‘Before Social Security, most people’s retirement plan was death’: US economist says baby boomers are not all onboard with the ‘modern’ notion of a ‘work-free retirement.’ Here’s why
If death and taxes mark two of life's certainties, some seniors believed a third one that mixed money and mortality: die before the cash runs out.
“Before Social Security, most people’s retirement plan was death,” economist Kathryn Edwards told Vox last month when talking about why older Americans are working longer. “Dying on the job, dying in your kid’s house. This whole notion of an independent, work-free retirement is truly a modern one.”
And increasingly, baby boomers have worked out their own approach to retirement that harkens back to that earlier attitude. As the Vox piece points out, they're either working because they have to, they actually want to, or a mixture of both.
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The point is this: Retirement for many in 2024 might as well not be retirement at all, depending on your outlook.
Here's why retirement, although spelled with 10 letters, has become something of a four-letter word for some — and a financial non-starter for others.
The 'want-to work’ cohort
If you're in a low-stress job you enjoy, the notion of trading all that in for loads of free time may feel like an abomination.
After all, leaving the workforce can increase feelings of isolation, loneliness and a lack of purpose for many older Americans.
According to the Vox piece, the median age of an American in the workforce today is 42. However, in the last 20 years, the participation rate of people aged 75 and older has increased.
As Edwards notes in her interview, those who are 75 and older are often still working as a choice rather than being forced by financial situations. That’s likely because, as a study from the Pew Research Center suggests, older workers are more likely to be self-employed, allowing them plenty of freedom to manage their own flexible work schedule — as well as provide mental stimulation and a sense of purpose.
And, although this might not be the first reason that comes to mind when people consider retirement, a 2016 study published in the Journal of Epidemiology and Community Health found a direct correlation between working past retirement age and a longer life expectancy.
According to research accumulated from an 18-year study period that involved 3,000 people, they discovered that working even one more year beyond retirement age was associated with a 9% to 11% lower risk of death, regardless of health.
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The 'have-to work’ cohort
Whatever the harsh realities of the economy at large, the truth is that older Americans are increasingly anxious about the prospects of a financial struggle in their golden years.
Last year, a Gallup poll of more than 1,000 adults revealed that, out of eight financial matters discussed, Americans worried most about not having enough money for retirement — with 42% of those saying they are very worried.
The Gallup research also revealed some compelling financial divides between current and future retirees. In the first group, 59% said they relied on Social Security as a major source of retirement income.
But among those not yet retired, that figure is nearly sliced in half: only 34% expected that Social Security would be their main source of income. Instead, they said they will rely more heavily on savings accounts like a 401(k) or IRA.
The picture grows even more bleak when you factor in the sobering fact of unpreparedness. Nearly half of adults surveyed (49%) aged 55 to 66 didn’t have any personal retirement savings in 2017, according to a 2022 release by the U.S. Census Bureau.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
