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. >> thank you, mr. senator. i would like to introduce the witnesses. first is stephen goss, chief actuary for the social security administration. thank you, mr. goss for coming today. next, mark friedman. mr. friedman is thus the co-founder and ceo of pacific ventures. next is marcia brown who i've known for many years, very active, very helpful, dedicated servant, public service to people in montana. she is currently the chief

operating officer of the national center for appropriate technology in butte montana, sometimes we say butte america. next is maestas with of the rand foundation. and finally is bonnie shelor, is that correct? >> it is. >> senior vice president for human resources at the health system -- >> [inaudible] >> okay, we are not in france. [laughter] i would ask each of you to summarize your statements about five minutes roughly and your statements, prepared statement will be automatically included in the record. mr. goss, thanks for coming. >> thank you, mr. chairman, ranking member, senator bunning. this is a great pleasure to talk to you today and i just also want to see it is an immense

pleasure for many years now to work with a fantastic staff that you all have on developing material for these hearings and legislation and everything else. >> thank you. >> senator grassley characterized very well what i feel as perhaps the best way to sort of identify what we are confronting, social security and not just such as to become also medicare and all of the private tension in the health systems that we have the same as 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 that we are shifting in social security even reflect the impact of increasing the age which is enacted back in this room some years ago, back in 1983. we are still going to be shifting from about 3.3 workers about two workers between now and 2035, the next 25 years which is a dramatic shift.

the reason for this, by the way, is not really because we are living longer. it's because the drop in birthrates that occurred after the post-world war two baby boom while we shifted from roughly three children and down to two children per woman and the trustees of the cbo, omb are working off projections that assume that will continue into the future even with the help of immigration that is substantial we still have a much, much lower number of people entering the population and that is causing the aging shift that we will be experiencing over the next 25 years. i mention that by the we've perspective it's not about the fact that we are living longer. as far as labour force participation rates are concerned there is no question there has been a major shift back to 1950 provided in the written testimony, some specific numbers. one thing we oftentimes like to do this sort of look at each interval basis just look at what the rates are, looking in terms of labour force participation

without the effect of aging occurring in the population because given people with high year ages tended to work with a lower profitably than people at lower wages if we have aging had a population even if at each age the probability stays the same ballot to give our overall rate of labour force down to a lower level. so we get a sort of final look at what is going on if we look at it on an age adjusted mutual basis. during this we do have some kind of good things between 1950 and today, 2010. the overall age adjusted labor force participation rate for men and women combined in our society increase from 57 to 65%. as we have actually had increasing labour force participation. however the reason for that is women have been doing the job. the female labour force for this edition combined from 31 to 50%. over that time while minn

declined from 84 down to 73%. overall we have gone up, but it's been because women have increased by so much more than the men. at age 65 and over, which is where the benefits apply and where we have some real possibilities the changes have been the other way even on the stage adjusted basis we have had half of the male labour force rates since 1950 from about 40% down to 22%. so there certainly is a possibility of making changes. women on the other hand have on the other way. they can't eight to 14% said they have come up, not quite the level of men that there is room for a possible change in those areas. in the future which sought to intimidate -- even at the highest pages and this principle because of the methodology we have introduced some years ago

suggesting as people live longer and presumably help figure there will be some tendency even without specific actions taking policy lies to work somewhat longer but these are modest indeed. we estimate the game will be something like 10% and overall labor force participation rates of 65 and over. however about 3% decline in the labor force participation rates at 35 and 64 largely because of the anticipated continued increases in disability preference in our society. so where are we with social security? social security financing we project in the report even with all the future changes and work to be having the trust funds on a combined basis exhausted and 2037 at which point we estimate we will still have 75 cents worth of taxes coming to be able to pay the benefits under the statutory regulations that is

all we would be able to pay as you well know. so the question is can increase would help fill the gap and there is no question that it can. we have many people on the panel today we can help some of the reasons, not just the reason but the way that we can try to encourage that. let me just show you what the implications will be and something we can actually get. we have developed three hypothetical possibilities for increased labor force participation in the future over and above what the trustees are already assuming. one and that i think senator baucus referred to is what if at age 62 and over we had an additional 10% increase over the trustees estimating and people 62 and over and as you indicated, mr. chairman, that would result in the reduction of our 2% payroll actual deficit by about a 5% reduction if we did

so well to have more than 10%, as a 20% increase in the amount of work activity for people age 65 and over we would have doubled that affect so there is a possibility of doing that as you indicated also devotee a medicare affect that in terms of the percentage of payroll would be similar but since medicare has under the 2009 considerably higher long-range deficit it would have less of a percentage wise effect on reducing the deficit. we did look at to whether the possible scenarios for increasing the labor force participation rates which would be much stronger and much larger potential effect and these are to in effect answer a hypothetical question of what if we went back to 1950 leader for >> is pushing rates but in a very special way? both men and women went back to the kneal 1950 participation rates getting a lot of closure that we have had since 1950 between men and women that isn't

a possibility, but it would be a strong change. if we were to do that and not the age rejected basis of the labor force participation rates of 1950 now returned from mails and manifest themselves similarly for female we estimate we would have an increase in payroll taxes to social security on the order of 16.5% in the long run and that would actually reduce the long range deficits to about half so this would be a very, very striking and immense change that we would have. another possibility that we looked at on that scenario is realizing that in 1950 we did not have a disability program under 1950 and disability insurance and given that we did have that enacted in 56 and benefits starting in 1957 we would probably, even if we had people wanting to work as much as they did back in 1950 we would not return quite to the

same levels of participation because it would be available estimate somewhat less of that, and that along with also some difference in terms of the age structure we estimate that we could have 16.5 or 13.5% increase in the labour force if we were returning to something very akin to the 1950 participation rates and the would reduce the long-range deficit for the 75 years by about 40%. the challenge really in all of this is how do we make this happen? clearly we do believe and understand people will be working longer and will be living healthier and will have the capacity to works of finding ways to encourage people ask you all have suggested to actually go and do more work will greatly benefit the finances of social security, medicare and really all of their retirement and health systems in this country. thank you very much. >> thank you, mr. goss.

we appreciate it very, very much. mr. freedman? >> thank you mr. chairman, ranking member grassley, center bombing and the entire committee for this opportunity to testify today. and i will pick up on stevan goss's question of how we make this happen, how we make a virtue of necessity in a voluntary way as you have charged us to think about today. to do that, i just want to step back quickly in history to the year 1950 that mr. goss just talked about. in that year, the labor leader discard retirement as too old to work and too young to die. it was very awkward. other people talk about as a role this role and in a period of about 15 years we turned this awkward state into a version of the american dream. we created a new dealer of the shorter working lives that people could actually look forward to. people started retiring early year and earlier said they could

get to this goal and now in the context of trends that you talked about, the demographic revolution as nearly 80 million baby boomers moving into the 60's and the 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 we have to come up with a new dealer on a longer working lives that is as appealing as the old deal but a deal that people can actually look forward to and be part of the new american dream for the 21st century get away the last deal was for the circumstances in the last century and i think the way to do that is first to make sure that it is in a way that protect 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 lives than it is a trend 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 the careers of ready millions of bloomers have launched second careers after the age of 50 in areas like health care, education, the green color economy in government, and we know from research a couple of years ago that 50% more want to follow that same path and i think an important measure we can take in the policy realm is to meet them halfway, to help them go for masturbation to asking these people who want to work to launch a second career in areas with no 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 and community colleges, which at a low cost and expedited way can help people move into careers as

churches to become nurses and teachers and other high need areas, to fund the fallujah provision of the serve america act which helps build the capacity of nonprofits through bringing people who have retired from the private sector currier and want to apply their skills in these critical areas of need and also to meet the target goal of 10% of americorps members in service rules that help them transition to a canoe on core career and we are interested in creating new financing vehicles like the individual purpose account which could be a corollary to the individual retirement account but it helps people support themselves during the inevitable period of transition. you can't just walk out and become a nurse or a teacher. you need to go back to school, to training and that can be a financial hardship for individuals. and in addition to making adjustments to social security, which not only removes impediments to the way people are working longer and provide additional flexibility particularly for that inevitable

transition period that i talked about before and then to invest in initiatives like the troops to teachers program which is an extraordinary model for helping people who completed a phase of the career and days of service move into other roles where they are equally needed and it brings up line of this committee has played an extraordinarily important role in the history of the g.i. bill. i think if these data to a third age bill of a bill that would help people move in the case of the g.i. bill from military service to civilian service from abroad to home come here from one phase of their working lives to a new one, and one that wouldn't just be another year or 16 months were 18 months of work but could be a whole ten year career or longer so that could really dramatically increase the length of their working lives. i think in doing this, we have an individual level stand to have a multiple paths idea built around the idea of continued in

come, new meetings, americans get up and go to work each day for daily meaning as daily bread, and a chance to use people's experience at a society level we can have improvements to social security, financing and fiscal solvency of the nation a windfall of talent for areas that are high national priorities and also send a signal that longer working lives are not a punishment can be something to invest in and look forward to. i think if we pull that off, we would be doing it in a time when all ready to thousand boomers today are hitting their 16th birthday but even more, new research shows more than half the children bourn in this country and in the developed will since 2000 can expect to live 200. this is the beginning of a deal that could help better balance of the response of devotees, the security of contribution and work across a life span that is likely to be decades longer than

it was in the last century. thank you. >> thank you, mr. freedman very much. ms. brown? >> chairman bachus, ranking member bachus, center bombing, i am honored to be here -- >> your microphone, please. thanks. >> i am honored to be here today representing the national center for appropriate technology and to talk to you about our organization efforts to success in recruiting and retaining on core employees, those working beyond retirement. i am particularly pleased to be here with my own senator, chairman max baucus. we are a small nonprofit organization headquartered in viewed montana with offices in iowa, arkansas, california, pennsylvania and a 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. we have a very highly educated staff committed to promoting our mission. we have a large diversity of staff and projects, but our perhaps best in congress for the national sustainable agriculture project. our staff is made up of a mix of agriculture and energy specialists including agronomists, horticulturists, livestock and organics specialists, energy engineers and architects. maintaining such a highly educated and experienced workforce, along with operating in an organization that is entrepreneurial is developing the project has required that we adopt the practice is to recruit and retain our workers. we are the proud recipient of a 2009 civic ventures encore opportunity award for our

efforts and employee and older workers. thank you, marc. there are three areas where we've been successful in recruiting and retaining older workers. first, employing what we call adjunct staff. second, accessing senior training programs and recruiting from diverse populations including workers who have retired. one successful method we have used is allowing employees to retire to be classified as adjunct employees. this allows for more staff the opportunity to come back to work on specific projects for a specific time period. our adjunct and we keep policy allows us to retain a pool of educated and experienced staff that can be called on as needed for projects with time limits that would not allow 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 to concentrate on raising flowers and touch the walls for her for hours market. she came back as an adjunct and plucky and has been working during the winter months has our -- one of our horticulturists. we have an investment in the education and training of the staff, so being able to bring them back easily allows us to retain their expertise after they retire and saves us from having too high year and train a temporary staff. rose salon.com our library and, was a retired school teacher when she started work in 1978. she retired our library and in 1992 but returned to work in 1997. she continues as our head librarian with a very limited work schedule. rose says she flunked retirement and she continues to work even though she will reach age 90

this month. wheels to get into just older worker training programs such as experienced work, which trains low-income seniors for jobs best serve their communities. we participated in experienced work for eight years, training older workers to assist on a national hotline helping low-income energy consumers. several our trainees have become excellent regular employees. i cannot stress enough how positive the experience work program is for an organization such as ours. we normally recruit nationally for our positions. however, when we had the opportunity a few years ago to conduct energy efficiency pockets and montana, we needed to step up more quickly than our normal hiring process will allow. we targeted the recruitment to a group of experienced energy engineers all over 50 who either

retired or have been laid off among local utilities. we now have a team of falstaff with the older engineers mentoring the understaffed. ncat has a multi generational diverse work force of 82 regular stuff, 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 carriers. i, myself, started at ncat just before my 50th birthday. this is my on corker. am i test professional life was as a staff member for senator and congressman pat williams of montana. ncat did for me what we do for all of our employees. they made certain treaty 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 reached from using employees who have retired. >> thank you, marsha. i'd just like you to know how much coffee and most people in montana and around the country know ncat and appreciate your work. it's quite something. i remember when ncat got started years ago and it's grown into a very impressive organization serving a lot of people. it's a great outfit. thanks very much okay, dr. maestas. >> thank you, german bachus, a ranking member grassley and senator bunning. 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 a baby boomers aging and retired the number of non-workers relative to the number of workers in the population is rising. streaming social security and medicare and slowing economic growth. the impact the population aging and the standard of living in the future depends a good deal on how long people choose to work before they retired. fortunately, here are the reasons for optimism. the end of the 20th century witnessed 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 demanding. work and older ages is likely to continue rising in the future but there will be propelled by different forces. chief among these is the scheduled increase in the social security for the retirement age which will not be fully

implemented until 2020 to. second is the restructuring of the pension plans from defined benefit pensions with strong early retirement incentives to the 401k style pensions that have no such incentives. in addition, legal barriers these retirement have only recently been relaxed. feared as the labour force for his official 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 husbands. this creates new incentives for continued work by women and importantly, when the women work long verso to their husbands. the ways in which men and women work at older ages has been changing, too. only 40% of those stop working in the 50's and 60's stay out of labor force. 40% return to work or of retired. and 20% pass through partial retirement. saltzman planet is also common. despite this good news there is potential challenges ahead. one is health. while many respects age 60 does

seem to be the new 50 the rise among the younger people signals the possibility of a reversal in the upward trend of healthy life expectancy. other challenges relate to demand for workers. many older americans would appear that the like to work but can't find jobs. even before the current recession only about one-half of older job searchers found jobs within two years. one-third of them 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 the cognitive abilities to decline with age, other aspects are stable. productivity may not decline of the compensatory the uterus possible or if a job drops on the stable skills. another challenge is health care cost. the extent to which health care costs depressed employer demand for older workers is unknown but may be substantial. even a part-time workers may not be given health insurance benefits, high turnover rate among workers nearing retirement

make it difficult for employers to reach costs in addition employers may find it difficult to adapt production processes to accommodate the flexible part-time work schedule decided by the older workers. the key question for the policy makers is how does the court forces already in motion and ease some of the challenges. should we encourage people to believe retirement in the first place or to retire but later re-enter the workforce into a capacity? perhaps both. but it's likely easier to incentivize the worker to defer retirement than to re-enter the labour force after having already left. in large part, this is because leading a long-term job for a new job often results in a wage loss. especially if the job as part time. most reentry jobs are part-time. if too many people who would have worked full time now work part time we could see a net reduction in work hours. policy options to encourage workers include eliminating the social security retirement earnings test, erasing early retirement age and formalizing

the cs retirement role to encourage the partial retirement instead of full retirement. policymakers can look for ways to help workers understand that when they claim early social security benefits they lose nearly 30% of their immunity from you. there may also be ways to encourage employees to hire and retain older workers but some caution is warranted. we do not yet understand what they're the biggest barriers faced by the employ years are with respect to perception about productivity, health care costs, high turnover rates or inability to accommodate part time work schedules. it is also worth considering that the policies can be designed to attract a middle-age women into the workforce, attracting and italy's woman 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 questions. >> thank you. sheila? >> thank you. good morning, jim bacchus, ranking member grassley and senator bunning. on behalf of the e 11,500

sponsors for the virginia health systems employees i think you for this opportunity to share in sight on how we attract and retain older workers as part of our 186-year-old health care industry. our organization began in 1824 in paris france and was founded by 12 catholic nuns, hence the genesis of our name, bon secours, meaning have good health. today i will share with you how and why our workforce is changing. why we value boulder workers, how they contribute to our success and culture and how we attract and retain them to create a culture aging. bon secours includes 11,500 employees, seven hospitals, multiple in view of tricare sites and week at bon secours virginia take our mission of providing good health to those at heart.

we provide health care for over 50% of our metropolitan population. we also have an active care ministry that provides outreach services to most the underserved or uninsured citizens and last year we provided 12,000 of those visits to read our legacy for the culture aging is the bon secours sisters. in fact many of these sisters ages 55 continue to work with us today and they serve as leaders well into their seventies, eighties and nineties, providing strategic direction and guidance including serving on the board of directors and leading the the decision making bonding. for us, workers of this age or common in their vision, wisdom and contributions are celebrated in our system, nearly 40% of employee population is age 50 and above. of those, 18% are age 62 and

above. the key to the culture of our aging is our philosophy that we believe experience, wisdom and institutional knowledge of our older workers is in valuable and in fact helps us make a more prosperous organization. let me share with you a story of patti davis. for someone turning 89 in august, she doesn't look a day over 60. haddi shrines when she talks about ever distinction as the oldest employees. she recently reflected on her life and her career in bon secours as a nurse and continues today with her job. she is also a regular volunteer for us in our gift shop. when asked about the a career with the health system, haddi said i tried to retire but soon after that, bon secours called me and to work for us, for them. at bon secours we are committed to the culture and we were recently named for the last ten 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 a majority of our workers are delaying retirement. but offering initiatives such as face retirement, flexible work skills and intergenerational programming, we have been able to successfully retained older workers. research shows that workers leave, nurses leave because changing interests, being called on to care for aging members, family members and work that is to choose ackley demanding. we have been able to offer the phased retirement. what does that mean? option number one ann poletti may cut back to part-time work and continue to receive a pension check with an employee he may receive a pension check at age 70 and a half and continue to work. an employee may retire and be rehired at a later date continuing to collect a pension check. obra older workers are eligible for medical, dental, vision coverage and other valuable

benefits including tuition reimbursement. for those workers aged 62 and over we are providing health insurance for them and they are not taking it that much of medicare at this point. our comprehensive generous benefits are attractive, flexible and creative. grand children and employees are eligible to attend, our family centered child care center. we offer the other 24 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 program to telecom union and job sharing and offer multiple work schedules such as today's wheat comer summers and become a winter only, etc.. automobility teams help older workers with the returning of

bed bound patients since the teams have started we've seen a steady drop in the number of injuries decrease in pain and reduction of muscle fatigue. when it comes to employee retention yet other initiatives. we are laying the foundation for a civic engagement program where we introduce workers age 50 plus to volunteer croupade volunteer hours as the advocate and participate and community initiatives representing our organization. we also have an intergenerational initiative called grant partners that pair and please come children at day care with elderly friends, employees or spouses of children in our journey to attract and retain older workers, we have made significant progress buy constantly improving programs and policies we continue to learn from other organizations and the public and private

sector. in closing, consider the words of haddi 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. >> thank you. the basic question i have is to ask each of you briefly to answer what are the main impediments that tend to prevent someone today from voluntarily working longer were going back to the work force, what are the impediments to prevent the natural inclination for those who want to do more? i will go straight down the line here and start with mr. goss and ask each to give one or two basics. >> thank you. there are a couple of things that occurred to me and this has

been to a strong degree addressed by a number of the other panelists. indeed the most fundamental question is the culture that we live. those laws daughter the beebee lawyers understand when the bird tecum enter the labour force there were a huge number of people available and the offer early of retirement plans and this became a part of our culture and expecting people to retire early. frankly we need to change that and this is a cultural change more than anything else. it can be done in a way that is intended it that would be excellent. i think the way we can introduce this is if we can get to the american people to think of the living work over retirement, working with your compatriots of the office, getting things done as opposed to playing golf has value and people should enjoy that. another small item i think is emphasizing as it was suggested by others on the panel social

security benefits to ticker benefits to 62 you get it permanently reduced level of your monthly benefit for the rest of your life. if you can wait a while longer to start that social security benefit you get a higher level. the lifetime of isn't any difference what your monthly amount which is what people live on will be a lot better. one way i think we can also possibly facilitate what we are talking about here is not just the encore of people moving to different careers but another cultural change and i have heard people talk of actuaries and others we tend to work on the basis that we had a chance in our career and get better and go to higher positions, more responsibility and it's a one-way street and nobody is willing to accept as they get older the designer to have perhaps they should step back taking less responsibility and perhaps less pay. it seems to me this is a cultural thing if we could modify that. >> thank you.

mr. freedman? >> i agree the cultural issue a certificate. there was an article in foreign affairs the described the working age population us 15 to 59. i was thinking i guess both of my senators are not in the working age population and so i think it persists in a way that -- i think another very important impediment is the transition for those people who want to have fun another phase of their career as a do-it-yourself process. there was an article in "the wall street journal" few years ago about rumors heading into their children's 529 accounts to pay for their own education and i just interviewed a guy who wants to become a park ranger at yellowstone and had to go through the student conservation program with a bunch of 19-year-olds. i think we could do a much better job creating a front door for people to make that transition instead of them having to speak in the back way. >> what are the specific stores? >> i think they are the same ones we provide for young

people. one is because a lot of traditions that we have heard about nursing, moving into nursing you've got to go back to school to become a teacher. i think another is the internship i get, that is of the encore fallujah is essentially an internship for grown-ups where they can spend a year in an organization that is in a different sector so they can adapt private sector skills into the nonprofit world or one of the government, so we don't even have to be that imaginative. we can just take some of the things we take for granted as young people make their shift and adapt for this population. >> could you give a little bit more later on what they are and -- >> i'm sorry. i think what we see as the biggest barriers will little bit of this culture thing that steve and marc for talking about but also requires the employer be

flexible the you work with each individual employee and help them with fewer hours, fewer words, work in the summer, work in the winter you have to as an employer be willing in order to keep that expertise be willing to change -- >> are you finding the are flexible or not? >> you know, we have to learn to be more flexible and i suspect other organizations have to come to mack believes the it folks that will only work two days a week or half a day a week or work from home and i think being flexible as i would say one of the things employees -- and lawyers could do the most. >> my time is expired but we are going to go very quickly. dr. maestas? >> i would add two things. my research shows 70% of older americans save for retirement of the plan to work during retirement. this is before the current recession.

but many fewer actually do work during retirement than say they wanted to come and two things are important. one is health. many people simply get sick before they can actually fulfill those plans but another important piece is jobs. older workers of part-time jobs but they are the hardest to get to this gimmick thank you very much. >> i would say organizations to the must learn to think about work differently. it's 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. and that would lead them to offer options are around flexibility which are key to older workers as well as key for older workers as health insurance and so those are the two things in my opinion that will bring older workers back into the workforce and keep them there. >> thank you very much. senator grassley? >> thank you 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 as we know the retirement earnings test reducing benefits 1 dollar 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 received and reduced benefits for the remainder of life. they accept that it's hard to explain their retirement earnings test which seems to encourage employment after retirement rather than discourage. so mr. goss and anyone else that wants to contribute to this question, would you care to explain why so few people take

it vantage of the ability to receive reduced benefits while they work between 62 and full retirement age and receive the and reduced benefits for the rest of their life? >> i think if i am understanding correctly we have over half of people who are eligible to start receiving social benefits to start taking them at 62 and that is a part of the issue i think we are dealing with today to lead to a great extent, that is because people believed quite frankly that the has been the culture of take the benefits available, he can now. people see that as a greater value. the do not understand if these are able to get benefits or if they have the benefits reduced through the earnings test that the lifetime value of benefits will not be reduced as a result and i think that we have the social security and a flavor body of this panel needs to do a better job of getting that message out for people to understand that. another aspect, too i think it's

perhaps with the good work in this room and on the other side of the capitol to get social security and medicare back to some financial footing so people are not concerned social security won't be there in the future. we understand someone to take the benefits earlier because i ought to take them now while they are available, so all these things could probably help in this respect. >> the other four of you have anything to contribute to that question? >> senator grassley, i would agree that in my experience, 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 and partnering with the government on communicating that concept. >> i would second that. it seems the test itself is not well understood at all and most people simply see it as a tax.

>> mr. goss, your testimony presented some of the political calculations to illustrate the potential impact of increased employment on the system. these calculations show when people work more social security collects more taxes and then it also pays more benefits. depending on the scenario of benefits they would rise 50 to 80 cents for every dollar of additional payroll taxes. as we understand your calculations, you assume those who work more with rm 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 job and retire leader or they could retire and get another job. the available data seems to suggest that those who stand their current job earn higher wages than those who start a new job. if this were true, how would that affect your calculations and in other words, does it continued employment of a different tack on social security than their reemployment?

>> i think the question is the additional employment people have had that effect is to put the question of the average earnings level. if additional employment were able to encourage people not working at all during a year for example and the work of a lower earnings level the taxes would be paid on that and there would be relatively little effect on benefits so that would actually be relatively more positive effect on the trust funds. if on the other hand people are what flea smaller number of people work additionally and have an additional year of work of a relatively high level, that can fall into their benefit calculation and will not only receive the tax is also receive benefit credits so that would be a lesser net effect on social security as you well described and i know that steve understands the way we put together these estimates fairly quickly are assuming that there would be no effect on the

average wage and that would be a combination of the extra work being some additional people working perhaps some part time but some other people who are already working during a given year working more and probably to the extent we are able to encourage príncipe should we would have a combination of the two but there is a lot of variants and the french edition possible around the estimates, no question. >> thank you, mr. chairman. >> thank you. senator bunning was a chairman -- >> social security subcommittee and it took eight years. i want you to know that, mr. goss, eight years to do away with the earnings limit and to presidents and it took the congress eight years to get the first -- it used to be even thousand $200 of earnings if you were 62 they would tax you $3

for every dollar that you earn over he $11,200. once you became fully eligible at age 65, beauvis tax you $2 for every dollar you earn over $11,200. now that has been moved up as you see senator grassley question earlier but if you wait until you're for retirement, you could earn a unlimited, unlimited and that's where i think your organization bought the nist service in the field buy not fully explaining to the retirees what they are doing when they started at 62 or 63 or 64 prior to age 60 something now

or 66 now we're the full retirement age starts. can you explain to me why that earnings test is not more fully and explained, mr. goss, to your field representatives that are dealing on a daily basis with retired three c's? >> cementer bunning i wish i could. i am not the best person to address the issue given the real we work. i know social security at ministration has been making serious efforts just on the last year or two to change the message given to people when they come to the field offices. for instance, there is a concept of break even point people jews to be told about and -- >> they always say if you start at 62, you will at 78 he will catch up. >> in number of us felt that wasn't being read correct.

most people with their benefits one month at a time and in fact you to durbin at 62 as opposed to 65, you are ahead in terms of benefits for three years between 62 come 6364 but that 65 you'll get a larger benefit for the rest of your life if you have waited until that time assuming that you can treat stomach to start at age 68, i waited until we finally got the bill passed, the earnings limit totally eliminated and restarted 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. >> there is no question. as recently as 83 when we had a delayed retirement credit of only 3% that you got for every year the yandi for your benefit past the retirement age, it was up to eight percentage points,

so now somebody with a 66 retirement eight weeks until they get 16% permanent increase in the month -- >> monthly benefit for the rest of their lives by waiting -- >> see, that is never -- as the chairman and i know that most of the calls to your office or 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 increase in health care costs for older employees could be a substantial determined in hiring older workers. please explain this.

>> the health declines and health care costs rise so you have to think about people who are before medicare eligibility and after medicare eligibility three estimate that each 65 you become immediately eligible for medicare. >> right. so, take a part-time worker who is five. that person, the employer is required to provide health insurance coverage, so medicare -- >> under the new regime is going to be -- >> right, we don't know. before 65, however, it is the employer that provides the coverage and so you have got an increasing number of workers in these older ages still will pre-medicare reason average health care costs. >> yes, for the group.

>> that's the mechanism that 65 everything shift the medicare interest the picture. >> all i can tell you, and i started as well as i guess anybody at this table not all the vacant chairs to have tabled , that sit here, the best and most practical way to increase the social security benefits is something the greenspan commission could have done only they put a patch on it for 30 years instead of permanently fixing at would be to have increased from 65 to 70 retirement age at full benefits at the same rate the increase from 65 to 67.

somebody said to him thousand 37 we are going to have to go to 75% of the benefits. i believe it was you, mr. goss? will we wouldn't have to do that if that money were deferred for those three years. we would be good on till 2075 and full benefits it just that little change, and that doesn't cost the average american who is going to receive social security anything but waiting or if they wanted to get 65, 66, 67, they can with a lesser benefit, but i'm telling you most people are trying to stay in the workforce at least past 70 that i know.

now i don't know what percentage of you have of those that are at age 65 to 70 that are continuing into the workforce. if they are able to do it. do you have information on that? >> in my organization, 18% of our employees are 62 and older. >> and over. l.f.? >> out of 11,500. >> and anybody else seven formation? in the 18%? >> 40% or over the age of 50. >> okay. well, i think it's very important to look at the solution not only of 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

a few lots of one of your 40 quarters when you make more than you did when you were 25 and 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 and social security. so there are a lot of tough things the field people need to explain to those people, and 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. >> thank you very much, senator.

we have four minutes left on this vote i think we should probably wrap up here. >> thank you very much. this is a big subject and a vanguard frankly with major directions in which this country has to go to address these basic issues. thank you