This is the 3rd post in an 8 part series on the topic of aging.
Work is an integral part of our adult lives. Not only does it provide the financial means to support ourselves, it also occupies the largest part of our day, often representing a thriving community, a place for learning, and a sense of meaning and self-worth. But as we age, the question of “Should I retire?” comes up. It’s a tricky question to answer with many factors of consideration, which are explored in this post.
#1: Americans are working longer
When confronted with the “Should I retire?” question, many Americans are choosing the employment path for longer as evidenced by these numbers from Pew Research Center.
While retirement age is increasing for both genders, it is more significant in males. Although less than 45% of the total 65+ population are men, they represent more than 55% of older workers. Within the male population Asian Americans and White Americans are more likely to work longer than other racial/ethnic groups.
#2: White collar professionals work longer
Management, sales and office administration represent the top 3 areas of employment for older individuals.
This ranking looks different if we consider older individuals as a percentage of the total number of people in specific role types.
#3 Older employees will be the fastest growing segment of the work force for the next 10 years
Due to lower birth rates and slower immigration rates among other factors, the overall U.S work force is growing slowly, at a rate of 0.5%. However the older work force is growing at a rate of 1.8%. This can be attributed to the tidal wave of baby boomers as well as government incentives to postpone retirement. Combine these two trends and it’s evident that the % of older workers as a % of all workers will continue to rise – from 19% currently to almost 30% by 2060.
#4 Working longer can be advantageous for all
Postponing retirement and participating in the work force can be advantageous for the individual and also for the economy. From the individual’s perspective, there are three key benefits to consider:
- Income & Social Security: Full eligibility for social security benefits kicks in at age 67, but individuals can start receiving it at age 62. If they opt for this, they get 70% of the benefit each month. This can be significantly impact their quality of life in the last 20+ years. In parallel, life expectancy is on the rise and most individuals need every extra dollar they can generate as income and put towards retirement planning to cover for health and home care costs.
- Health insurance: Medicare typically kicks in at age 65 (with some exceptions). If individuals decide to retire earlier than this, they have to get private insurance to cover health care costs. Premiums for private insurance can run high since it’s a cost driver for insurance companies and individuals cannot benefit from group rates.
- Personal well-being: While studies remain conflicted on the impact of retirement on physical & mental health (some suggesting that individuals are 40% more likely to get a stroke within the first year of retirement, others suggesting that the use of anti-depressants and anxiety medication drops after retirement), it’s universally accepted that transitioning from full-time work to no-work is a stressful experience and unless it’s considered a process rather than an event, it negatively impacts one’s sense of community, routine and purpose.
The government has been encouraging individuals working longer both through legislation (like the Age Discrimination in Employment Act) and incentives (moving the Social Security eligibility from 65 to 67 years). This is beneficial because:
- U.S. dependency ratios are on the rise, which creates pressure on government programs as well as working citizens. By encouraging the aging population to work, their dependence on the other constituents declines.
2. The longer individuals participate in the economy, the more they can contribute to government programs like Social Security. While Social Security has $3 trillion in reserves today, 2018 is the first year it had to dip into the trust to cover costs. It is expected that by 2034 this reserve will be depleted, at which point eligible individuals will receive 75% of their benefits instead of the full 100% today. About 60.5 million individuals receive Social Security benefits today and this number will rise to approximately 80 million over the next 20 years.
#4 Yet, most individuals do not work to eligible retirement age
Even though older individuals are working longer, more than two thirds are out of the work force by age 66. This increases to 85% by age 75.
#5 Ageism is rampant
The Age Discrimination in Employment Act forbids workplace discrimination against anyone 40 years or older. However many sources suggest that ageism is rampant in corporate America, and incredibly hard to prove. This makes it difficult for individuals to retain their jobs after they turn 50, to find new jobs if they are terminated or decide to leave, and get promotions or rewards within a current job. In a mass scale study with 40,000 job applications across 12 cities in 11 states, resumes were submitted for 3 types of jobs. The resumes were identical except for the applicant age and gender. The results highlighted 3 key points:
- Older applicants had a significantly lower callback rate than younger applicants
- Older female applicants were discriminated against more than any other candidate group
- Callback rates were lowest for the oldest age group, followed by the middle age group
#6 The ideal job
After conducting 60+ interviews with individuals over 55, I have crafted traits of the ideal job based on what I’ve heard.
- Part-time – 15 – 25 hours a week instead of high-stress 50 hours a week
- Flexibility – ability to set my one’s own hours, work from home and also come into the office, potential to take time off in the summer
- Engaging – The job is interesting, and leverages existing skills and intellect
- Learning – The job offers opportunities to learn new skills
- Giving back – An avenue to help others who are earlier in their career
- Dignity in the hiring process – The hiring process doesn’t insult their decades of experience by asking questions one would ask a college hire
- Connection – There are opportunities to talk to other people and lightly collaborate
- Compensation – There is some (not market rate) financial compensation associated with the work
- Healthcare benefits – There is an option to leverage group rates for health insurance, even if it means the individual is paying out of pocket
It is in our collective best interest to re-think the cliff that is Retirement. Instead of a precipitous fall, perhaps we can craft a glide path for willing older individuals such that they can continue to participate in the work force in traditional and new types of roles, generating income for themselves and adding value to the economy. There are also opportunities to offer the skills of older white-collar Americans in an international marketplace. Finally, employers need to update benefits and employee programs to account for a workforce that is 30% 65 years and older.
Other posts on aging