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71–156—PDF 2010

S. HRG. 111–1112 

CHOOSING TO WORK DURING RETIREMENT AND 

THE IMPACT ON SOCIAL SECURITY 

HEARING 

BEFORE THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 15, 2010 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

BLANCHE L. LINCOLN, Arkansas 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

JOHN ENSIGN, Nevada 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

RUSSELL SULLIVAN, Staff Director 

KOLAN DAVIS, Republican Staff Director and Chief Counsel 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee 

on Finance ............................................................................................................ 1 

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3 

WITNESSES 

Goss, Stephen, Chief Actuary, Social Security Administration, Baltimore, MD 4 

Freedman, Marc, CEO and founder, Civic Ventures, San Francisco, CA ........... 7 

Brown, Marcia, chief operating officer, National Center for Appropriate Technology, Butte, MT ................................................................................................. 9 

Maestas, Dr. Nicole, economist and group manager, RAND Corporation, 

Santa Monica, CA ................................................................................................ 11 

Shelor, Bonnie, senior vice president for human resources, Bon Secours Richmond Health Systems, Richmond, VA ............................................................... 12 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Baucus, Hon. Max: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 21 

Brown, Marcia: 

Testimony .......................................................................................................... 9 

Prepared statement .......................................................................................... 23 

Responses to questions from committee members ......................................... 27 

Freedman, Marc: 

Testimony .......................................................................................................... 7 

Prepared statement .......................................................................................... 30 

Responses to questions from committee members ......................................... 48 

Goss, Stephen: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 64 

Responses to questions from committee members ......................................... 69 

Grassley, Hon. Chuck: 

Opening statement ........................................................................................... 3 

Prepared statement .......................................................................................... 70 

Maestas, Dr. Nicole: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 72 

Responses to questions from committee members ......................................... 77 

Shelor, Bonnie: 

Testimony .......................................................................................................... 12 

Prepared statement with attachment ............................................................. 80 

Responses to questions from committee members ......................................... 98 

COMMUNICATIONS

AARP ........................................................................................................................ 101 

Employee Benefit Research Institute ..................................................................... 108 

(III) 

(1) 

CHOOSING TO WORK DURING RETIREMENT 

AND THE IMPACT ON SOCIAL SECURITY 

THURSDAY, JULY 15, 2010 

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC. 

The hearing was convened, pursuant to notice, at 10:11 a.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus 

(chairman of the committee) presiding. 

Present: Senators Grassley and Bunning. 

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Alan Cohen, Senior Budget Analyst; Tom 

Klouda, Professional Staff Member, Social Security; Blaise Cote, 

Research Assistant; Jenn Rigger, Detailee; Chris Goble, Detailee; 

and Claire Green, Detailee. Republican Staff: Steve Robinson, Chief 

Social Security Advisor. 

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR 

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE 

The CHAIRMAN. The hearing will come to order. 

George Burns, who worked until he was 100, said of retirement: 

‘‘Retirement at 65 is ridiculous. When I was 65, I still had pimples.’’ [Laughter.] 

Today we will talk about people who want to work beyond retirement age, and we will talk about those folks’ decisions and how 

those decisions affect Social Security. 

When it comes to Social Security, people often say there are only 

two ways to improve solvency: cutting benefits or raising taxes. 

Neither is easy, and each has drawbacks. Fortunately, there are 

other ways. These ways do not involve cutting benefits or raising 

taxes. For example, there is the tax gap. What is the tax gap? The 

tax gap is the difference between what taxpayers owe and what 

they actually pay. 

For the last year for which we have data, I think it is 2001, the 

total tax gap, which includes payroll tax gap as well as income, was 

about $345 billion every year. That is, every year about $345 billion of taxes legally owed by Americans are not paid. My view is, 

as we try to whittle down these Federal budget deficits, a good 

place to begin is that $345 billion, which now, in 2010, 9 years 

later, is probably a lot higher than $345 billion. But the point is, within that $345 billion there is also the payroll 

tax gap. That is, about $58 billion each year that is owed under the 

payroll tax, that is for Social Security and Medicare, is not paid— 

about $58 billion every year that is not collected under our payroll 

2 

taxes. Clearly, if that were collected—again, dollars legally owed— 

that would help reduce the strain on the Social Security trust fund. 

We have to do a lot more to collect those revenues. It is a tough 

thing to do. I have put a lot of pressure on Treasury Secretaries, 

this administration, the past administration. In my judgment, they 

still have not done the job. They have not sufficiently addressed the 

tax gap, and I do not know why. 

Today we are going to look at another idea for improving Social 

Security and Medicare solvency without raising taxes or cutting 

benefits. We are going to look at facilitating work by people who 

want to resume work after they retire from their full-time jobs or 

who want to phase down their work before retiring. 

Folks are making these employment arrangements already. 

Today we will examine whether we can make it easier for these arrangements to happen. If we could increase the number of people 

over age 62—that is the earliest year in which one can retire and 

still get Social Security—who are working by just 10 percent, we 

could reduce Social Security’s long-run actuarial imbalance by 

about 5 percent. We could also reduce the Medicare trust fund’s 

long-run imbalance by about 2 percent. And an increase in the 

number of these workers would increase Federal and State income 

tax revenues as well. 

There are many ways that these workers can continue to work 

voluntarily, and I underline that word ‘‘voluntarily.’’ All these 

methods are loosely called ‘‘phased retirement.’’ Workers can reduce their hours of work at their principal job or work only seasonally. The current firm can rehire them after they have retired for 

a period of time. Workers can go to work in another career or occupation, or they can do the current kind of work at a different firm. 

One example is called ‘‘encore careers.’’ These are jobs for workers who want to start a new career doing something for the benefit 

of society. That job might be as a nurse or a hospital worker, or 

as a teacher, as a social worker, or as one of countless other positions. From the employer’s perspective, there can also be advantages to hiring someone who has already retired, or allowing for a 

phase-down of work before retirement. These workers bring a 

wealth of experience and good work habits, and they are wellsuited to help training or mentoring of new employees. Some organizations have very seasonal work patterns or temporary workloads and are looking for workers who want to work only part-time 

or seasonally. 

Let me be very clear: we are not talking about requiring people 

to work more hours or pressuring people to work. I want to make 

that very clear. Rather, we are talking about additional work that 

is voluntary. Nothing is required here; it is all voluntary. Unfortunately, some workers today are finding that they need to work 

longer than they want just to make ends meet. In a sense, these 

folks are not working longer voluntarily. 

But phased retirement can help them as well. Phased retirement 

can give them more job options. So increasing phased retirement 

possibilities can be a winning proposition. Employees can have 

more choices, employers can more easily meet their workforce 

needs, and the lives of the Social Security and Medicare trust funds 

can be extended. 

3 

So let us look at folks who want to work after normal retirement 

years. Let us examine whether we can help workers and businesses 

to have more choices. And let us see whether we can help out Social Security and Medicare in the bargain. 

[The prepared statement of Chairman Baucus appears in the appendix.] 

The CHAIRMAN. Senator Grassley? 

OPENING STATEMENT OF HON. CHUCK GRASSLEY, 

A U.S. SENATOR FROM IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman. 

Over the next 2 decades, the aging of 78 million baby boomers 

will bring about a dramatic demographic shift. Our Nation will see 

the ratio of workers to Social Security beneficiaries decline from 

roughly 3:1 to roughly 2:1; that means one-third fewer workers relative to each beneficiary. All other things being equal, this demographic shift implies a payroll tax increase of 34 percent or benefit 

reductions of 25 percent being necessary to balance Social Security 

cash flow in 2030. 

The purpose of today’s hearing is to consider ways to encourage 

the employment of older Americans and thereby improve Social Security’s long-term financial outlook. It should not be necessary, but 

I think the chairman is right in emphasizing that we are talking 

about voluntary aspects of this whole question. 

When Social Security was enacted in 1935, it was agreed that, 

if a person worked, he or she was not retired and thus not entitled 

to Social Security retirement benefits. Over the years, the so-called 

‘‘retirement earnings test’’ has been modified to allow many people 

to work and collect retirement benefits at the same time. The exact 

amount depends on each worker’s age and income. 

We did this for the simple reason that we should not have disincentives to productivity included in our Social Security system, 

and we should not let any sort of aspect of discrimination against 

older people be a part of the program. 

Now, these modifications that I just mentioned represent a tradeoff between two competing objectives: limiting retirement benefits 

to those who are retired and allowing those who are retired to supplement their income. Much of today’s testimony focuses on encouraging those who are old enough to collect Social Security to pursue 

a second career on a voluntary basis, but the historical data show 

a significant decline in labor force participation, particularly among 

men of every age. 

As Mr. Goss’s testimony will show, between 1950 and 2010, the 

labor force participation rate among younger men 16 to 44 fell by 

9 percent; among older men 45 to 64, the rate fell by 14 percent; 

and among those aged 65 and older, the rate fell by 44 percent. 

The historic decline among men has been offset, however, by an 

increase among women. There has also been a slight increase 

among men in recent years that we do not know the full impact 

of or the trend, but under the Social Security Administration’s intermediate assumption, future increases will not make up for our 

aging population. There will be a net decline in the overall labor 

force participation. Higher labor force participation rates would improve Social Security’s long-term annual cash flow. I will not get 

4 

into the specifics that the chairman just did, but I would associate 

myself with those statistics. 

Additional employment would bring in more payroll taxes, but it 

would also result in higher benefits. In the long run, benefits would 

increase by 50 to 80 cents for every dollar of additional payroll 

taxes. Ultimately, achieving a sustainable Social Security system 

will require beyond what we are talking about here, obviously: fundamental reform. But as today’s testimony will show, encouraging 

more employment among Americans of every age will make the 

task easier than it might otherwise be. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator. 

[The prepared statement of Senator Grassley appears in the appendix.] 

The CHAIRMAN. I would like to introduce our witnesses. First is 

Stephen Goss, the Chief Actuary for the Social Security Administration. Thank you, Mr. Goss, for coming today. Next, Marc Freedman. Mr. Freedman is the CEO and founder of Civic Ventures in 

San Francisco, CA, and has some interesting things to pass on to 

us. Next is Marcia Brown, whom I have known for many years. She 

is very active, very helpful, a real dedicated servant. She provides 

public service to the people in the State of Montana. She is currently the chief operating officer of the National Center for Appropriate Technology in Butte, MT. Sometimes we say Butte, America. 

Next is Nicole Maestas, economist and group manager at the 

RAND Corporation. Thank you, Dr. Maestas, for being here. Our 

final witness is Bonnie Shelor. Is that pronounced correctly? 

Ms. SHELOR. That is. 

The CHAIRMAN. Thank you. Senior vice president for Human Resources at Bon Secours Health Systems in Richmond. 

Thank you all for today. As is our regular custom, I ask each of 

you to summarize your statements in about 5 minutes, roughly. 

Your prepared statements will be automatically included in the 

record. 

Mr. Goss, thanks for coming. 

STATEMENT OF STEPHEN GOSS, CHIEF ACTUARY, 

SOCIAL SECURITY ADMINISTRATION, BALTIMORE, MD 

Mr. GOSS. Thank you, Mr. Chairman, Mr. Ranking Member, Senator Bunning. It is a great pleasure to be here to get to talk to you 

today. I just also want to say, it is an immense pleasure, for many 

years now, to work with the fantastic staffers that you all have in 

developing material for these hearings, and legislation, and everything else. 

The CHAIRMAN. Thank you. 

Mr. GOSS. Senator Grassley characterized very well what is perhaps the best way to identify what we are confronting in Social Security, and not just Social Security, but also what Medicare and all 

of the private pension and health systems are facing in the future, 

that we simply have a very substantial demographic shift, the 

aging that we are talking about today. 

The statistics Senator Grassley mentioned indicate that we are 

shifting the ratio of workers to beneficiaries in Social Security, 

even reflecting the impact of increasing the normal retirement age, 

5 

which was enacted largely because of work in this room back some 

years ago, back in 1983. We are still going to be shifting from a 

position of having about 3.3 workers per beneficiary down to about 

2 workers between now and 2035, that is, over just the next 25 

years. This is a dramatic shift. 

The reason for this, by the way, is not really because we are living longer, it is because of the drop in birth rates that occurred 

after the post-World War II baby boom. We shifted from roughly 

three children per woman down to two children per woman on average, and the trustees, CBO, OMB, are all using projections that 

presume that this lower birth rate will continue into the future. 

Even with the help of immigration, that is substantial, and we 

still have a much, much slower rate of growth in the number of 

people entering our population. This is what is causing the aging 

shift that we will be experiencing over the next 25 years. I mention 

this by way of this perspective: aging over the next 25 years is not 

about the fact that we will be living longer. 

As far as labor force participation rates are concerned, there is 

no question that there have been major shifts since 1950. I have 

provided statistics in the written testimony. It is useful to look at 

labor force participation on an age-neutral basis. The aging occurring in the population, given that people at higher ages tend to be 

less likely to work than people at middle ages, will make our overall rate of labor force participation lower, even if at each age the 

probability of work stays the same. So, we get a far better indication of change in likelihood of working if we look at age-adjusted 

or age-neutral rates. 

On this basis, we have some good news. Between 1950 and today, 

2010, the overall age-adjusted labor force participation rate for men 

and women combined in our society has increased from 57 to 65 

percent. We have actually had increasing labor force participation, 

all told. 

However, the main reason for this is that women have been 

working in paid employment much more. Female labor force participation rates, all ages combined, rose from 31 to 58 percent since 

1950, while men declined from 84 down to 73 percent. Overall, we 

have gone up, but it has been because women have increased by 

so much more than men have declined. 

At age 65 and over, which is principally where our benefits 

apply, the changes have been just as dramatic. On an age-adjusted 

basis, we have had about a halving of the male labor force participation rate since 1950, from about 40 percent down to 22 percent. 

Women, on the other hand, have gone from 8 to 14 percent, so they 

have come up, not quite to the level of men. Clearly there is room 

for change for the population over age 65. 

For the future, under the intermediate assumptions of our trustees’ reports, we are projecting some fairly modest increases in labor 

force participation rates, even at the highest ages. This is principally because of a methodology that we introduced some years 

ago presuming that, as people live longer and presumably 

healthier, there will be some tendency, even without specific policy 

actions, for people to work somewhat longer. But these are relatively modest gains. 

6 

We estimate the gains will be on the order of a 10-percent increase in overall labor force participation rates at age 65 and older, 

but about a 3-percent decline in the labor force participation rates 

at ages 45 to 64, largely because of anticipated continued increases 

in disability prevalence in our society. 

So where are we with Social Security? We are projecting under 

the intermediate assumptions of the trustees’ report, even with all 

these future changes in work level, that the Social Security trust 

funds, on a combined basis, will be exhausted in 2037, at which 

point we estimate we will still have about 75 cents’ worth of taxes 

coming in for each dollar of benefits scheduled in the law. 

Under the statutory limitations, that is all we would be able to 

pay, as you all well know. So the question is: can increased work 

help fill that gap? There is no question that it can. I am glad to 

see that we have many people on the panel today who can show 

us ways we can try to encourage that. Let me share what the implications will be, assuming we can actually further increase labor 

force participation. We have developed three hypothetical possibilities for increased labor force participation in the future, over and 

above the increases the trustees are already assuming. 

One that Senator Baucus referred to is, what if we had an additional 10-percent increase in work and earnings for people 62 and 

over? As you indicated, Mr. Chairman, that would result in a reduction of our 2-percent of payroll long-range actuarial deficit by 

about .09 percent, or about a 5-percent reduction in the long-range 

deficit. If we manage to do even better, say a 20-percent increase 

in the amount of work activity for people age 62 and older, we 

would have about double that effect. There is certainly a real possibility of doing that. 

As you indicated, there would also be a Medicare effect. In terms 

of the long-term deficit as a percent of payroll, the effect for the 

HI program would be similar. But because Medicare has, under the 

2009 trustees’ report, a considerably higher long-range deficit, it 

would have a smaller percentage effect on reducing the HI deficit. 

We have looked at two additional possible scenarios for increasing labor force participation rates. These would presume a much 

stronger increase and a much larger potential effect. These scenarios answer the hypothetical question: what if we went back to 

1950 labor force participation rates, but in a very special way? 

What if both men and women went back to the male 1950 labor 

force participation rates? Given the amount of closure we have had 

in employment since 1950 between men and women, this is not out 

of the question, but it would be a strong change. 

If we assume this change on a non-age-adjusted basis, we estimate that we would have an increase in payroll taxes to Social Security on the order of 16.5 percent in the long run. That would reduce our long-range deficit by about half. So, this would be a very 

striking and large change. 

The third possibility we looked at is a variant of the second scenario. First we note that in 1950 we did not have the Social Security Disability Insurance program. That program was enacted in 

1956, and benefits started in 1957. Even if people desired to work 

as much as they did back in 1950, we would not expect the same 

7 

levels of labor force participation because the disability benefits are 

now available. 

Reflecting also the change in age distribution since 1950, we estimate that we would have a 13.5-percent increase in labor force if 

we return to the 1950 work tendency of males for both genders. 

That would reduce our long-range deficit for the 75 years by about 

40 percent. The challenge in all three scenarios is: how do we make 

this happen? 

Clearly, we do believe and understand that people will be living 

longer and will be living healthier and will have a greater capacity 

to work. Finding ways to encourage people to actually do more 

work will benefit the finances of Social Security, Medicare, and all 

of the retirement and health systems within this country. 

Thank you very much. I will be happy to answer any questions. 

The CHAIRMAN. Thank you, Mr. Goss. That was very interesting. 

We appreciate it very, very much. You have obviously spent some 

time thinking about all this. 

[The prepared statement of Mr. Goss appears in the appendix.] 

The CHAIRMAN. Mr. Freedman? 

STATEMENT OF MARC FREEDMAN, CEO AND FOUNDER, 

CIVIC VENTURES, SAN FRANCISCO, CA 

Mr. FREEDMAN. Thank you, Chairman Baucus, Ranking Member 

Grassley, Senator Bunning, and the entire committee, for this opportunity to testify today. 

I will pick up on Stephen Goss’s question of, how do we make 

this happen? How do we make a virtue out of a necessity in a voluntary way, as you charged us to think about today? 

To do that, I just wanted to step back quickly in history to that 

year 1950 that Mr. Goss just talked about. In that year, Walter 

Reuther, the labor leader, described retirement as ‘‘too old to work, 

too young to die.’’ It was a very awkward time for people. Other 

people talked about it as a ‘‘roleless role.’’ In a period of about 15 

years, we turned this awkward state into a version of the American 

dream: we created a new deal around shorter working lives that 

people could actually look forward to. In fact, people started retiring earlier and earlier so they could get to this goal. 

Now, in the context of the two trends that you talked about, the 

demographic revolution of nearly 80 million baby boomers moving 

into their 60s and a near doubling of life expectancy over the last 

century, there is a question about whether that old deal is still sustainable. At an individual level, how many of us can afford a 30- 

or 40-year retirement? As a society, having a quarter of the population in that state is really hard to support. 

So I think we are at a point now where we have to come up with 

a new deal around longer working lives that is as appealing as the 

old deal, a deal that people could actually look forward to and could 

be part of a new American dream that is fitted for the 21st century 

in the way the last deal was for the circumstances of the last century. 

I think the way to do that is, first, to make sure that it is done 

in a way that protects people who cannot continue to work, but also 

focuses on those who choose to work voluntarily, who want to or 

need to continue to have another chapter of contribution in their 

8 

lives. It is a trend, as we have heard, that has already been happening in a broad sense. 

I want to focus on a more particular trend, which is a movement 

towards encore careers. Already, millions of boomers have launched 

second careers after the age of 50 in areas like health care, education, the green collar economy, in government, and we know from 

research a couple of years ago that fully 50 percent more want to 

follow that same path. I think an important measure that we can 

take in the policy realm is to meet them half way, to help them 

go from aspiration to action, these people who want to work, who 

want to launch a whole second career in areas where we know talent shortages are going to be increasing over the coming decade. 

In our testimony, we talk about a number of ways to do that. 

One is to increase the investment in community colleges, which, in 

a low-cost and expedited way, can help people move into second careers as nurses, teachers, and other high-need areas. Two is to 

fund the ‘‘encore fellowship’’ provision of the Serve America Act, 

which helps build the capacity of nonprofits through bringing in 

people who have retired from their private sector career and want 

to apply their skills in these critical areas of need. Three is to meet 

the target goal of 10 percent of Americorps members in service 

roles that help them transition to a new encore career. 

We are also interested in creating new financing vehicles like the 

Individual Purpose Account, which could be a corollary to the Individual Retirement Account, to help people support themselves during the inevitable period of transition. You cannot just walk out 

and become a nurse or a teacher; you need to go back to school, 

do training, and that can be a financial hardship for individuals. 

In addition, we need to make adjustments to Social Security, 

which not only remove impediments in the way to people working 

longer, but provide additional flexibility, particularly for that inevitable transition period that I talked about before. And we need to 

invest in initiatives like the Troops to Teachers program, which I 

think is an extraordinary model for helping people who have completed a phase of their career, a phase of service, move into other 

roles where they are equally needed. 

I know this committee has played an extraordinarily important 

role in the history of the GI bill. I think of these adding up to 

something like a third age bill, a bill that would help people 

move—in the case of the GI bill, from military service to civilian 

service, from abroad to home—here from one phase of their working lives to a new one, and one that would not just be another year 

or 16 months or 18 months of work, but could be a whole 10-year 

career or longer. So, that could really dramatically increase the 

length of their working lives. 

I think in doing this we, at an individual level, stand to have a 

multiple path. The encore career idea is built around the idea of 

continued income, new meaning—as Studs Terkel said, Americans 

get up and go to work each day as much for daily meaning as for 

daily bread—and a chance to use people’s experience. 

At a societal level, we can have improvements to Social Security 

financing and to the fiscal solvency of the Nation, a windfall of talent for areas that are high national priorities, and also send a sigVerDate Nov 24 2008 19:13 Dec 01, 2011 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 R:\DOCS\71156.000 TIMD
9 

nal that longer working lives are not a punishment, but can actually be something to invest in and look forward to. 

I think if we pull that off we would be doing it at a time, already, 

when 10,000 boomers a day are hitting their 60th birthday. But 

even more new research from the fall shows that more than half 

the children born in this country and in the developed world since 

2000 can expect to live to 100. I think this is the beginning of a 

deal that can help better balance the joys, the responsibilities, the 

security of contribution and work across a lifespan that is likely to 

be decades longer than it was in the last century. 

Thank you. 

The CHAIRMAN. Thank you, Mr. Freedman, very much. 

[The prepared statement of Mr. Freedman appears in the appendix.] 

The CHAIRMAN. Ms. Brown? 

STATEMENT OF MARCIA BROWN, CHIEF OPERATING OFFICER, 

NATIONAL CENTER FOR APPROPRIATE TECHNOLOGY, 

BUTTE, MT 

Ms. BROWN. Chairman Baucus, Ranking Member Grassley, and 

Senator Bunning, I am honored to be here today representing the 

National Center for Appropriate Technology and to talk to you 

about our organization’s efforts and success in recruiting and retaining encore employees, those working beyond retirement. I am 

particularly pleased to be here with my own Senator, Chairman 

Max Baucus. 

NCAT is a small, nonprofit organization headquartered in Butte, 

MT, with offices in Iowa, Arkansas, California, Pennsylvania, and 

Louisiana. Our mission is to promote sustainable, small-scale, local 

solutions in the fields of agriculture and energy, with a particular 

interest in helping people who are economically disadvantaged. 

NCAT has a very highly educated staff committed to promoting 

our mission. We have a large diversity of staff and projects, but are 

perhaps best known here in Congress for ATTRA, the national sustainable agriculture information service. 

Our staff is made up of a mix of agriculture and energy specialists, including agronomists, horticulturists, livestock and organic 

specialists, energy engineers, and architects. Maintaining such a 

highly educated and experienced workforce, along with operating 

an organization that is entrepreneurial in developing new projects, 

has required that we adopt new practices to recruit and retain our 

workers. NCAT was the proud recipient of a 2009 Civic Ventures 

Encore Opportunities award for our efforts in employing older 

workers. Thank you, Marc. 

There are three areas where NCAT has been successful in recruiting and retaining older workers: first, employing what we call 

adjunct staff; second, accessing senior training programs; and 

third, recruiting from diverse populations, including workers who 

have retired. 

One successful method we have used is allowing employees who 

retire to be classified as adjunct employees. This allows former 

staff the opportunity to come back to work on specific projects for 

a specific time period. Our adjunct employee policy allows us to retain a pool of educated and experienced staff that can be called on 

10 

as needed for projects with time limits that would not allow for a 

full outside recruitment process. 

It saves us money as an organization in recruiting, hiring, and 

training. For example, one of our long-term employees left NCAT 

to concentrate on raising flowers and vegetables for her farmer’s 

market. She came back as an adjunct employee and has been working during the winter months as one of our horticulturists. NCAT 

has an investment in the education and training of our staff, so 

being able to bring them back easily allows us to retain their expertise after they retire and saves us from having to hire and train 

temporary staff. 

Rose Sullivan, our librarian, was a retired school teacher when 

she started work at NCAT in 1978. She retired as our librarian in 

1992, but returned to work in 1997. She continues as our head librarian, with a very limited work schedule. Rose says that she 

‘‘flunked retirement’’ and she continues to work, even though she 

will reach age 90 this month. 

NCAT also takes advantage of older worker training programs 

such as Experience Works, which trains low-income seniors for jobs 

that serve their communities. NCAT has participated in Experience 

Works for 8 years, training older workers to assist on our national 

hotline, helping low-income energy consumers. Several of our trainees have become excellent regular NCAT employees. I cannot stress 

enough how positive the Experience Works program is for an organization such as ours. 

NCAT normally recruits nationally for our positions; however, 

when we had the opportunity a few years ago to conduct energy efficiency audits in Montana, we needed to staff up more quickly 

than our normal hiring process would allow. We targeted our recruitment to a group of experienced energy engineers, all over 50, 

who had either retired or been laid off from our local utility. We 

now have a team of 12 staff, with the older engineers mentoring 

the younger staff. 

NCAT has a multi-generational, diverse workforce of 82 regular 

staff, 36 of whom are over 50 years of age. We value their experience and expertise and make every effort to remove any barriers 

to the employment of older workers, including allowing flexible 

work schedules. Many of our staff are working in encore, or second, 

careers. 

I myself started at NCAT just before my 50th birthday. This is 

my encore career. My past professional life was as a staff member 

for Senator Lee Metcalf and Congressman Pat Williams of Montana. NCAT did for me what we do for all of our employees: we 

make certain that training and professional development opportunities are available to all staff, no matter their age. 

One of those opportunities includes my testimony today, nearly 

40 years after my first employment here in the U.S. Senate. Thank 

you so much for the opportunity to testify and to put on the record 

the great benefits our organization has reaped from using employees who have ‘‘retired.’’ 

The CHAIRMAN. Thank you, Marcia. I just want you to know just 

how much I—and I think most people in Montana, and others 

around the country who know NCAT—appreciate your work. I 

mean, it is really quite something. I remember when NCAT started 

11 

years ago, and it has grown into a very impressive organization, 

serving a lot of people. It is a great outfit. Thank you very much 

for what you do. 

Ms. BROWN. Thank you. Thank you, Senator. 

[The prepared statement of Ms. Brown appears in the appendix.] 

The CHAIRMAN. Dr. Maestas? 

STATEMENT OF DR. NICOLE MAESTAS, ECONOMIST AND 

GROUP MANAGER, RAND CORPORATION, SANTA MONICA, CA 

Dr. MAESTAS. Thank you, Chairman Baucus, Ranking Member 

Grassley, and Senator Bunning, for the opportunity to testify. I will 

address my comments to the question of encouraging work at older 

ages, drawing on recently published RAND research funded by 

NIH and Social Security. 

As the baby boomers age and retire, the number of non-workers 

relative to the number of workers in the population is rising, 

straining Social Security and Medicare and slowing economic 

growth. The impact of population aging on our standard of living 

in the future depends a good deal on how long people choose to 

work before they retire. 

Fortunately, here there is reason for optimism. The end of the 

20th century witnessed a profound change in retirement behavior. 

For over a century, the labor force participation rate of men over 

age 65 declined. At the end of the 20th century, however, it began 

to rise. Work by older women rose as well. This historical turnaround was mostly driven by rising education levels and technological change. Jobs have become less physically demanding. 

Work at older ages is likely to continue rising in the future, but 

it would be propelled by different forces. Chief among these is the 

scheduled increase in the Social Security full retirement age, which 

will not be fully implemented until 2022. Second is the restructuring of employer pension plans, from defined benefit pensions 

with strong early retirement incentives, to 401(k)-style pensions 

that have no such incentives. In addition, legal barriers to phased 

retirement have only recently been partially relaxed. 

Third, as the labor force participation rate of younger women has 

risen over time, more women qualify for Social Security benefits on 

the basis of their own work history rather than their husband’s. 

This creates new incentives for continued work by women and, importantly, when women work longer, so do their husbands. 

The ways in which men and women work at older ages has been 

changing too. Only 40 percent of those who stopped working in 

their 50s and 60s stay out of the labor force, 40 percent return to 

work or ‘‘unretire,’’ and 20 percent pass through partial retirement. 

Self-employment is also common. 

Despite this good news, there are some potential challenges 

ahead. One is health. While in many respects age 60 does seem to 

be the new 50, the rise in obesity among younger people signals the 

possibility of a reversal in the upward trend in healthy life expectancy. 

Other challenges relate to employer demand for older workers. 

Many older Americans would apparently like to work, but cannot 

find jobs. Even before the current recession, only about one-half of 

older job searchers found jobs within 2 years. One-third of them 

12 

wanted part-time jobs, but these jobs were the hardest to find. One 

potential barrier on the employer side is the perception that older 

workers are less productive. While some aspects of cognitive ability 

do indeed decline with age, other aspects are stable. Productivity 

need not decline if compensatory behavior is possible, or if a job 

draws on stable skills. 

Another challenge is health care costs. The extent to which 

health care costs depress employer demand for older workers is unknown, but may be substantial. Even though part-time workers 

need not be given health pension benefits, high turnover rates 

among workers nearing retirement make it difficult for employers 

to recoup hiring costs. In addition, employers may find it difficult 

to adapt production processes to accommodate the flexible parttime work schedules desired by older workers. 

A key question for policymakers is how to support the forces already in motion and ease some of the challenges. Should we encourage people to delay retirement in the first place, or encourage 

them to retire but later reenter the workforce in a different capacity? Perhaps both, but it is likely easier to incentivize an older 

worker to defer retirement than to reenter the labor force after 

having already left. 

In large part, this is because leaving a long-term job for a new 

job often results in a wage loss, especially if the job is part-time. 

Most reentry jobs are part-time. If too many people who would 

have worked full-time now work part-time, we could even see a net 

reduction in work hours. 

Policy options to encourage work at older ages include eliminating the Social Security retirement earnings test, raising the 

early retirement age, and formalizing phased retirement rules to 

encourage partial retirement instead of full retirement. Policymakers could also look for ways to help workers understand that 

when they claim early Social Security benefits they lose nearly 30 

percent of their annuity value. 

There may also be ways to encourage employers to hire and retain older workers, but some caution is warranted here. We do not 

yet understand whether the biggest barriers faced by employers are 

with respect to perceptions about productivity, health care costs, 

high turnover rates, or an inability to accommodate part-time work 

schedules. It is also worth considering whether policies could be designed to attract middle-aged women into the labor force. Attracting a middle-aged woman into the labor force may pay a double 

dividend later on if it means her husband is more likely to delay 

retirement. 

Thank you. I would be happy to take your questions. 

The CHAIRMAN. Thank you, Dr. Maestas. 

[The prepared statement of Dr. Maestas appears in the appendix.] 

The CHAIRMAN. Ms. Shelor? 

STATEMENT OF BONNIE SHELOR, SENIOR VICE PRESIDENT 

FOR HUMAN RESOURCES, BON SECOURS RICHMOND 

HEALTH SYSTEMS, RICHMOND, VA 

Ms. SHELOR. Thank you. Good morning, Chairman Baucus, 

Ranking Member Grassley, and Senator Bunning. On behalf of the 

13 

11,500 Bon Secours Virginia Health System employees, I thank you 

for this opportunity to share insights on how we attract and retain 

older workers as part of our 186-year-old health care ministry. Our 

organization actually began in 1824 in Paris, France, and was 

founded by 12 Catholic nuns, hence the genesis of our name, Bon 

Secours, meaning good help. 

Today I will share with you how and why our workforce is changing, why we value older workers, how they contribute to our success and culture, and how we attract and retain them to create a 

culture of aging. Bon Secours Virginia includes 11,500 employees, 

7 hospitals, and multiple ambulatory care sites, and we at Bon 

Secours Virginia take our mission of providing good help to those 

who need it to heart. We annually provide health care for over 50 

percent of our metropolitan population. We also have an active 

caravan ministry that provides outreach services to mostly underserved or uninsured citizens, and last year we provided 12,000 of 

those visits. 

Our legacy for a culture of aging is the Bon Secours sisters. In 

fact, many of these sisters, ages 50-plus, continue to work with us 

today, and they serve as leaders well into their 70s, 80s, and 90s, 

providing strategic direction and guidance, including serving on our 

board of directors and leading the decision-making body. For us, 

workers of this age are common, and their vision, wisdom, and contributions are celebrated. In our system, nearly 40 percent of our 

employee population is age 50 and above. Of those, 18 percent are 

age 62 and above. 

The key to our culture of aging is our philosophy that we believe 

the experience, wisdom, and institutional knowledge of our older 

workers is invaluable, and in fact helps us to make a more prosperous organization. Let me share with you a story of Hattie Davis. 

For someone turning 89 in August, Hattie does not look a day over 

60. Hattie shines when she talks about her distinction as our oldest 

employee. 

She recently reflected on her life and her career in Bon Secours 

as a nurse that continues today with her 2-day-a-week job. She is 

also a regular volunteer for us in our gift shop. When asked about 

her career with the health system, Hattie said, ‘‘I tried to retire, 

but soon after that Bon Secours called me in to work for them.’’ At 

Bon Secours we are committed to that culture and were recently 

named, and were named over the last 10 years by AARP, as a top 

company for workers over 50. 

At the same time, people are starting to live longer and healthier 

lives, and the majority of our workers are delaying retirement. By 

offering initiatives such as phased retirement, flexible work schedules, and intergenerational programming, we have been able to 

successfully retain older workers. 

Research shows that nurses leave because of changing interests, 

being called on to care for aging family members, and work that 

is too physically demanding. We have been able to offer phased retirement. What does that mean? Option number one: an employee 

may cut back to part-time work and continue to receive a pension 

check; an employee may receive a pension check at age 701⁄2 and 

continue to work; or an employee may retire and then be rehired 

at a later date, continuing to collect a pension check. 

14 

Our older workers are eligible for medical, dental, vision coverage, and other valuable benefits, including tuition reimbursement, so, for those workers age 62 and older, we are providing 

health insurance, and they are not taking advantage of Medicare 

at this point. 

Our comprehensive and generous benefits are attractive, flexible, 

and creative. Grandchildren of our employees are eligible to attend 

our family-centered child care center. We offer opportunities for 

employees to take health risk assessments and to be monitored for 

health risk assessments. As a result, we have seen our older workers consistently see improvements in such areas as cancer, fitness, 

nutrition, stress, substance abuse, safety, and heart health. 

We have tailored our programs to telecommuting and job sharing 

and offer multiple work schedules, such as 2 days a week, summers 

only, winters only, et cetera. Our mobility lift teams help our older 

workers with the regular turning of bed-bound patients. Since the 

lift teams have started, we have seen a steady drop in the number 

of injuries, a decrease in pain, and a reduction in muscle fatigue. 

When it comes to employee retention, we have several other key 

initiatives. We are laying the foundation for a civic engagement 

program where we introduce workers age 50-plus to volunteering 

through paid volunteer hours as they advocate and participate in 

community initiatives representing our organization. We also have 

an intergenerational initiative called ‘‘GrandPartners’’ that pairs 

employees’ children in our daycare with elderly friends, employees, 

or spouses of children. 

In our journey to attract and retain older workers, we have made 

significant progress by constantly improving programs and policies. 

We continue to learn from other organizations in the public and 

private sector. 

In closing, consider the words of Hattie Davis: ‘‘I am the oldest 

employee of Bon Secours Richmond. I spent my entire career here, 

and I don’t have any plans of stopping soon. As long as I am able, 

I will keep on working.’’ 

Thank you for your time, and I welcome any questions. 

The CHAIRMAN. Thank you, Ms. Shelor. 

[The prepared statement of Ms. Shelor appears in the appendix.] 

The CHAIRMAN. The basic question I have is—I am going to ask 

each of you briefly to answer—what are the main impediments that 

tend to prevent someone today from voluntarily working longer, or 

going back in the workforce, part-time or something? What are the 

impediments that prevent a natural inclination for those who want 

to do more? I will just go straight down the line here. I will start 

with you, Mr. Goss, and have each of the five of you kind of give 

one or two basics. 

Mr. GOSS. Thank you. This has been addressed to some extent 

by a number of the other panelists. I think the most fundamental 

question is the culture that we live in. Those of us who are baby 

boomers understand well that when the baby boomers entered the 

labor force there were huge numbers of young people available in 

the work force. 

Employers began to offer early-out retirement plans, and this became a part of our culture, people expecting they could retire early. 

It seems we may need to change that. This will be a cultural 

15 

change more than anything else. If it can be done in a way where 

that does not seem to be punitive, that would be excellent. 

One way that we might potentially do this is to get the American 

people to value work over retirement, that is, productive effort. 

Working with your compatriots at the office, getting good things 

done, as opposed to playing golf, has value, and people should enjoy 

that and value it. 

Another small item is to emphasize, as I think was suggested by 

others on the panel, Social Security benefit reductions for early retirement. If you take your benefits at 62, you get a permanently 

reduced level of your monthly benefits for the rest of your life. If 

you can wait a while longer to start that Social Security benefit, 

you will get a higher monthly level. The lifetime amount of benefit 

is not any different on average, but your monthly amount, which 

is what people live on, will be a lot better. 

There is another way we could possibly facilitate what we are 

talking about that goes beyond encore careers: people moving to 

different careers. This would be another cultural change. We all 

tend to work on the basis that we advance in our careers, and we 

get better and we go to higher positions, more responsibility, and 

it is a one-way street. 

In our culture, we are not generally willing to accept that, as we 

get older, as we desire to have more free time, perhaps we should 

be willing to step back in our level of responsibility, take on less 

responsibility and less pay. If we could modify this attitude, that 

would be good. 

The CHAIRMAN. All right. Thank you. 

Mr. Freedman? 

Mr. FREEDMAN. I agree that the cultural issue is really significant. There was an article in Foreign Affairs in January/February 

this year that described the working age population as 15 to 59. I 

was thinking, well, I guess both of my Senators are not in the 

working age population, so it persists in a way. But I think another 

very important impediment is that the transition for those people 

who want to have another phase of their career is a do-it-yourself 

process. 

There was an article in the Wall Street Journal a few years ago 

about boomers who were tapping into their children’s 529 accounts 

to pay for their own education. I just interviewed a guy who wanted to become a park ranger at Yellowstone, and he had to go 

through the Student Conservation Association internship program 

with a bunch of 19-year-olds. I think we can do a much better job 

creating a front door for people to make that transition instead of 

them having to sneak in the back way. 

The CHAIRMAN. So what are the significant doors? 

Mr. FREEDMAN. I think they are the same ones that we provide 

for young people. One is school, because a lot of transitions we 

have heard about, moving into nursing, you have to go back to 

school, or to become a teacher. 

I think another is, essentially, the internship idea; that is what 

the Encore Fellowship is. It is essentially an internship for grownups where they can spend a year in an organization that is in a 

different sector so that they can adapt their private sector skills 

into the nonprofit world or the government. So I think we do not 

16 

even have to be that imaginative. We can just take some of the 

things that we take for granted, as young people make their shift, 

and adapt it for this population. 

The CHAIRMAN. Thank you. 

Ms. Brown, you talked about removing barriers. Could you give 

us a little more flavor of what they are and what NCAT has done 

to help remove them? 

Ms. BROWN. I think that what we see as the biggest barrier is 

a little bit this culture thing that Steve and Marc were talking 

about, but also it requires that the employer be flexible, that you 

work with each individual employee and help them have fewer 

hours, less work, work in the summer, work in the winter. You 

have to, as an employer, in order to keep that expertise, be willing 

to change. 

The CHAIRMAN. Are you finding employers are flexible or not? 

Ms. BROWN. We have had to learn to be more flexible, and I suspect other organizations have to too. So we have folks who only 

work 2 days a week, or half a day a week, or work from home. I 

think being flexible, I would say, was one of the things employers 

could do the most. 

The CHAIRMAN. All right. My time has expired. We are going to 

go very, very quickly here. Dr. Maestas? 

Dr. MAESTAS. I would just add two things. My research shows 

that about 70 percent of older Americans say before retirement 

that they plan to work during retirement. This is before the current recession. But many fewer actually do work during retirement 

than say they wanted to, and two things are important here. One 

is health. Many people simply get sick before they can actually fulfill those plans. But another important piece is jobs. Older workers 

want part-time jobs, but these jobs are the hardest to get. 

The CHAIRMAN. All right. Thank you very much. 

Ms. Shelor? 

Ms. SHELOR. Yes. I would say that organizations today must 

learn to think about work differently. It is not the way it used to 

be. So organizations must be innovative and creative and value 

older workers and what they can bring into the organization, so 

that would lead them to offer options around flexibility which are 

key to older workers; also key for older workers is health insurance. So those are the two things, in my opinion, that will bring 

older workers back into the workforce and keep them there. 

The CHAIRMAN. Thank you very much. Thank you. 

Senator Grassley? 

Senator GRASSLEY. Thank you all very much for your testimony. 

I want to zero in on the 62 to 65 age range. Those who retire early 

and choose to work are also subject to then, as we know, the retirement earnings test, reducing benefits $1 for every $2 for that 

money earned over $14,160 for this year. Many people view the retirement earnings test as a tax that discourages working after retirement. 

However, benefits are recalculated once a person reaches a full 

retirement age. Thus, a worker who retired at 62 could receive reduced benefits until reaching the full retirement age, and then receive unreduced benefits for the remainder of life. Except that it is 

17 

hard to explain. The retirement earnings test would seem to encourage employment after retirement rather than discourage it. 

So, Mr. Goss, and anybody else who wants to contribute to this 

question, would you care to explain why so few people take advantage of the ability to defer reduced benefits while they work between 62 and full retirement age, and then receive unreduced benefits for the rest of their life? 

Mr. GOSS. Over half of people who are eligible to start receiving 

Social Security retirement benefits, who are not disabled, start taking them at 62. That is part of the issue that we are dealing with 

here today. To a great extent, that is because people believe, as a 

part of the culture, that you should take the benefits that are available, and take them now. People see that as a greater value. 

They do not understand that if they either wait to get benefits, 

or if they are working and have the benefits reduced due to the 

earnings test, the lifetime value of benefits will not be reduced as 

a result. We at Social Security, and hopefully everybody else on 

this panel, need to do a better job of getting that message out so 

that people will better understand. 

Another aspect, too, is the good work in this room and on the 

other side of the Capitol to get Social Security and Medicare back 

to sound financial footing so that people are not concerned that 

these programs will not be there in the future. We understand that 

many people want to take the benefits early, because they say, I 

had better take them now while they are available. All of these 

things could probably help. 

Senator GRASSLEY. Any of the other four of you have anything 

to contribute to that question? 

Ms. SHELOR. Senator Grassley, I would absolutely agree that, in 

my experience, our older workers do not have an understanding of 

that concept, and I think that I agree that we need to do a much 

better job as organizations in partnering with the government on 

communicating that concept. 

Dr. MAESTAS. I would just second that, that it seems that the 

earnings test itself is not well understood at all. Really, most people just simply see it as a tax. 

Senator GRASSLEY. All right. 

Mr. Goss, your testimony presented some hypothetical calculations to illustrate the potential impact of increased employment on 

the SS system. These calculations show that, when people work 

more, Social Security collects more taxes, and then it also pays 

more benefits. Depending on the scenario, benefits would eventually rise 50 to 80 cents for every dollar of additional payroll taxes. 

As I understand your calculations, you assume those who work 

more would earn typical wages, thereby leaving the overall average 

wage unchanged. There are a couple of ways of thinking about increased employment. Workers would remain in their current job 

and retire later, or they could retire and get another job. 

The available data seems to suggest that those who stay in their 

current job earn higher wages than those who start a new job. If 

this were true, how would that affect your calculations? In other 

words, does continued employment have a different impact on Social Security than reemployment? 

18 

Mr. GOSS. I think your question is, how would the additional employment affect the average earnings level? If additional employment that we are able to encourage is for people who are not working at all now during a year, and it is at a very low earnings level, 

the taxes would be paid on these earnings and there would be relatively little effect on benefits. That would be a relatively more 

positive effect on the trust funds. 

If, on the other hand, a relatively smaller number of people work 

additionally and have an additional year of work at a relatively 

high level that can be used for their benefit calculation, the trust 

funds will receive the taxes, and the workers will receive more benefit credit. That would be a lesser net effect on the financial position of Social Security. 

As you well described, and I know Steve Robinson well understands, we developed these estimates fairly quickly, assuming that 

there would be no effect on the average wage level. That implies 

a combination of the extra work by some additional people working, 

perhaps largely part-time, and some other people who are already 

working during a given year working more. To the extent that we 

are able to encourage more labor force participation, we would have 

a combination of those two. But there is a lot of variance and a lot 

of differentiation possible around these estimates, no question. 

Senator GRASSLEY. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Grassley. 

Next is Senator Bunning, who, when he was in the House of Representatives, was chairman of the Subcommittee on Social Security. 

Senator BUNNING. Social Security Subcommittee, yes. And it took 

us 8 years—I want you to know that, Mr. Goss—to do away with 

the earnings limit. It took two presidents, and it took the Congress 

8 years to get the first—it used to be $11,200 in earnings. If you 

were 62, they taxed you $3 for every dollar you earned over 

$11,200. Once you became fully eligible at age 65, they taxed you 

$2 for every dollar you earned over $11,200. Now, that has been 

moved up, as you see, as Senator Grassley questioned you earlier. 

But if you wait until your full retirement, you can earn unlimited—unlimited—and that is where I think your organization does 

a disservice in the field by not fully explaining to retirees what 

they are doing when they start at age 62, or 63, or 64, and some 

now are 66, where their full retirement age starts. 

Can you explain to me why that earnings test is not more fully 

explained, Mr. Goss, to your field representatives who are dealing 

on a daily basis with retirees? 

Mr. GOSS. Senator Bunning, I wish I could. I am probably not 

the best person to try to address that issue, given the area that I 

work in. I do know that the Social Security Administration has 

been making some very serious efforts just in the last year or so 

to change the message that is given to people when they come into 

the field offices. For instance, there is a concept of break-even point 

that people used to be told about, and told that if they—— 

Senator BUNNING. They always say, well, if you start at 62, at 

78 you will catch up. 

Mr. GOSS. Right, and it was said often that you will be ahead for 

14 years. 

Senator BUNNING. Yes. That is right. 

19 

Mr. GOSS. A number of us felt that that was not being read the 

correct way when people heard it, because most people get and 

spend their benefits one month at a time. In fact, if you take your 

benefits at 62, as opposed to, say, 65, you are ahead in terms of 

benefits for 3 years, at 62, 63, and 64, but at 65 you will get a larger monthly benefit for the rest of your life if you have waited until 

that time, assuming you can. 

Senator BUNNING. If you start at age 68—I waited until we finally got the bill passed, the earnings limit totally eliminated, and 

I started my Social Security benefits at age 68—there are some 

very, very positive effects to your Social Security benefits if you 

start them later than age 65. 

Mr. GOSS. There is no question. Back as recently as 1983 we had 

a delayed retirement credit of only 3 percent for every year you deferred your benefit past the normal retirement age. Now it has 

been raised up to 8 percentage points for each year you delay. Now 

if somebody with a 66 normal retirement age waits until 68, they 

will get a 16-percent permanent increase in the monthly benefit—— 

Senator BUNNING. In the monthly benefit. 

Mr. GOSS [continuing]. For the rest of their lives, by waiting 

those extra 2 years. 

Senator BUNNING. See, that is never—the chairman and I know 

that most of the calls to your office are about Social Security, at 

least in my office they are. We get more calls on Social Security 

than any other issue by far. 

Let me ask one other very serious question to the person from 

the RAND Corporation. You mentioned in your testimony that likely increases in health care costs for older employees could be a substantial deterrent in hiring older workers. Please explain this. 

Dr. MAESTAS. Well, as people age, their health declines, and 

health care costs rise. So you have to think about people who are 

before Medicare eligibility and after Medicare eligibility. 

Senator BUNNING. Well, at age 65 you become immediately eligible for Medicare. 

Dr. MAESTAS. Right. So take a part-time worker who is 65. The 

employer is not required to provide health insurance coverage for 

that person. 

Senator BUNNING. Correct. 

Dr. MAESTAS. Medicare provides health insurance. 

Senator BUNNING. Under the new regime, it will be even worse. 

Dr. MAESTAS. Right. We do not know. Right. Before 65, however, 

it is the employer that provides the coverage, so you have an increasing number of workers in these older ages, still pre-Medicare, 

raising average health care costs. 

Senator BUNNING. Yes. For the group. 

Dr. MAESTAS. For the group, yes. 

Senator BUNNING. That is the reason. 

Dr. MAESTAS. That is the mechanism. But at 65, everything 

shifts, because then Medicare enters the picture. 

Senator BUNNING. Well, all I can tell you—and I have studied it 

as well as I guess anybody up at this table; I mean, all the vacant 

chairs do have people who sit here—the best and most practical 

way to increase the Social Security benefits is something that the 

20 

Greenspan Commission could have done, only they put a patch on 

it for 30 years instead of permanently fixing it, and that would be 

to have increased from 65 to 70 the retirement age at full benefits 

at the same rate they increased it from 65 to 67. 

Now, somebody said that in 2037 we are going to have to go to 

75 percent of the benefits. I believe it was you, Mr. Goss. Well, we 

would not have to do that if that money were deferred for those 3 

years. We would be good until 2075 at full benefits with just that 

little change. That does not cost the average American who is going 

to receive Social Security anything but waiting, or, if they want to 

take it at 65, 66, 67, they can with a lesser benefit. 

But I am telling you, most people are trying to stay in the workforce at least past 70 that I know of. Now, I do not know what percentages all of you have of those who are at age 65 to 70 who are 

continuing in the workforce if they are able to do it. Do any of you 

have information on that? 

Ms. SHELOR. In my organization, 18 percent of our employees are 

62 and older. 

Senator BUNNING. And older? 

Ms. SHELOR. Yes. 

Senator BUNNING. Out of? 

Ms. SHELOR. Out of 11,500. 

Senator BUNNING. Anybody else have information? Only 18 percent? 

Ms. SHELOR. Forty percent are over the age of 50. 

Senator BUNNING. All right. Well, I think it is very important for 

us to look at the solution, not only to keeping those people in the 

workforce, because obviously the more money going into the trust 

funds, the more money is going to be available for those who collect 

it, but there is an upgrade you get if you lop off one of your 40 

quarters when you make more than you did when you were 25, and 

you get an upgrade in your benefit every year, not counting the 

possibility of inflation adjustment. 

You get an upgrade in your benefit at the end of November in 

a lump sum check if you have made over the earnings limit as far 

as what is paid in taxes in Social Security. So there are a lot of 

things that the field people need to explain to those people. I ask 

you, Mr. Goss, since you have the closest relationship with Social 

Security, to please get your field people up to speed on that. Thank 

you. 

The CHAIRMAN. Thank you very much, Senator. 

We have about 4 minutes left on this vote, so I think we probably 

should wrap up here. Thank you all very much. It is a big, big subject, one where you are in the vanguard, frankly, the leading edges 

on probably major directions in which this country has to go to address the basic issues. Thank you for your work. I encourage you 

to keep at it, because we are going to need a lot of help in the next 

couple, 3 years as we try to solve this. 

So, thank you very, very much. The hearing is adjourned. 

[Whereupon, at 11:18 a.m., the hearing was concluded.] 

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(101) 

COMMUNICATIONS


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Æ 


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