The prospect of longer employment suggests more people will choose to alternate the rhythm of their lives, sometimes working intensely and at others exploring other opportunities.
Nevertheless, it's a social and economic revolution. Take those surveys that show a majority of boomers expect to earn a paycheck in retirement. Only about a third in the past actually worked for pay following retirement.
Yet companies are far from eager to fill their ranks with an aging work force. The same energy and marketing savvy that created the postwar retirement of mass tourism and leisure will need to be expended on building satisfying careers and job opportunities for a highly experienced but graying and less robust work force.
That said, the pressure to accommodate older workers will be there, much as the demand for old-age insurance was growing around the time D.W. Griffith made his movie. The reason is that the financial impact of working even a few years longer on the average older worker is dramatic.
A paycheck has a greater effect on living standards than increasing retirement contributions from 15% of that paycheck to 25%, for example. Your savings continue to compound, and your Social Security benefit grows. The same dynamic holds with working part-time.
"You don't have to pay for expenses out of savings," says Christine Fahlund, a senior financial planner at T. Rowe Price. "You meet them with your paycheck."
Take this illustration from the number-crunchers at T. Rowe Price. A worker earns $100,000 a year. He has a portfolio worth $500,000. His asset allocation is 40% stocks, 40% bonds and 20% cash. Instead of retiring, he continues to work and socks away 15% of his income for three more years. At age 65, he would have boosted his total retirement benefit package by 28%.
If he went to age 70, his retirement finances would almost double in value, rising 90%. Of course, he doesn't have to work full-time to get a return from waiting. An income of $20,000 from part-time work is the equivalent of withdrawing 4% a year from a $500,000 portfolio.
It's also underappreciated that laboring for a paycheck may actually make aging workers healthier. More than just making ends meet, work is physically and mentally energizing for many people.
Express his soul
Work is a social environment, with birthday celebrations and coffee klatches, friends and acquaintances, people to swap gossip and stories with, neighbors to commiserate with over divorce and to congratulate on pregnancy. It's likely that you'll want to move on to a different employer or paid activity when you're older. But that doesn't mean you won't want to work.
"For most people work is a community," says Meir Statman, finance professor at Santa Clara University.
For workers burning the midnight oil in a tough economy, this may all seem like the social equivalent of happy talk. They're bone tired from working. Health problems are wearing them down. And, as the astute social commentator H.L. Mencken noted back in 1922, occupation matters:
If he got no reward whatever, the artist would go on working just the same; his actual reward, in fact, is often so little that he almost starves. But suppose a garment worker got nothing for his labor: Would he go on working just the same? Can one imagine his submitting voluntarily to hardship and sore want that he might express his soul in 200 more pairs of ladies' pants?
The aging of America isn't a tale about the arrival of an economic utopia. The transition to the new world of the older worker will be difficult. But there are many positive fundamental forces at work. The elderly are more vital than before. Americans can afford to grow old. They will grow old gracefully -- and on the job.
This article was reported by Chris Farrell for Bloomberg Businessweek.
