By: Allison Eatough, Contributor

Older Americans are working longer than ever before1.

According to the U.S. Department of Labor2, people age 55 and over represented 11.9 percent of the nation’s workforce in 1994. By 2014, that number jumped to 21.7 percent, and by 2024, it’s projected to reach almost 25 percent. The workforce participation rate of older adults has also increased in recent years. In 1994, 38.7 percent of adults ages 62 to 64 worked, compared to 50.2 percent in 2014.

So why are so many older adults feeling discouraged about continued employment?

A new report from the Brookings Economic Studies program states while many older Americans are physically and mentally able to work and want to remain in the workforce, provisions of Social Security and Medicare reduce their take-home pay. As a result, the extra time working is less rewarding.

The report, called “Enhancing Work Incentives for Older Workers: Social Security and Medicare Proposals to Reduce Work Disincentives,” suggests three ways to remove disincentives and keep Social Security beneficiaries in the workforce.

  • Eliminate the earnings test for participants between age 62 (the early retirement age) and 66 and six months (the full retirement age). Report authors argue the test is widely misunderstood and produces no long-term revenue for Social Security. Note: Full retirement age will increase to age 67 by 2022.
  • Examine the effects of creating a “paid-up” status for Social Security. When reaching this status, employees/employers would no longer have to pay a payroll tax, and earnings would not alter future benefits.
  • Examine the effects of creating a “paid-up” status for Medicare, coupled with a policy shift that would make Medicare the primary payer for covered expenses. In Medicare’s current form it is the secondary payer.

If the government adopted measures two and three, report authors estimate the net wage would increase by 40 percent for workers over age 65.

Brian Kuhn, a financial planner with PSG in Fulton, Md., says economically friendly ideas that can keep older workers in some form of employment is a “win-win for our society.”

“Older workers generally want to work, they may just not want to work full time like they have the prior several decades,” Kuhn said. “Any government or private sector adjustments that can facilitate that are going to be helpful. Those workers then feel they are contributing, have additional income, assure that job is getting done, and generates tax revenue from the employment.”



Allison Eatough, Contributor

Allison Eatough is a freelance writer with more than 20 years of experience covering everything from business and finance to higher education and local government. She is a resident of Howard County, Md


This article was contributed to, a division of Planning Solutions Group, a financial planning firm.  If you would like to discuss your financial goals with Brian Kuhn, CFP® the financial planner quoted in this article you may schedule a time using the online scheduler at this website, or calling 301-543-6035 or emailing him at

No portion of the content in this article may be construed as investment or tax advice.


Securities offered through Triad Advisors, Member FINRA / SIPC.  Advisory Services offered through Planning Solutions Group, LLC.  Planning Solutions Group, LLC is not affiliated with Triad Advisors. PSG Clarity is a division of Planning Solutions Group, LLC