Tarnish in the Golden Years

Aside from the millions who have given up and opted for a Social Security exit before they ever imagined are the millions of older workers for whom retirement is no longer an option. Unemployed workers eligible to access Social Security were and are literally twice as likely to opt into that governmental retirement pool as those who retain(ed) their jobs. “‘The fact of the matter is that this aging-but-not-yet-aged segment of the baby boomer class can’t afford to retire,’ said David A. Rosenberg, the chief economist of Gluskin Sheff, a Canadian firm, noting that overall household net worth was 15 percent lower than at the pre-recession peak. ‘Dreams of the 5,000-square-foot McMansion being a viable retirement asset have morphed into nightmares of a deflationary ball and chain.’” New York Times, May 18^th.

The notion of working until you drop, seemingly a vestige of the 19^th and early 20^th centuries, seems to be back, but Americans are living longer than they did back then. Not only are the de facto “implied savings from owning a home” gone, but too many retirement accounts have been decimated in value or used when premature layoffs and pay cuts required emergency access to money intended for later years.

“Many older Americans had to dip into their savings to cope with the impact of the recession. A quarter of Americans age 50 and over report exhausting all of their savings during the recession, according to an AARP Public Policy Institute... Nearly half (48 percent) of older workers have had trouble making ends meet over the previous three years, typically because household expenses increased (60 percent) or household income fell (56 percent), the survey of 5,027 older Americans who are currently employed or who have been in the labor force at some time during the past three years found. Those who had trouble making ends meet were particularly likely to withdraw money from a savings account (57 percent). The majority of those surveyed (75 percent) are worried about depleting their savings too quickly in retirement.” US News and World Report, May 27, 2011.

The net impact is more people remaining in the labor force longer, literally bottlenecking normal job growth through attrition and retirement at the younger, “other end” of the normal labor cycles: “In general, for workers it was better to be older in the current cycle. The employment-to-population ratios are higher now than before the recession began for both men and women in all age groups above 65. More than a third of men ages 65 to 69 are working, as are more than a quarter of women… But the proportion of both sexes working is down from the peak for all age groups under 60...

“Labor Department figures indicate that the percentage of workers over the traditional retirement age of 65 is at a record high. But, the figures show, job totals fell sharply for men under 55 during the recession and have only started to recover, while the proportion of women ages 25 to 54 with jobs also slid and is close to the lowest level of the last two decades… For the first time since the government began keeping track of the numbers in 1981 — and probably the first time ever — one in nine American men over the age of 75 was working in April. About one in 20 women over that age have jobs.” NY Times. For many, the years where retirement was expected, only years of stress, the question of whether their health will hold out long enough to allow work to continue and the big issue of when their companies will demand an exit make life exceptionally difficult.

I’m Peter Dekom, and I’m one of those who may just work until I drop.