Prolonged retirements could become America's worst nightmare

In November, Wells Fargo released the results of its seventh annual Retirement Survey which found for many middle class Americans, 80 is the new 65 when it comes to retirement. According to the survey, a quarter (25%) of middle class Americans say they will need to work until at least age 80 to live comfortably in retirement. Three-fourths (74%) expect to work in their retirement years.

Many people saw the results of the survey, but most probably did not see the firestorm of online discussions this survey created. Discussion boards on CNN, Yahoo, CNBC, and other web sites became quite heated as Baby Boomers and Generations X and Y argued about whether prolonged retirement is a good idea.

Generation X (currently in their late-20s to mid-40s) and Generation Y  (currently in their late 20’s and younger) blame not only the current economic malaise on the Boomers, but also the inability to advance their own careers as fewer managerial level jobs are opening up due to Boomers remaining in the workforce.

This “gray ceiling” as they are calling it, is preventing them from attaining higher salaried positions and creating their own financial independence.

The Boomer’s (currently in their late-40’s to mid-60’s) blame economic circumstances beyond their control, a lack of jobs and age discrimination for their financial struggles. Some Boomers are indifferent towards the needs of younger generations, showing an “I’ve got mine, too bad for you” and “Get in line and pay your dues” attitude.

Regardless of which side of the issue you lean, a couple observations are painfully clear.  First, working longer is going to be a reality for many people, and second, it’s an emotionally charged issue.

The fact that the vast majority of middle class Americans expect to work well past the traditional retirement age has significant societal and economic implications. Personally, I just met someone (a Boomer, of course) who tried to convince me (unsuccessfully, I might add) that people should work until they’re 80 or even longer.

Undoubtedly, demographic shifts and economic decline has placed the United States in a position of great uncertainty, which has every generation feeling like they’re in a no-win situation.

But as someone who researches this topic in great detail, what’s unsettling to me is the amount of time and resources focused on caring for the Boomers–their careers, beauty, health, housing, finances, and everything in between.

In stark contrast, there is very little attention paid to workforce development, succession planning, education, training, and employment of Generations X and Y. I’m convinced this is because the Boomers comprise the vast majority of political power and executive leadership in nearly every sector and region of the nation.

Our society remains obsessed with the aging Boomer population and prolonging retirement is just another example of this anti-aging trend. In the meantime, our future generations have been neglected and abandoned.

Teen unemployment at an all-time high? Leadership skill training and succession planning virtually non-existent? Talent among people under 30 turning over at an unprecedented rate? College debt is higher than nation’s credit card debt? So what. Those young people will have to figure it out for themselves. The ‘Me Generation’ can’t afford to retire now so everyone else will just have to be patient and wait their turn.

For 40 years, Boomers have been the dominant generation. However, by 2015 Generation Y will outnumber the Boomers and change is likely to ensue. Hopefully, it won’t be too late and our economy won’t be ruined beyond repair.

To be clear, I’m not completely insensitive to the trials and tribulations of Boomers. I understand that Boomers have found themselves in the midst of great economic uncertainty.

Raised during one of the most prosperous eras in America, Boomers expected to work until hitting a retirement age and then to retire with an employer-paid pension plan. However, defined-benefit pensions are now uncommon in the private sector and are being scaled back for a growing number of new government employers.

At the same time, political leaders are discussing cuts to future Social Security and Medicare benefits, and many Boomers have seen their savings washed away by unemployment, sharp declines in house values, and wild swings in stock prices.

Politicians have recognized that spending on Social Security and Medicaid is not sustainable. According to the Senate Committee on Aging, increasing the retirement age would cut less than one third of the Social Security deficit.

I also understand that the concept of where and when and how we work has changed.

The retirement age of 65 was set back in the 1930s when the American economy was built on the backs of blue-collar workers, whose bodies wouldn’t allow continued strenuous work as they lived into their 60s.

However, many of the manufacturing jobs that used to reside in Detroit or Cleveland were shipped overseas in the 1970s and 1980s. Americans now do work that is less physically demanding but more mentally taxing.

Because of this, Americans are living longer. According to a U.S. Senate report, the life expectancy of U.S. citizens was 70 in 1969. Now, the average American can expect to live to 77.

What I disagree with is this notion that prolonging retirement for Boomers so they can work until they’re 80 can improve our economy.

Indeed, if we make the Boomers work longer we could milk the Boomers for more taxes and reduce the cost of government pensions and Social Security benefits in the process.

But let’s be honest here. If the U.S. wants to compete in a global economy it doesn’t need older workers as much as it needs young workers with the latest job skills.

There’s been more technology developed in the last five years than the last 50 years. Generation Y is the best educated generation of Americans, boasting a high volume of college graduates, and the most tech-savvy of all the generations.  Younger generations are also more innovative, driven, adaptable, and productive in comparison to older generations.

Also, there are entire industries at risk of aging out –industries like construction, manufacturing, finance, and healthcare– which are the cornerstones of the American economy. When entire industries are failing miserably at recruiting and retaining young workers– literally at risk of aging out–the U.S. has a serious problem on its hands!

Furthermore, it’s entirely possible that increasing the retirement age would not keep people working and paying taxes longer — it would just increase the level of poverty among people in their mid 60s who could neither find jobs nor collect Social Security benefits.

Since the Great Recession began, the unemployment rate among people over 55 has been at the highest levels in more than 60 years. When companies started laying off workers in massive waves in 2008 and 2009, millions of Baby Boomers lost their jobs and haven’t been able to find their way back into the workforce.

Many of them have decided to file for early Social Security benefits. In 2007, before the recession hit, 38 percent of 62-year-olds asked for their benefits. By 2009, the figure was up to 42 percent.

Instead of focusing on cutting costs by making people work longer, government leaders should be trying to boost the tax revenues generated by highly productive, innovative companies. In today’s competitive, globalized economy, U.S. companies should be focused on developing the talent and leadership (or lack thereof) who will be filling the void left by the massive exodus of Boomers.

The U.S. population is aging. And right now, more emphasis is placed on keeping our aging population working than it is on growing a young workforce capable of supporting our aging population.

In the future, employers and government alike will have to make some tough decisions about who should have the first crack at jobs and financial help: Boomers or Generations X and Y?

Let’s hope they make the right choice.

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2 thoughts on “Prolonged retirements could become America's worst nightmare”

  1. If “the problem” is only for the next 3 years, then why worry? In my opinion, many of your assumptions are incorrect. In my industry, I don’t know any organization that is NOT focused (and spending money) on succession planning, knowledge transfer, training, diversity and inclusion initiatives and yes, hiring the younger generations. I also disagree with the assessment that younger generations are more innovative, driven, adaptable, and productive in comparison to older generations. Steve Jobs – Boomer; Bill Gates – Boomer; Meg Whitman – Boomer; Carly Fiona – Boomer, etc., etc. Boomers have something that Gen X or Y simply isn’t interested in possessing – dedicated experience – and the College of Experience has no dropouts. Gen X & Y are fleeting in their ability to stick with an organization – to gain “corporate capital” in their knowledge of the organization, its goals, its vision. They prefer to “serve themselves” by moving every 5 years – intentionally, and having 15 careers in their lifetime. Go then and do it – but don’t expect to make it to VP in 5 years… anywhere. They should set their sights on being entrepreneurs (and many do) as opposed to putting in the time many organizations require to get ahead.

    In my industry in particular, Gen X and Y folks are not willing to do the labor necessary to keep our homes warm in the winter or climb a pole in 20-below temperatures so the hospital or your iPad can have the energy to serve you. They’d rather take “all that tech talent” and create a video game, or sit in an office decorated by Google. Our industry requires people dedicated to their jobs. The possibility of them dying or getting severly injured in the midst of doing these jobs also exists. They have to be willing to get up at 2 AM – leave their family, so they can protect the public and keep them safe and warm. Gen X & Y seem too self-absorbed to find this work a noble occupation. And it is a very steady industry – people will always need heat and lights! Thank God we haven’t lost the Boomers who have the knowledge how to do this job safely and are willing to make the sacrifices necessary! My organization has been doing all it can to capture their knowledge and successful practices before they leave.

    It’s also a misnomer that younger workers will somehow “have the latest job skills”. In case you’re not aware, studies have shown that the majority of the jobs needed in 5 years don’t even EXIST today! Someone graduating from College in 2006 could not find a “Social Media Expert” job – because there weren’t any in 2006. And that’s been true for decades – I got out of school prepared with Word Processing, which changed to Computer Mainframe and various software programs, then Desktop computing, which changed to Client-Server and Object-Oriented systems, which is now changing again to open architecture and cloud computing… learning – by experience – all the way – and yes, I’m a Boomer! Adaptable, Driven, Productive, Innovative… just another typical Boomer.

    My mother is 86 years old and still plays the organ in church and teaches kids piano in her home. She was “let go” by her previous church for “being too old to play” – that was 35 years ago. Perhaps the list of church organists in the Gen X or Y crowd is long and distinguished – my guess would be it’s zero. My mother states that to take away her opportunity to play is like taking paint brushes from an artist. As long as her spirit is willing and her body is able – I say Rock On Mom!

    As a Boomer I also consider myself very well educated, extremely technically savvy and very adaptable. At 50 I will not see one dime of the tens of thousands I have already invested in decades of my worklife into Social Security and/or Medicaid. But I also NEVER counted on it being there either! Again – from experience – I know to rely on the government for my well being is folly. I am not “entitled” to anything – you’ll never hear a Gen X or Y say that! I am responsible for myself and the choices I make. My decisions provide my family with a good living and myself with a decent retirement. I am also responsible for choosing when I decide to retire. My decision will have nothing to do with who is “behind me” or feels slighted because I’m staying. As Erma Bombeck put it: “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say, “I used everything you gave me.””

    Yes – let’s hope they make “the right choice” by never putting any one group above another (that’s called discrimination). Gen X & Y need to accept responsbility for their own life – it is the very definition of “Character” and is the source of self-respect.

  2. The Deficit Reduction Commission placed our future unfunded entitlement mandates at over $50 trillion.
    With numbers so staggering, how can we fund SS and Medicare for boomers without bankrupting these programs. Today, there are serious discussions of raising the age to collect Medicare to 67. This increase could happen in 2014.

    This change will force more boomers to stay in the workforce because obtaining health insurance at a reasonable cost is almost impossible for people 55 and over. Most people in that age catagory go into the high risk pool which is extremely costly.

    When you add that factor along with the exploding entitlement deficit, and unraveling of defined benefit plans most boomers will need to work longer to survive. In order to really help the younger workers, we need to secure our entitlement programs for future generations, and this means immediate reforms in both Medicare and SS for those under 66.5 year of age. Boomers are not being selfish by staying in the workforce longer, they are actually helping younger workers by not collecting entitrlement benefit when they are first available.

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