Santa Claus, the Easter Bunny, and Traditional Retirement

Posted Wednesday, May 29th, 2013  | Comments (1) rule
We’re going to have to work later in life and scale back in retirement. Let’s get used to it.
Cahill's photo Kevin E. Cahill, PhD
Research Economist
Sloan Center on Aging & Work and ECONorthwest
Phone: 617.552.9195
Kovacs's photo Gene J. Kovacs, PhD
Vice President
Analysis Group, Inc.
Phone: 617-425-8118

Today we hear lots of reports about how Americans are failing at retirement planning: 401(k) plans are insufficient; the Social Security trust fund is depleted; private savings are nonexistent. What are we saying these three pillars of retirement income are failing to provide, though: 20-plus years of full-time leisure? That goal might have made sense in a booming post-World War II America, when we generated an enormous amount of wealth and spent a sizable fraction of it on leisure, including long retirements.

Those days are gone.

Today, most Americans—young and old—can’t expect 20 years of leisure in retirement without a reduction in their standards of living. Our society—government, employers, and individuals—simply can’t afford that.

Here are the facts. The latest Social Security Board of Trustees report shows that Social Security will be able to pay promised benefits until 2033, after which some form of benefit cut or tax increase will be required to keep the program solvent. Sounds fine, but unfortunately the 2033 number requires lots of additional government borrowing as the Social Security Administration cashes in the IOUs it’s received from the Treasury. So while 2033 may be a relevant number from the Social Security Administration’s perspective, the government needs to borrow money now to finance our full promised Social Security benefits going forward. Further, even with the borrowed funds and even if the long-term gap in funding can be resolved, the typical older American can expect only about $1,200 per month in Social Security benefits—hardly enough to sustain a person in retirement.

Private pensions and savings are faring no better. Gone are the days of private-sector traditional defined-benefit pension plans, and there’s no sign that these plans are coming back. In their place are 401(k)s, and the typical older American household has accumulated less than $50,000 in these accounts. As for private savings, the typical worker has less than $25,000, excluding home equity and the value of defined-benefit pensions.

The not-so-awful truth
So, yes, the typical older American is unprepared for traditional retirement. Now, we can pretend that this isn’t the case, and advocate ever-larger publicly funded retirement benefits that the country can’t afford. Or we can face reality and do something about it.

Back in 2004, the Congressional Budget Office (CBO) conducted an analysis that examined how much in savings would be required to maintain living standards later in life based on the timing of retirement. According to the CBO, if a worker stays on the job just four more years—from age 62 to 66—the amount of money needed for retirement will fall by more than half. Delaying retirement for eight years—from age 62 to 70—reduces the amount needed for retirement by 90 percent!

The reason for this extreme impact isn’t rocket science. Each additional year of work:

  1. replaces a year in which assets are drawn down with a year in which assets accumulate, earning interest, and
  2. reduces the number of years of leisure that need to be financed.

With such huge benefits, working at least until the age of 66 seems to be a slam dunk for most Americans. Further, because an additional hour of work necessarily means one less hour of leisure, to recognize the need for continued work is also to acknowledge that traditional retirement is a thing of the past.

The Expanding Golden Years
Note: Average retirement age is defined as the youngest age at which half of individuals are out of the labor force.
Sources: Arias E. United States life tables, 2008. National vital statistics reports; vol 61 no 3. Hyattasville, MD: National Center for Health Statistics. 2012 (available at:; Quinn, J.F., Cahill K.E, &Giandrea, M.D. 2011. “Early Retirement: The Dawn of a New Era?” TIAA-CREF Institute Policy Brief (July) (available at:

Those who might think that extending their time in the workforce is a new hardship should think again. What’s truly new in American society, as the illustration above shows, is the idea that 20 years of leisure is the normal way to retire. Today, the average retirement age of men is about 65—higher than it’s been in about 30 years, so as a country we’ve already started moving in the right direction. In 1950, however, the average retirement age of men was 70 and in 1910—more than a hundred years ago—it was 73. The difference between retirement today and in the past is even more pronounced when one takes into account increases in life expectancy. With amazing improvements in health and longevity and with jobs being less physically demanding than in the past, common sense says that the vast majority of us can work later in life.

Herbert Stein, the late economist, once said, “If something cannot go on forever, it will stop.” For most Americans, traditional retirement is one of those things. It’s pointless, and even counterproductive, to say that we’re falling short of some fanciful retirement expectation. We aren’t falling short of anything. We’re simply returning to a more realistic world of work later in life.


The views expressed in this article are those of the authors and do not necessarily reflect the views of Analysis Group or ECONorthwest.

Comments (1) for "Santa Claus, the Easter Bunny, and Traditional Retirement"

The Costs of Age-related “Microaggressions”
and What Employers Can Do to Avoid Them

Posted Wednesday, May 15th, 2013  | Comments (5) rule
About Jackie James  About Marcie Pitt-Catsouphes About Elyssa Besen
Jacquelyn B. James, PhD
Director of Research
Sloan Center on Aging & Work
Marcie Pitt-Catsouphes, PhD
Sloan Center on Aging & Work
Elyssa Besen, PhD
Research Assistant
Sloan Center on Aging & Work

Around the world, older adults are exposed to negative stereotypes and, sometimes, outright discrimination. These vulnerabilities are especially worrisome today, given older workers’ increasing demand for employment. While most negative stereotypes of older workers have been challenged—in some cases refuted—by empirical data, research also shows that they are nevertheless common, especially among younger workers.

According to Derald Wing Sue and his colleagues at Columbia University (2007), microaggressions are “brief and commonplace daily verbal, behavioral, and environmental indignities, whether intentional or unintentional, that communicate hostile, derogatory or negative racial slights and insults to the target person or group.” Although perpetrators are often unaware of what they are doing, these “subtle snubs or dismissive looks, gestures, and tones” are blows to the self-esteem and/or well-being of their targets.

We assert that microaggressions can also be age-related. When misperceptions about the capabilities of older workers take the form of microaggressions, they affect older workers in the same way that they do members of racial minorities, eroding self-esteem.

“Old man,” “gramps,” “geezer,” and “old bag”: these and other epithets, experienced day after day, are degrading to older adults. Cumulatively, they are likely to have a negative impact on the well-being and the work-related outcomes of older workers.

Using data from the Sloan Center’s Age & Generations study, we examined internal (core self evaluation) and external (job conditions) predictors of employees’ mental health and work engagement scores. Our findings suggest that negative attitudes toward late-career workers do in fact affect these workers’ engagement with their jobs and ultimately their mental health.

Fortunately, our findings suggest that certain job conditions shield older workers from the ill effects of microaggressions. Moreover, our findings point employers to steps they can take to promote work environments that protect older employees from microaggressions.

First, employers can gather information formally or informally from employees to assess the prevalence of microaggressions in the workplace. Next, they can train supervisors and organize team-building experiences to foster an ethic of inclusion. Some employers might also find that job redesign to create a better fit with the needs and preferences of older workers is an effective approach. Indeed, the authors of one study reported that redesigning jobs in ways that increase the variety of an employee’s skills, clarify the significance of an employee’s tasks, and offer an employee more autonomy can greatly enhance the quality of the employee’s work.

Decades of research suggest that negative stereotypes of older workers are entrenched. It may take a long time to replace assumptions about older workers’ limitations with recognition of the assets that older workers bring to the workplace. In the meantime, buffering employees from age-related microaggressions is not only good for morale but also good for business. When older workers maintain their engagement in and enjoyment of jobs they find meaningful, they are more likely to stay with a company, minimizing the expense of recruitment and training and sustaining the company’s pool of knowledge and talent.

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Leaning Out

Posted Wednesday, May 1st, 2013  | Comments (2) rule
Why do women retire earlier than men?
Phyllis Moen, PhD
McKnight Presidential Chair in Sociology
University of Minnesota
Research Fellow
Sloan Center on Aging & Work, Boston College

Bloggers have had much to say lately about the difficulties of working women who are raising children and/or managing dual-career marriages, as well as those who are planning to marry or to have children. They’ve paid less attention to women in their 50s, 60s, and early 70s who are confronting work-family pressures, too—but of a different sort. This age-span has come to be defined as the encore years. These are bonus years of healthy life expectancy after the period of career- and family-building—a time when men and women can pursue meaningful engagement in often reduced forms of paid work or else in voluntary service. The concept of productive, active aging emphasizes the social value of ongoing public engagement in the encore years, embracing this age group as an untapped source of talented and motivated human capital that can be a key organizational resource, as well as a community resource for promoting the common good. How Americans spend their time during this life phase also matters for their health and well-being, because those who work or volunteer tend to be and remain in better mental and physical health than those who don’t.

Recently, Sarah M. Flood, a researcher at the University of Minnesota, and I examined the amount of time that contemporary Americans moving through their encore years allocate to paid work. In an article published this month in the journal Social Problems, we report that women are less apt than men to be working for pay across this age span and more likely to use the word “retired” to define themselves. When we broadened our scope to include any form of public engagement (paid work; volunteering; informally helping out), we found that men are still more apt to be engaged than women, and the percentages don’t match up until men and women are in their late 70s.

Why is this the case? One reason is that women experience poorer health, and health issues have been shown to push older workers out of the workforce. Women are more likely than men to experience involuntary retirement as a result of corporate layoffs or buyouts. Another key reason is women’s family caregiving responsibilities, which encourage women to lean out of full-time work and even exit the labor market altogether. Ms. Flood and I found that women who care for a nonresidential child or grandchild or for an infirm older adult are about half as likely to be engaged in paid work than women without these obligations. Women with children or grandchildren under the age of 18 in their homes also have lower odds of working—roughly one chance out of three—than women who are free of such responsibility. Being married generally decreases women’s engagement in and time allocated to paid work, whether their husbands are employed or not.

Charting the time allocations of women and men suggests that the encore life stage could become a new arena for gender inequality, in which women with caregiving obligations are selectively excluded from participating in public activities that society values. The bonus years of health and vitality producing an emerging encore life stage can promote public engagement only if women and men in this age group can find flexible jobs, openings for less-than-fulltime encores. Such opportunities have yet to be institutionalized and legitimized in either government or corporate policies and practices.

Our findings underscore this phase of the life course as a time of transition out of paid work—a transition occurring more quickly for women. Drawing on the American Time Use Survey, data collected by U.S. Bureau of Labor Statistics, we show 86 percent of American men and 76 percent of American women between the ages 45 and 49 (pre-encore) are working for pay. Among those between the ages of 75 and 79 (post-encore), 83 percent of men and 95 percent of women are out of the workforce; moreover, 78 percent of men and 88 percent of women in their late 70s say they are retired. Advancing age is not the only source of pressure that keeps women at home during the encore years, however. The amount of time women can spend on activities in the sphere of public engagement depends on their ties to spouses, children and grandchildren, and infirm relatives, illuminating the family as a shaper of women’s experience throughout the life course.

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