Working Longer Is Not The Solution To The Retirement Problem In The U.S.

The majority of people in their 50s and 60s who are concerned about saving enough money for retirement hear two words from most financial advisers and retirement coaches: work longer. They believe doing so will increase their savings, allow them to get larger Social Security payments (by postponing them till they reach their full retirement age or age 70), and give them something to do in their “unretirement.”

A recent book, “Overtime: America’s Older Workers and the Prospect of Working Longer,” argues that this is unrealistic advice.

Consequences of working longer hours

Beth C. Truesdale, a research fellow at the Upjohn Institute for Employment Research and Harvard Center for Population and Development Studies’ director, Lisa Berkman, disagrees that working longer is a realistic solution to retirement insecurity.

They reached this conclusion after reviewing information on factors such as older Americans’ income, wealth, health, and caregiving responsibilities.

Older employees who are “steady outs” or “intermittent.”

According to Berkman and Truesdale, there is a sizable population of persons who are “steady outs” and hence unlikely to be able to continue working. According to the biannual Health and Retirement Survey of Americans over 50, this group represents 15% of persons who never worked throughout their 50s.

Just 42% of American adults were found to be continually working during their 50s and having worked at some point between the ages of 62 and 66. That is to say, if you aren’t working in your 50s, you probably won’t be working when you’re in your mid-to late-60s.

According to Berkman, anybody who has dropped out of the workforce will face difficulties getting a job and working up to 65 to 67 (the age at which the U.S. Government considers your FRA based on your birth date). 

Truesdale said you can only delay retirement if you still have a job to delay retirement from. It’s not unheard of for someone who stopped working in their fifties to enter the workforce again at a later date, although it does happen very seldom.

Another 34% of Americans over 50 are “intermittents,” or those who periodically enter and leave the labor.

She believes they would have a better chance of continuing in the labor field for longer if policy adjustments were implemented, making it more conceivable for more folks to have a steady and more remunerative job during their 50s. 

Reasons why some retirees don’t seek paid employment

Individuals in their 50s who aren’t working do so for several reasons, including personal or family health problems, caregiving duties, and the effects of ageism in the job market.

Working circumstances provided by businesses are a fourth factor. Berkman added that employment might be unstable or schedules are incredibly hard to forecast and manage for families and workers.

The authors believe that if working conditions were improved, more people would remain in the workforce into their 60s and beyond.

The workplace can be improved, Berkman said. The nation could simply transition into a society that recognizes and values the contributions of people with disabilities, illnesses, and caregiving and work-family obligations. People might stay in the workforce longer if companies made it easy for them to do so.

More time at work: a pipe fantasy or a practical reality?

Workers in the United States have far higher expectations for their workweeks than their actual workweeks. According to the most recent survey on retirement expectations from the Employee Benefit Research Institute, 29% of workers plan to either work until they are 70 or older to retire or they don’t plan to retire at all. Seven percent of retirees left the workforce after age 69, whereas 42 percent did so by age 61. These days, 62 is the typical age for retirement.

A new article by American Enterprise Institute Senior Fellow Andrew G. Biggs stated that the typical American workweek had become longer in recent years.

Biggs wrote that the early Social Security benefits provision in the late 1950s and early 1960s encouraged a decline in labor-force participation at older ages that had persisted for decades. Data gathering began in the early 1960s, but today, Americans aged 62 to 65 are engaging in the work market at rates highest since then.

Berkman and Truesdale, who predict a reversal in the working longer trend, are pessimistic about the future of this movement.

For the time being, extending healthy life expectancy does not seem automatic in our future, as Berkman put it. Compared to other OECD nations, the United States is now dead last in terms of life expectancy.

She said those in the United States with lesser education and income should be particularly concerned about life expectancy trends. Berkman believes that inequality is a driving factor.

Truesdale pointed out that there has been very little change in the workforce over the past two or three decades, but the enormity of inequities is magnified by degrees of education. She also saw a decline in men’s workforce engagement.

Difficulties that many people may experience

As Berkman puts it, those who have more resources, are better educated, have better health, and have low caregiving duties may likely be able to work longer, desire to work longer, and be in occupations that permit them to work longer.

At 66 years old, she considers herself one of the few who can continue working as a freelance writer and editor.

Many others, unfortunately, will not be so fortunate.

For the “vast majority of individuals,” Berkman warns, working longer in the future will provide some form of problem. Truesdale, nevertheless, warned that even those who start with all the benefits couldn’t necessarily assume that they will work longer and be able to retire without worry.

To encourage more individuals to work for longer if they so choose, Berkman and Truesdale advocate for policy reforms at the national and state levels and among businesses. They’re discussing things like mandating 401(k)-style corporate retirement plans, establishing state-run programs for citizens without retirement plans, easing age discrimination in the workforce, and increasing the minimum wage, among other things.

They also want economists of retirement, labor, and organizational psychology to work together to address the possibility of working for longer.

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