More working seniors also could lower demand for social services by cutting the number of Americans who don't have enough money in retirement. In 2008, the federal and state governments spent nearly $15,000 per elderly person on income security and tax credits, according to a report earlier this year from the Urban Institute. Every year that a person delays taking Social Security past his or her full retirement age (anywhere from age 65 to 67, depending on the date of birth), the check amount grows by 8 percent, says Sara Rix, who focuses on the economics of aging at AARP's Public Policy Institute.



That continues up to age 70, when everyone must draw a check. "You're not going to get that [8-percent] return anywhere else… and it's a guarantee," Rix says.

It may be hard to imagine with unemployment at 7.5 percent, but more seniors on the job could help alleviate a labor shortage in the years ahead. That's because the U.S. population is aging: While the proportion of seniors is growing, the percentage of those in their prime working age is stagnating, says Richard Johnson, an economist who directs the Urban Institute's retirement policy program. By 2030, if people retire at age 65, the number of workers per retiree will drop from 4.5 to 3, according to a 2010 study by the Rand Corporation.

"We really need older people to stay in the labor force to provide the workers that the economy needs to continue to grow," says Johnson. In an April 2012 survey of 430 human resource professionals, 72 percent said the loss of talented older workers poses a problem or potential problem for their organization.

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If younger people worry that older colleagues staying on the job might cut into their opportunities, those fears aren't supported by recent data. A study last fall by the Pew Economic Mobility Project found that from 1977−2011, every one percentage-point increase in the employment rate of older workers was associated with a slight decline in youth unemployment. That's partly because employed older workers also create jobs by starting businesses themselves, or offer skills that allow companies to expand operations.

But other experts worry that later retirement could shrink company bottom lines if the workers who stay do so because they don't have enough retirement savings. The typical household, age 55-64, had only $120,000 in their 401(k) or IRA account in 2010, according to a study last summer from Boston College's Center for Retirement Research. The report also noted that 13 percent of those ages 60-64 had no retirement account at all.

Those who feel obligated to keep working tend to have worse health and work in jobs that are more strenuous, compared with older knowledge workers who choose to keep going. Susan Conrad of Plancorp Retirement Plan Advisors says that among this group, health care, workers' compensation, and disability costs are higher than for others, while productivity is lower. A study by MassMutual Financial Group calculated that for companies with more than a thousand employees, increasing the portion of their workforce of those over age 60 from 10 percent to 30 percent hiked their health care and disabilities costs by about $2 million. Johnson also estimates that a company spends an average of about a thousand dollars more per year for an older worker.

Johnson argues, however, that there's not much evidence that older workers are less productive – their productivity simply takes different forms. They may make fewer creative breakthroughs and process information more slowly, in general, but their knowledge and experience improve with age. An older telephone salesperson might make fewer calls, for example, but sell more by drawing on years of experience, he says.

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A possible worker shortage in some fields is causing a number of companies to retool their operations to retain older workers. The shortage of nurses, for example, has led hospitals to redesign layouts so that work stations are closer to patients, says Jacquelyn James of Boston College's Sloan Center on Aging & Work. And the shortage of truck drivers has some companies redesigning vehicles to create more comfortable sleeping spaces, she says. Other firms are changing work schedules: The April 2012 survey of human resource professionals found that about a quarter of companies are offering more flexible work arrangements and part-time positions to attract older workers.

With U.S. birth rates dropping and the population getting older, encouraging more companies to create incentives for older workers to delay their retirement parties could benefit us all, says Johnson.