Updated: 9/8/2010 9:00 AM ET|
The case against retirement
The Age of Retirement is over, and a new social revolution is afoot: A majority of boomers expect to earn a paycheck in retirement, and that's a good thing.
Before the 1950s, it was something only the wealthy could afford to do. Everyone else needed an income, and most folks struggled to get by in the industrial economy as their faculties deteriorated. Back in the days before 401k's -- let alone Social Security -- older people faced the kind of pressures portrayed by filmmaker D.W. Griffith in his melodramatic 1911 silent film "What Shall We Do With Our Old?" It's a sad tale of the setbacks endured by an elderly couple, the wife ailing, the husband tossed off the assembly line to make way for a younger worker.
Griffith was one of many social activists calling for a social insurance system to provide an income for the elderly. The social reformist dream became reality with the 1935 Social Security Act, the spread of the corporate defined benefit pension plan and Medicare in 1965. For most workers, the last stage of life became a time of leisure, recreation and enjoyment.
The Age of Retirement was one of America's most successful social reforms ever. But that era is over. A new vision of old age is emerging from the trauma of the credit crunch and the Great Recession: Forget retirement; keep working.
Surveys show that a majority of baby boomers say they want to work during their golden years. They're going to get their wish. The key question is no longer "How early can I retire?" It's "Why retire?"
Of course, like all tectonic social and economic shifts, the trend isn't new. It has been building for the past three decades with the move away from traditional pensions, with their involuntary contributions and steady payout, and toward 401k-type plans, with their voluntary contributions and uncertain returns.
We're also living longer. That's good news, but it does mean that to maintain their standard of living the elderly have to either earn a paycheck longer or save more -- a lot more.
For workers nearing their retirement years, the median balance on 401k's and IRAs combined was a mere $78,000 in 2007. And the stock market reached its all-time peak that year! But the Great Recession has devastated portfolios since then, a stark reminder to millions of near-retirees that they haven't saved enough to fund a good retirement.
Indeed, taking into account the declines in financial assets and housing, the National Retirement Risk Index as of mid-2009 signaled that 51% of households were at risk at age 65 of not having enough retirement income to maintain their pre-retirement standard of living. That's up from 44% in 2007 and 43% in 2004, according to the index's creator, the Center for Retirement Research at Boston College.
Those are hardly heartening percentages, and the situation seems even worse when the U.S. unemployment rate is hovering stubbornly around 10%, according to the Labor Department's October survey.
But a look at longer-term trends is encouraging. An aging work force is living longer and is less disabled than previous generations. After all, average life expectancy in 1935, when Social Security became law, was 61 years. It's now 78.
A tweak may have to be made to the Beatles song "When I'm Sixty-Four":
When I get older losing my hair,
Many years from now,
Will you still be sending me a valentine,
Birthday greetings, bottle of wine . . .
If I'm at work till quarter to 10
Would you lock the door? . . .
(It should be noted that the man who sings the lead vocal on the original tune, Sir Paul McCartney, continues to enjoy a productive career years beyond his 64th birthday.)
Of course, older workers probably won't be "digging the weeds," to mine the Beatles vein one last time. An economy dominated by services, information industries and knowledge businesses is far easier to labor in than one where the commanding heights are full of factories, mines and farms.
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