Economic Report President

Box 4-1.—continuedfor couples and $75,000 for unmarried taxpayers. The creditwould provide financial support for about 2 million Americans,broadly expanding an existing set of tax allowances. Under currenttax policy, taxpayers can claim the child and dependent caretax credit to cover part of the cost of care of a disabled spouse,when that cost is incurred by the taxpayer in order to work. A taxpayerwho itemizes can also deduct any qualified long-term careexpenses that exceed 7.5 percent of adjusted gross income. Thenew tax credit would defray some costs of both formal and informalcare. Over half the chronically ill people thus helped will beelderly persons.Second, the National Family Caregiver Support Program wouldfund State initiatives establishing “one-stop shops” that assistfamilies caring for elderly relatives through training, counseling,and arranging for respite care.Third, the Administration has proposed a national campaign toeducate Medicare beneficiaries about the program’s limited coverageof long-term care and help inform their care decisions. The need forinformation is great: nearly 60 percent of Medicare beneficiaries areunaware that Medicare does not cover most long-term care.Finally, the Administration has proposed that the Federal Governmentserve as a model employer, by offering nonsubsidized,quality long-term care insurance to all Federal employees andusing its market leverage to negotiate favorable group rates.denominator (the total number of men in this age group). Therefore,the participation rate of men aged 65 and over has declined even morethan the decline in average retirement age might suggest.Meanwhile the labor force participation rate for women aged 55-64has actually increased since 1948—in fact it has more than doubled,from 24.3 percent to 51.2 percent (Chart 4-4). This has happeneddespite a decline in women’s median retirement age, from 67.7 years in1950-55 to 62.6 years in 1990-95, because more recent cohorts ofwomen have been more likely to be in the labor force during most oftheir adult lives (Chart 4-5).In the face of long-term improvements in health and longevity, whyhas the retirement age fallen, not risen, during the 20th century? Risingwages are a large part of the answer. As their earning power hasrisen, men have enjoyed both more income and more time for activitiesother than paid work. They have taken some of this additional time inthe form of leisure at the end of life, as well as shorter workdays andworkweeks and more holidays during the year. The growth of SocialSecurity and employer pensions since the 1930s has also facilitated137