Laws, Economy Altering Future of Retirement

The president and Congress recently repealed the “earnings penalty” for seniors 65 to 69 who receive Social Security but who continue to work and make more than $17,000 a year. The big question, however, is whether this change will alter significantly the nature of retirement in America.

Overall, the data show that as of 1995, only about 12% of men and women over 65 continued to work, suggesting that 88% found a life of leisure retirement more desirable than continued work. Many of the 12% were self-employed who had no particular incentive to stop working at 65.

Will retirement in the future continue as a form of leisure retirement, or will tomorrow’s seniors reject retirement as presently practiced and continue to work well into their 80s and 90s?

A second interesting and related question is whether Orange County, as a leader in both the new information/service economy and in retirement living, will serve as a new model for any dramatic change in the nature of retirement.

There is considerable evidence to suggest that both can happen but limited evidence that either actually will. John Glenn returning to space at 77 and the Rev. Billy Graham preaching the Gospel at 80 are well-known examples of this possibility.

Why can a major change in the nature of retirement occur? First and most obvious is the fact that people today are living longer and are healthier. In 1900, the life expectancy in the United States was 47 years, and today it is 77. For women it is 80 and for men 73, mainly because men are far more likely to die from homicide and work-related causes in their younger years. Modern medicine, of course, has greatly reduced the rates of infant and childhood deaths, but it has also helped those between 55 and 75 to escape the life-ending diseases of cancer, stroke and heart attacks, allowing people to live well into their 80s and 90s.

Second, mandatory retirement was ended for most occupations with legislation enacted by Congress in 1978 and 1986, thus ending a major legal roadblock to working beyond 65. Removing the earnings penalty removes another roadblock.

Third, the nature of work, as we move from the industrial to the knowledge- and service-based economy, requires more from the mental than the physical attributes of workers. Indeed, as recently as 1960, two-thirds of all work still was identified as heavy labor and resulted more from chance than worker choice. For someone who had worked 45 years in a factory, retiring at age 65 was a welcome relief. Today, however, the nature of work allows even the less physically fit to contribute to their economic well-being long after 65.

Fourth, there is evidence that the nation and Orange County will face a serious shortage of well-educated, highly skilled workers necessary for continued expansion of the information/service economy. If such shortages do occur because of demographic changes, those in their late 50s and early 60s, instead of facing job losses because of age discrimination, may instead find their experience and job skills in great demand.

Finally, the earlier image of retirees in their late 60s and 70s as helpless elders in serious physical and mental decline is rapidly vanishing. Of those over 65 today, only 6% will end up in long-term institutional care, and only then largely in the last two to three years of life. Indeed, the median age of elderly residents of nursing homes and assisted-living facilities in the United States today is 86.

The reality today for those living past 65 is that many will live healthy and potentially productive lives in total years equal to or greater than their years spent in pre-adulthood.

Those retirees from the World War II generation who lived through the Depression and the Korean War and who started the baby boomer generation may have gladly accepted leisure retirement as a fitting and just reward for the sacrifices they and their generation made and for their contribution to this nation’s unparalleled economic boom of the 1950s and 1960s.

But the baby boomer generation may look upon leisure retirement not as the golden age of entitlement but rather as a useless form of social and economic dependency. If so, they may decide that their greatest historical contribution lies in using their talents and experience to maintain self-sufficiency and economic productivity for as long as possible.

By choosing this retirement path, they would enhance the social value and respect attached to being old. The exploits of John Glenn and Billy Graham would be commonplace, not the exception.