I have long been impressed at how quickly our society can change its attitudes.
Premarital sex, cohabitation, out-of-wedlock childbirth, interracial relationships - all were taboo, and then, in a relatively brief time, they weren’t. We did not expect women to have the same educational, athletic and professional opportunities as men, and then we did. Taking out a second mortgage on one’s house was once a sign of financial distress, until a change in the tax laws and a rebranding as “home equity loans” encouraged millions of Americans to turn their dwellings into ATMs. That this last change did not turn out so well only reminds us that sometimes conventional wisdom is indeed wise.
But more often than not, we are well-served by our open-mindedness. Life demands that we adjust and adapt. Americans do, better than many.
So it was pleasing but not surprising to read an Associated Press report last week about a new survey that shows a strong shift in our expectations about retirement. Large swaths of Americans, at various income levels, expect to work longer before retiring and to continue working for pay after they cross the retirement threshold. Far fewer still cling to the idea that they will stop working by age 65, move someplace sunny and spend the rest of their days chasing little white balls around big green fields.
I am convinced that this change is both good and necessary.
It is good because the very concept of prolonged “retirement,” applied to a human being, is corrosive. We retire machines when they become obsolete or unproductive. Our goal should be to keep ourselves productive as long as possible.
It is necessary because we simply cannot afford either to discard the labor that older people can contribute to our economy or to sustain them through decades of voluntary, or involuntary, idleness.
The first thing that happens when someone retires is that life goes on. New retirees may go home expecting the phone to ring with cries for help from their former colleagues, but it seldom happens. Retirees soon get the message that though they may have voluntarily decided that it was time to go, everyone around them agreed.
A retired machine can be demolished or recycled for what accountants call its salvage value. People have no salvage value. When we retire someone on a publicly funded income stream, we are telling the person that we actually prefer to pay to have her not come to work.
It is a concept that seems designed to crush the spirit of older people. Of course, nobody means it this way. Retirement evolved in the late 19th and early 20th centuries to provide for people who could no longer provide for themselves, in a world in which most labor was manual and physically demanding. Often, the claim for this support was based on prior service to the country, such as from veterans of the Civil War and World War I.
Later, Social Security was engineered as a means to move older workers out of the way so that younger breadwinners, often supporting large families, could find jobs during the Great Depression. Retirees were stereotypically frail, their pensions easily supported by the much larger number of active workers for the retirees’ typically short remaining lifespan.
This description of the world was only partly true back then; Social Security was in dire financial straits by the early 1980s, less than 50 years after its creation. As everyone knows, the description is much less true today.
Baby boomers in their 50s and 60s largely recognize this. As the AP-University of Chicago survey (funded by the Alfred P. Sloan Foundation) indicates, they are rapidly changing their expectations, not just about when to retire, but about what the concept of retirement actually means. It used to mean no longer getting a paycheck. Increasingly, it may mean earning money from a different job (or jobs), perhaps significantly less than in one’s pre-retirement career but still enough to help pay the bills.
For older workers, having a job means having co-workers and customers, who bring new social interaction and new opportunities to forge friendships. Old-age employment is the antithesis of the over-55 retirement communities that came into vogue a generation ago, in which retirees were expected to retreat into gray ghettos. Many of those communities have become de facto nursing homes as the once-vigorous retirees age in place, relying on a patchwork of private aides and public services to stay in their homes.
Around 15 years ago, the financial planning trade press was full of articles about the vast sums that boomers expected to inherit from their parents. It should have mostly happened by now, but for the most part, it has not. Those parents lived much longer and required much more late-in-life care than anyone expected. Fortunately, they were a generation of savers. While the physical and emotional burdens of caring for them have fallen on their children, a lot of the financial load was cushioned.
The boomers are not big savers like their parents. They won’t have that ample cushion to carry them when they reach advanced old age. By adjusting to the idea that they must work longer and spend less on leisure pursuits in retirement, they are responding sensibly to the facts of their lives.
I don’t believe human beings were built to spend decades in enforced idleness. I don’t think it is healthy to give millions the message that they are so useless that retiring them, like worn-out-machines, is the best option. Besides, the boomers had much smaller families than their parents did, and their children are themselves having smaller and later families than the boomers. We will need our retirees to work for our benefit almost as much as they will for their own.
So I continue to admire America’s adaptability. I expect it will serve us well once again.
Posted by Larry M. Elkin, CPA, CFP®
I have long been impressed at how quickly our society can change its attitudes.
Premarital sex, cohabitation, out-of-wedlock childbirth, interracial relationships - all were taboo, and then, in a relatively brief time, they weren’t. We did not expect women to have the same educational, athletic and professional opportunities as men, and then we did. Taking out a second mortgage on one’s house was once a sign of financial distress, until a change in the tax laws and a rebranding as “home equity loans” encouraged millions of Americans to turn their dwellings into ATMs. That this last change did not turn out so well only reminds us that sometimes conventional wisdom is indeed wise.
But more often than not, we are well-served by our open-mindedness. Life demands that we adjust and adapt. Americans do, better than many.
So it was pleasing but not surprising to read an Associated Press report last week about a new survey that shows a strong shift in our expectations about retirement. Large swaths of Americans, at various income levels, expect to work longer before retiring and to continue working for pay after they cross the retirement threshold. Far fewer still cling to the idea that they will stop working by age 65, move someplace sunny and spend the rest of their days chasing little white balls around big green fields.
I am convinced that this change is both good and necessary.
It is good because the very concept of prolonged “retirement,” applied to a human being, is corrosive. We retire machines when they become obsolete or unproductive. Our goal should be to keep ourselves productive as long as possible.
It is necessary because we simply cannot afford either to discard the labor that older people can contribute to our economy or to sustain them through decades of voluntary, or involuntary, idleness.
The first thing that happens when someone retires is that life goes on. New retirees may go home expecting the phone to ring with cries for help from their former colleagues, but it seldom happens. Retirees soon get the message that though they may have voluntarily decided that it was time to go, everyone around them agreed.
A retired machine can be demolished or recycled for what accountants call its salvage value. People have no salvage value. When we retire someone on a publicly funded income stream, we are telling the person that we actually prefer to pay to have her not come to work.
It is a concept that seems designed to crush the spirit of older people. Of course, nobody means it this way. Retirement evolved in the late 19th and early 20th centuries to provide for people who could no longer provide for themselves, in a world in which most labor was manual and physically demanding. Often, the claim for this support was based on prior service to the country, such as from veterans of the Civil War and World War I.
Later, Social Security was engineered as a means to move older workers out of the way so that younger breadwinners, often supporting large families, could find jobs during the Great Depression. Retirees were stereotypically frail, their pensions easily supported by the much larger number of active workers for the retirees’ typically short remaining lifespan.
This description of the world was only partly true back then; Social Security was in dire financial straits by the early 1980s, less than 50 years after its creation. As everyone knows, the description is much less true today.
Baby boomers in their 50s and 60s largely recognize this. As the AP-University of Chicago survey (funded by the Alfred P. Sloan Foundation) indicates, they are rapidly changing their expectations, not just about when to retire, but about what the concept of retirement actually means. It used to mean no longer getting a paycheck. Increasingly, it may mean earning money from a different job (or jobs), perhaps significantly less than in one’s pre-retirement career but still enough to help pay the bills.
For older workers, having a job means having co-workers and customers, who bring new social interaction and new opportunities to forge friendships. Old-age employment is the antithesis of the over-55 retirement communities that came into vogue a generation ago, in which retirees were expected to retreat into gray ghettos. Many of those communities have become de facto nursing homes as the once-vigorous retirees age in place, relying on a patchwork of private aides and public services to stay in their homes.
Around 15 years ago, the financial planning trade press was full of articles about the vast sums that boomers expected to inherit from their parents. It should have mostly happened by now, but for the most part, it has not. Those parents lived much longer and required much more late-in-life care than anyone expected. Fortunately, they were a generation of savers. While the physical and emotional burdens of caring for them have fallen on their children, a lot of the financial load was cushioned.
The boomers are not big savers like their parents. They won’t have that ample cushion to carry them when they reach advanced old age. By adjusting to the idea that they must work longer and spend less on leisure pursuits in retirement, they are responding sensibly to the facts of their lives.
I don’t believe human beings were built to spend decades in enforced idleness. I don’t think it is healthy to give millions the message that they are so useless that retiring them, like worn-out-machines, is the best option. Besides, the boomers had much smaller families than their parents did, and their children are themselves having smaller and later families than the boomers. We will need our retirees to work for our benefit almost as much as they will for their own.
So I continue to admire America’s adaptability. I expect it will serve us well once again.
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