Non-Mortgage Debt and Working in Retirement

The US News article The Number One Obstacle to Retirement points out that non-mortgage debt is a significant problem for many Americans.  According to the article, debt payments are interfering with retirement savings for 63% of Americans.

The article's suggestions on how to fix this are pretty straight forward - their number 1 suggestion is to stop borrowing.  Hard to argue with that advice.

But the point they make - many Americans are not saving enough for retirement - is a good one. 

We've long forecasted that many baby boomers will continue to work past traditional retirement age.  We posted on Tim Berry's un-retirement last week.  He is an example of someone who is working in retirement because he wants to.  And a lot of baby boomers feel the same way Tim does.

But another group will work because they have to. 

When you combine the two groups, we believe you get a majority of baby boomers. 

The workforce participation rate for those 65 and older starting moving up in the early 90's.  We expect this trend to continue and accelerate as aging boomers continue working both by choice and necessity. 

Comments

[steve]

Lorranie: Nicely stated and I agree. The good news is the growing awareness of the need to change the nature of retirement and provide employment options for older workers.

Steve

[Lorraine]

In my career, I've worked with people 55 and up in an activity centre and with members of non-profit boards who faced "forced" retirement. I can tell you that "retirement" claimed to be a "wonderful" experience is not for many people.

Why? Some people like to work and when their retirement came, it was a major blow from which some never recovered. Even women who had been housewives all of their adult lives felt trapped by a husband who was now at home much of the time. Executives found it particularly difficult because, all of a sudden, their calendar was clear after years of jam-packed meetings and social events. No one was interested in having lunch with them any longer - the phone was silent! It was a tremendous shock to their "modus operandi". Many died very shortly after retirement of heart attacks.

For some, at first, it was exciting to do what they wanted when they wanted but there is only so much golf and crocket a person can play, only so much traveling a person wants to do and so much of all the other hobbies and activities a person can do. They wear thin after a while.

Those who succeeded in adjusting to "retirement" best were the ones who had some form of "job" - they had the time, it gave them a social outlet and they earned some income whether they needed it not. Volunteering sometimes filled the bill, however, it had to be meaningful, purposeful volunteering; few volunteering jobs can be as purposeful as a job.

Often they don't need the money for themselves - they saved enough for themselves but their children or grandchildren got into financial difficulty and a lot of money was diverted to those needs.

Either way, working was a much healthier way to live and most liked to work part-time -- 3 or 4 days a week. Some companies begged them to stay on because smart companies understood the value of experience both in terms of productivity and in helping people new to the company.

Humans were not meant to "retire". They were meant to stay active and have some purposeful work to do their entire lives perhaps not always at the same level.

The attitudes towards aging would also change if the retirement age was eliminated -aging is not a bad thing - it's just a part of life and people don't turn into non-people just because of age.

For younger people, it would ease the "stress and strain" of raising families while intensely pursuing their careers knowing there would be a natural progression to their careers rather than a "rush to the top".

Also, for younger people, it would likely ease the tax squeeze. If older people who are able to work cannot find work, then some will draw on the public resources. As a consequence, when considering the "balloon" of baby boomers, it might have an impact on tax rates.

Overall, "retirement" should be "a thing of the past" and a socially healthier attitude developed allowing more choices for all people of all ages. We all know that life is never a straight line - it's a series of ebbs and flows, some ebbs more disastrous for certain people than others no matter the care they have taken in assuring the best life possible.

Many thousands of people did all the right things - saved their whole lives, bought their houses, raised their children, were good employees and good citizens. They were wiped out financially because of a severe turn in the economy or scams which took their life savings or losing a job at a critical moment or having their company pension plan disappear.

It is time for change in employment approaches and aging. We will likely keep many people out of hospitals, care facilities for the aged and isolation if we, as a society, adopt a better approach to retirement - make it a choice, not a requirement.