranking Member John Breaux
June 17, 1999
Serial No. 106-10

    This hearing was both a follow-up event to the 1998 SAVER 
summit and a way to highlight initiatives in the public and 
private sector that educate people about retirement savings and 
financial planning. The SAVER summit was held as part of the 
Savings Are Vital to Everyone's Retirement (``SAVER'') Act of 
1997. This legislation mapped out three areas where the 
government needs to focus its energy to help American's achieve 
a secure retirement: motivating individuals to take steps to 
secure their own retirements, assisting small employers to 
better understand the pension coverage options available and 
preparing those especially at risk in retirement planning, such 
as women and minorities.
    The hearing highlighted what is being done specifically to 
help women, minorities and youth plan for retirement. A 
steadily growing number depend on defined contribution plans 
that require more individual decision-making. Therefore, 
witnesses concluded that more education is necessary to help 
those who are unaware of their financial planning options. 
Nearly all of the witnesses expressed the importance of using 
all available media outlets to educate people about personal 
retirement saving. The witnesses also stressed the importance 
of educating people about the importance of saving early for 
retirement, educating people about the actual costs of 
retirement, encouraging the use of payroll deductions for 
saving, developing financial planning curriculum for high 
schools/colleges and providing simple, user-friendly 
information on retirement savings. The hearing concluded by 
examining the roadblocks facing small businesses that would 
like to offer a pension plan, but are unable to do so due to 
uncertain revenues, large numbers of temporary or part-time 
employees, employees that prefer higher wages, and the costs to 
set up/administer/contribute to pension plans. Several 
solutions were offered to overcome these hurdles, including the 
implementation of business tax credits to offset startup costs 
of pension plans.

Preparing Americans for Retirement: The Roadblocks to Increased 
Savings
Chairman Charles E. Grassley; Ranking Member John Breaux
June 2, 1998
Serial No. 105-25

    This hearing focused on the problems Americans will have 
saving for their future. Promises of benefits to retirees are 
under fire from a number of different directions. In fact, if 
Congress does not act soon Social Security benefits for many 
people may not be paid out at the same level as they are today.
    Witnesses testified that a primary roadblock to increased 
savings is the lack of knowledge people have about saving. For 
example, workers with pensions are not aware of the structure 
of their benefits and borrow from their 401(k) plans without 
realizing the consequences. Participants in 401(k) plans need 
to take responsibility for understanding how their plans work 
and how to determine the optimal level of contributions to 
these plans.
    The hearing proposed several ideas to increase savings. 
Retirement plan accounts should not be used as glorified 
savings accounts, and there should be no withdrawals allowed 
from retirement accounts or Social Security until age 65 
(unless a person is disabled). In addition, the encouragement 
of pension creation and protection of pensions is a necessary 
tool for saving. Congress should continue to examine ways to 
simplify pension regulation, which is a leading impediment to 
the start-up of new plans. Moreover, workers should not be 
permitted to take lump-sum distributions from pensions when 
they change jobs. Witnesses also suggested that Congress and 
the President work on increasing how much money people can put 
away tax-free, especially the self-employed. Public education 
of finances also was stressed. Finally, witnesses suggested 
that there needs to be ways in which the portability of pension 
benefits would help workers avoid losing benefits when they 
switch jobs. Allowing more workers to contribute to their 
pensions from the very first day of a new job also would boost 
individual savings.

                      PENSIONS/RETIREMENT SAVINGS


The Role of Employer-Sponsored Retirement Plans
Chairman Gordon H. Smith; Ranking Member Herb Kohl
April 12, 2005
Serial No. 109-5

    The purpose of this hearing was to examine savings in the 
context of employer-sponsored pensions and explore solutions to 
improve the system. The Committee heard from a number of 
witnesses, including an official from the Department of the 
Treasury, who discussed whether the current employer-sponsored 
pension system effectively increases national savings; how the 
system could be improved to increase savings; whether tax 
incentives are an effective way to increase savings; what the 
coverage rates in employer pension plans are today; and whether 
there are ways to increase such rates.
    Retirement income has been referred to by many as a three 
legged stool: Social Security, employer-sponsored pensions and 
personal savings. Although there has been a tremendous amount 
of focus on the Social Security program, the other two legs of 
the retirement income stool are equally as important. Pensions 
are the second largest source of income among the elderly, 
after Social Security. Therefore, this hearing focused on ways 
to increase savings in employer-sponsored pensions.

America's Pensions: The Next Savings and Loan Crisis?
Chairman Larry Craig; Ranking Member John Breaux
October 14, 2003
Serial No. 108-24

    The purpose of this hearing was to examine the long-term 
financing risks to the single-employer insurance program 
managed by the Pension Benefit Guaranty Corporation (PBGC) and 
the future of the defined benefit pension system. More than 34 
million workers and retirees in 30,000 single-employer defined 
benefit pension plans rely on the PBGC's federal insurance 
program to protect their pension benefits. During fiscal year 
2002, the PBGC's single-employer insurance program went from a 
surplus of $7.7 billion to a deficit of $3.6 billion, a loss of 
$11.2 billion in just one year. In addition, based on PBGC's 
latest unaudited financial report, the deficit had grown to 
$8.8 billion as of August 31, 2003.
    The major reason for PBGC's single-employer pension 
insurance program's return to a deficit in 2002 was the 
termination, or expected termination, of several severely 
underfunded pension plans. Several underlying factors 
contributed to the severity of the plans' underfunded status, 
including a sharp decline in the stock market, which reduced 
plan asset values, and a general decline in interest rates, 
which increased the cost of terminating defined benefit pension 
plans. Witnesses discussed the implications of this financial 
reversal and what must be done to address it.

The Cash Balance Conundrum: How to Promote Pensions without 
Harming Participants
Chairman Charles E. Grassley; Ranking Member John Breaux
June 5, 2000
Serial No. 106-29

    This hearing evaluated the benefit and drawbacks of 
different types of pension plans. Specifically, the purpose of 
the hearing was to determine which plans best promote worker's 
individual needs. In general, there are two types of retirement 
plans: defined benefit pension plans, which guarantee a certain 
monthly payment upon retirement; and defined contribution 
plans, which establish contributions for the employer and 
employee, but guarantee no specific payment at retirement.
    However, employers recently have been converting their 
traditional pension plans to cash balance plans or other hybrid 
pension plans. These plans are more easily understandable from 
an employee perspective and more portable. Under a traditional 
defined benefit pension plan that bases benefits on final 
average pay, the value of your annuity spikes upward in the 
last few years on the job. Under cash balance and similar 
plans, there is no spike in value at the end of a career. This 
is because benefits tend to accrue at a more even pace.
    This more constant rate of benefit accrual in a cash 
balance plan can be a disadvantage if you are in the middle or 
toward the end of your career. And many employees who have 
worked for years in a ``back-loaded'' plan and find out that 
their employer is converting to a more ``front-loaded'' plan 
are concerned. It is many of these workers who often are not in 
a good position to save more money in order to make up the 
difference between what they expected to receive from their old 
retirement plan and what they will get under their cash balance 
plan. Unless the plan provides transition benefits, some long-
service employees can be harmed.
    This hearing explored the controversy surrounding cash 
balance plans. With the trend away from defined benefit pension 
plans, the hearing also focused on ways to make pension plans 
more attractive to companies.

Shortchanged: Pension Miscalculations
Chairman Charles E. Grassley; Ranking Member John Breaux
June 16, 1997
Serial No. 105-6

    This hearing discussed the prevalence of pension 
miscalculation and the reasons behind these miscalculations. 
The hearing examined who is at risk, the scope of the problem 
and how individuals could protect their pensions.
    To address these issues, the PBGC did an estimate of error 
rate in the audit samples they conducted for terminated pension 
plans. The PBGC reported that the preliminary results from 
their latest audit cycle showed approximately 13.7 percent of 
almost 2,800 people were underpaid. The majority of these 
people were receiving lump sum distribution payments. The PBGC 
audit results also revealed that there is a disturbing increase 
in the number of people underpaid. Ten years ago, the number of 
pension plan participants underpaid was slightly over two 
percent; today it is 8.2 percent. Unfortunately, a high number 
of people are finding that what they were counting on for 
retirement simply is not there.
    Witnesses urged employees to make an effort to fully 
understand their company's pension program. Witnesses also 
stressed the importance of being persistent when tracking 
possible mistakes in a pension plan. Legislative fixes were 
proposed to alleviate the problem, including a bill that would 
require employers to provide employees with a benefit statement 
at least once every three years, a departure from current law, 
which requires employers to provide a statement of benefits 
only when asked by the employee. It also was proposed that 
employers provide employees with all documents showing how 
their benefits were calculated. Lastly and most importantly, 
witnesses stressed the importance of people being accountable 
for their future and being proactive in understanding and 
protecting their benefits.

                             OLDER WORKERS


Living Stronger, Earning Longer: Redefining Retirement in the 
21st Century Workplace
Chairman Gordon H. Smith; Ranking Member Herb Kohl
April 27, 2005
Serial No. 109-6

    The purpose of this hearing, which was chaired by Ranking 
Member Kohl, was to examine U.S. demographic and labor force 
trends and the barriers seniors experience in extending their 
employment years. Demographically, society is getting older 
and, as a result, the labor force will need to work longer to 
maintain a high level of productivity and to support the nation 
economically.
    Due to increased life expectancies in the U.S., many 
Americans plan to work later in life. Under some existing 
employment systems, such as defined benefit programs, employees 
are discouraged from working past the traditional retirement 
age and, in some instances, financially penalized for staying 
in the workforce longer. The hearing included discussions of 
best practices currently being implemented by businesses 
regarding employment of seniors, such as offering flexible work 
hours, eldercare and phased retirement programs.

Breaking the Silver Ceiling: A New Generation of Older 
Americans Redefining the New Rules of the Workplace
Chairman Larry Craig; Ranking Member John Breaux
September 20, 2004
Serial No. 108-43

    The purpose of this hearing, which was chaired by Ranking 
Member Breaux, was to discuss how older Americans are breaking 
the silver ceiling in the nation's workplace. Since 1985, there 
has been an upturn in the number of older Americans who are 
choosing to work past age 65. However, over the past 50 years, 
both corporate and federal policies have encouraged workers to 
leave the workforce as early as possible. Social Security 
benefits allow people to retire as early as age 62, with normal 
retirement age at 65 years. Currently, 75 percent of Americans 
apply for Social Security benefits at age 62. In addition, 
companies have built their pension plans to favor early 
retirement and to encourage the hiring of younger workers.
    A number of factors impact whether older Americans stay in 
the workforce longer, including inadequate retirement savings 
and cuts in retiree health benefits. In addition to these 
factors, it is important for the nation's economy for older 
workers to continue working. As Baby Boomers reach retirement 
age in the next few years, the economy will start to experience 
negative effects of mass retirements. There will be fewer 
younger workers to fill the mass vacancies of the older, 
experienced workers.
    Therefore, it is critical to develop policies that 
encourage older Americans to remain in the workforce longer. 
Workplace flexibility is critical to this goal. For example, 
many older workers want to work part-time or on and off 
throughout the year. Phased retirement, i.e., leaving the 
workforce gradually, also is appealing to many older Americans.

Mandatory Retirements: Do They Still Make Sense?
Chairman Larry Craig; Ranking Member John Breaux
September 14, 2004
Serial No. 108-42

    The purpose of this hearing was to reexamine the mandatory 
retirement age rules and determine whether they are still 
appropriate. A number of federal, state and local governments 
have mandatory retirement rules for public-safety related jobs 
with a physical and cognitive fitness requirement, such as 
state police and federal firefighters. These restrictions were 
introduced primarily to ensure public safety. However, because 
Americans are living longer and healthier lives, chronological 
age often is an inaccurate indicator of physical and cognitive 
age for many workers. Therefore, a number of experts argue that 
the current mandatory retirement age rules are outdated. During 
this hearing, members examined specific professions that are 
subject to federal mandatory retirement rules to better 
understand the dynamics of each profession and whether the 
rules still make sense.

Overcoming Obstacles and Crafting Opportunity for Older Workers
Chairman Larry Craig; Ranking Member John Breaux
September 3, 2003
Serial No. 108-20

    The Committee held a Forum on Older Workers that was 
moderated by Barbara Bovbjerg, the Director of Education, 
Workforce and Income Security Issues at GAO. The forum focused 
on overcoming obstacles and creating job opportunities for 
older Americans.
    According to GAO, the population that is 55 years or older 
is poised to grow dramatically. At the time of this hearing, 
this group was 21 percent of the population and it was 
estimated to be 29 percent in 2019. At the same time, however, 
labor force growth will slow from about 1.1 percent to 0.7 
percent annually. Slower growth in the labor force and the 
resulting shortage of skilled workers has serious implications 
on the national economy and for retirement systems. Therefore, 
it is critical that our nation provides incentives for American 
workers to delay full retirement and for American employers to 
retain their older workers.

Hearing on Now Hiring: The Rising Demand for Older Workers
Chairman Charles E. Grassley; Ranking Member John Breaux
April 3, 2000
Serial No. 106-26

    This hearing explored creative ways to provide incentives 
to employers and retirees to find appropriate jobs to 
supplement retirement income. As the labor pool begins to 
shrink and the Baby Boomers age and leave the workforce, more 
creative ways will be needed to entice them to stay in the work 
force. This hearing looked at several options, including more 
customized retirement arrangements and flexible scheduling.
    The hearing examined legislative proposals including the 
Defined Benefit Revitalization Act (DBRA), which attempted to 
change the tax code to meet current labor market needs. 
Currently, if a person retires past the age of 59\1/2\ and has 
a defined benefit plan, they cannot access those funds, 
creating a disincentive to continue working. The DBRA would 
have maximized pension benefits while allowing workers to stay 
in the workforce. Witnesses also highlighted the benefits of 
phased retirement for both employers and employees, reiterating 
the need to include in phased retirement legislation 
protections for older workers to be able to remain in the 
workforce and not be penalized for earning a small income.

                                  
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