The Next American Dream
Straight Story: Retirement
Our economics editor Chris Farrell thinks about retirement a lot, and gets a lot of questions about it. Here's his assessment of the next American Dream for retirement.
Economics editor Chris Farrell (American Public Media)
More on Retirement - Saving, Straight Story, America's Financial Crisis
TEXT OF COMMENTARY
TESS VIGELAND: Our economics editor Chris Farrell thinks about retirement a lot. He gets questions about it. And of course, he'd like to actually retire himself someday.
Here's his assessment of the next American Dream for retirement.
Chris Farrell: The message in the current economic collapse to America's aging population? Forget retirement.
That's right. We're going to be working during the last third of life. Put it this way: Survey after survey, shows that most aging baby boomers want to work in retirement.
Well, that wish just got granted.
Our image of retirement is still shaped by the early decades after World War II. The poverty rate plunged, thanks to Social Security. Older Americans gained universal health care with MediCare. Corporate America offered workers good pensions. And it was in these years that retirees developed a distinct lifestyle, captured by the mass migration to the Sun Belt -- places like Sun City -- traveling in RVs, and long mornings spent on the golf course.
The rise of modern retirement was a great social achievement of the 20th century. But in the 21st century, the underlying economics of retirement has changed. The risk of getting laid off is high, health care is increasingly expensive, our pension is now the 401k. And for the second time in eight years, savers have watched in horror as their retirement money was badly beaten down by a bear market.
We've learned that most of us simply can't save enough to create a solid foundation of savings for old age.
The solution? Work longer. Fact is, the longer you work, the less you need to save for old age. Pocketing even a small income lets savings compound over a longer period of time.
The idea of working longer sounds horrible to anyone who has dreamed of retiring in a place like Sun City. Not all seniors will be physically and mentally healthy in retirement.
That said, for most people, the change will be for the good. After all, we're living longer, healthier lives. Work keeps the mind active. It's a community, where we have friends and acquaintances.
Here's my bet: Instead of talking about retirement, we'll discuss second, third, maybe even fourth careers over a lifetime.
The challenge for all of us, employers and employees, entrepreneurs and legislators, is how to make this change an even better vision of old age than life in Sun City, in the early post-war years.
It won't be easy.
Comments
Comment | Refresh
From San Dieg, CO, 08/17/2009
Thanks for the story. I include my vote that working forever was not in my cards even with a state job! My caregiving responsibilities for a mom and brother curtailed an 18 year career. At that time, 12 weeks w/out pay was all the state could muster. Now, of course, that law changed. But, I too diligently looked for a similar type position in many different areas all to no avail. If you are a professional, with a top ten salary, you'll have a better time than say an administrative secretary at 53. It's just true and I was one of the last to believe that. So, work forever NO THANKS. So, I took my early $700 retirement and major medical, thank you and started my small business. Shame on our society for swallowing every work till you drop story. Just downsize and re lax America. It's OKAY to retire and read, volunteer, exercize and finally have a life.
From CO, 05/22/2009
I disagree with the gloomy picture painted in the commentary. I think normal people can save enough to retire in comfort, provided that they learn to save, invest in a reasonable balance of stocks, bonds, and real estate, and never - ever give up. Now is a great time to invest, with the market down. If you figure how much average, moderate income Americans need to save, it is not such a huge percentage, maybe 12% for a long period, and that really can be done, if you have good sense and don't let your decisions be driven by advertising.
From Factoryville, PA, 05/18/2009
There is one large group of American workers who have a retirement deal beyond the dreams of even the most idealistic Utopian philosophers - government employees. All (including those with the department of Social Security) can retire early, often with as little as 20 years on the job or less, and enjoy hefty pensions and fantastic health insurance. For example, here in Pennsylvania, all state employees, including school teachers, receive 87 1/2% of their highest annual income as a pension. The downside is that a good chunk of that is financed by the taxpayers, including via exorbitant property taxes, meaning that money they could be saving for their own meager retirements is being taken away.
That said, the government has a long record of setting the standard for labor, including such once unheard of things as paid vacations and the 40 hour week. The retirement age for everyone should be lowered to age 50 or 55 at most, and pensions increased accordingly. Fund it by taxing the former Masters of the Universe who dumped everyone's 401Ks and IRAs into a black hole!
From Sun City, AZ, 05/18/2009
Don't be so hard on Chris, he's just bought into this whole American Dream thing being dismantled. The real tragedy is we all kind of went down without much of a fight.
Over the past 30 years the hogs who have had it all wanted more and damned if we didn't let them take it. Now we should just swallow the idea that all of us must work until we drop and what the heck is the difference if it's carrying out groceries when we are in our 60's and 70's.
In the 80's organized labor put out a periodical called the Changing Nature of Work. Rather than fighting the idea we should all make 7 or 8 career changes, they just started touting it. Stupid.
Now organized labor is into forming partnerships rather than building a bottom up movement of workers. Sadly, that doesn't bode well for any of us.
One can only hope this economic downturn will force all of us to look at what has happened and come to understand, the structure has to change. Clinging to what has been a flawed system only insures more of the same.
I think the future lies in smaller settings where people have more control over what is in front of them. While the corporatist, the politicians and the "labor leaders" all cry the mantra of bigger is better, the reality is smaller may be the future that bodes well for all of us.
From CA, 05/17/2009
Chris better take the needle out of his arm. Work longer? I was laid off at age 63. I was good at what I did, but the company made some bad decisions and I got stuck. After two years I gave up trying to find a job. I loved my field. I was not (and am not) going to be a Walmart greeter. You just try getting hired after age 50 and see where it gets you.
From Manhattan, NY, 05/17/2009
I've been listening to NPR reports and stories about retirement via WNYC.
Yes, times are not good for American's to retirement and look forward to Sun City.
You ask "how do we make this change", Chris.
That's a major problem.
Our American Dream is work hard and be rewarded. Hmm...so, all of us bought into the Corporate American Dream....be worker bees about entire adult life for their greed.
From Lafayette, CO, 05/16/2009
Chris, your commentary sounds like the smugly satisfied thoughts of someone who has either A) large enough retirement funds, or B) a career not subject to cancellation by off-shoring. I shared your thoughts until recently being ejected from high-tech at age 50+. Do you seriously think that laws against age discrimination have any effect on hiring practices? If so, quit your commentary job, attend a Community College to get qualifications in some second career, and then start sending out those resumes. Let me know when you reach over 200 contacts with no responses, or have your first interview where the interviewer is obviously put off by your gray hair. I assure you that qualifications and a willingness to change careers is not sufficient to gain re-employment.
From St Paul, MN, 05/16/2009
In thinking about a future, and a now, working life in various stages, I realize that I am continuing with exactly that. Worked part-time during highschool and one year of college, then full-time a year until I married. Was a stay-at-home Mom doing some regular volunteer work until my youngest was 9. Then returned to work moving from school district accounting assistant to production/inventory control manager in manufacturing. At age 51 joined the Peace Corps with the goal of eventually working overseas. Did that happily for 9 years in S.E. Asia and E. Europe in senior management non-profit positions returning to the U.S. to continue to work in non-profit management. Retired at age 67; flunked retirement and am now working in part-time accounting for a non-profit, while continuing to volunteer in several areas. I had no specific vision for retirement and know that even working more than half-time, I still have plenty of time for leisure and volunteer pursuits - while keeping that invaluable steady income. With continuing good health I hope to be in the workforce for years to come. I think that many of us of retirement age have similar histories with a variety of work experiences.
From Sun City, AZ, 05/16/2009
As excited as i was about this series coming on, i find it somewhat disheartening to read the pronouncement that retirement is dead and gone. That working till we drop is really the only option; albeit we find ways to make our third, fourth or fifth career somehow more satisfying.
Life is way too short, and i think it far better to look at alternatives that may allow us to find better solutions. Del Webb's vision of an active retirement lifestyle may not be for everyone, but it most assuredly is within reach for millions of the boomers who will be hitting retirement age in the coming years.
The community was built on the premise that we can live affordably and well at the same time. Of course to do that, we needed to have a community geared to seniors. A place where costs were shared and the ability to sustain it was predicated on those living there were willing to give back their time to keep it working.
Sun City has worked for 50 years because those moving here were willing to take ownership. To shape it into the kind of place that was user friendly and appealing on so many levels.
When you think about retirement, hopefully people think about downsizing; about simplifying; about living a more satisfying final third of their days on this earth. I cringe that because of this economic downturn we just proclaim working till we drop is all that is available.
My thanks to APM for putting on this series. It has been a good read, i just hope people start looking early and shopping all of their options as they age.
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.