b'AGING IN THE 21ST CENTURYTurning their attention to older households,Social Security Replacement Rates While the percentage of men in the paid labor Poterba et al. (2012) examine the evolution ofSocial Security plays a very important role inforce decreased between the two cohorts from 83 assets in later retirement and the wealth holdingsretirement readiness. For example, Hurd andto 79%, women increased their labor force par-of Asset and Health Dynamics Study (AHEAD)Rohwedder (2012) estimate that a reduction inticipation rate by seven percent, from 64 to 71%. respondents (born before 1924) toward the endSocial Security benefits of 30% would reduceTheir earnings increased dramatically as well. of their lives. Median wealth is $157,363 (in 2016the percentage adequately prepared by 7.8% forFigure 3-2 shows the impact on redistribution, dollars) for singles, $280,985 for widows, andmarried individuals but as much as 10.7% amongmeasured as the fraction of total Social Security $768,545 for married households. But 46% ofsingles. In addition, Bender (2007) shows that in- benefits that is distributed among wealth deciles. this older population dies with less than $11,113come from pensions and Social Security accountsThe amount of redistribution increases from in assets and is much more likely to have been infor the majority of retirement income.about 10% for the 1992 cohort to over 12% for poor health. Besides replacing earnings for retiredthe 2004 cohort. Redistribution at the household The financial situation at the end of lifeindividuals, Social Security benefits are pro- level increases from about 5% to nearly 7%. These also depends on how long we live. An Employeegressive; that is, they replace a higher fractiontrends are likely to continue as womens labor Benefit Research Institute (EBRI) report showsof low earners pay than high earners pay. Butforce participation grows. that 20.6% of those who die at 85 or older havebecause benefits are calculated at the level of the no non-housing assets, and 12.2% have no assetsindividual instead of the household, and because left. The percentages are higher for those who areof the spousal benefit, much of the redistribution single at the time of death with 9.1% also holdinggoes from higher-earning husbands to their outstanding nonmortgage debt (EBRI 2015a).lower-earning wives (Gustman and SteinmeierFIGURE 3-1Percent in the labor force 2001). As womens labor force participationand working full-time and Social Security increases, this is likely to change. Indeed, withearnings for men and women aged 51-56: more women working, the Social Security system1992 and 2004is becoming more redistributive (Gustman et al.Source: Gustman et al. (2013).2013). Figure 3-1 shows the labor force participa- HRS cohort Early Boomerstion rates and the Social Security average indexed1992 2004monthly earnings (AIME) in 2016 dollars,Percent in the labor forcemultiplied by 12 to calculate an annual estimate.All respondents: 73% 75%Males: 83% 79%Men and women in the original HRS cohort areFemales: 64% 71%compared with the Early Baby Boomers. Percent working full timeAll respondents: 64% 66%Males: 77% 74%Females: 52% 58%Increasingly, married women areSocial Security earnings * All respondents: $30,215 $42,429earning Social Security benefits throughMales: $45,949 $55,458their own labor force participation . Females: $16,001 $26,896* Converted to 2016 dollars54'