2012: The Beginning of the End of Retirement

A recent NPR broadcast about “The Future of Retirement” confirmed that even thought leaders from our most respected institutions are seeing an economic future through rose-colored glasses. 2012 will usher in the end of retirement and our society is not prepared to deal with it.

One guest (Ron Brownstein) on the show stated, “the image we have of retirement is as outdated as fallout shelter.” That image is reality and is unquestionably accurate. Mr. Brownstein cited results from the 11th quarterly Allstate-National Journal Heartland Monitor Poll, which explored Americans’ financial situations and attitudes toward retirement. On average, near-retirees (50 years and older) expect to retire six years later than the age at which current retirees did. More than two-thirds of Baby Boomers (68%) expect to work in some form after retirement – about half say, out of necessity – while only 11 percent of current retirees report that they work.

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In addition, the survey reported that 34 percent of near-retirees expect part-time work to be a major income source, while only 8 percent of current retirees report part-time work due to economic necessity. While 79 percent of current retirees say they’re confident about their retirement security, only 67 percent of near-retirees say the same, and only 19 person say they are “very confident.”

One often overlooked factor in this dramatic shift in how workers view retirement is the shift from defined benefit to defined contribution retirement plans. The effect of this shift is just beginning to hit retirees now. Up to this point both public and private retires could retire in their early 60s if not earlier and receive a check comparable to the one they received when working. These older workers retired, played golf, traveled, moved to Florida or Arizona, and then died – generally in that order. Sometimes that scenario lasted only 10 years, maybe 20, but rarely longer.

That era has ended and its impact on how people approach retirement has just begun. Its impact on the economy, and how employers approach talent management, is unprecedented. Today, life expectancy isn’t 65 or 70 but 85 or 90, maybe older. People can no longer expect to work only one-third of their life and living happily ever after for another 30 or 40 years. (One in 10 people who are 60 years old today will live to be 100!) And yet employers and workers still plan their workforce around workers ages 16 to 55.

I don’t have a problem with any of the above mentioned facts or survey results. They are what they are. I do have a problem with the presumptions of the second guest (Olivia Mitchell, Executive Director of the Pension Research Council at Wharton School).

Ms. Mitchell started by saying that 10,000 Baby Boomers will retire daily for the next 19 years? While Ms. Mitchell is highly respected, that stat is mispresented. Ten thousand Baby Boomers will turn 65 years old every year for the next two decades. But many Baby Boomers will not stop working. Yes, they might retire from their current job but then they will start a new business, change careers, and at the very least work part-time.

But maybe that’s my opinion vs hers. Here’s the real problem. If we don’t retire the old folks, their grandchildren won’t have jobs. That is already occurring because unemployment for the 16-25 year old cohort is near record highs while the only demographic group to increase labor force participation since 2008 is the 55+ age group.

Ms. Mitchell challenged this idea of a “gray ceiling” – that Baby Boomers were holding the jobs traditionally held by the next generation. In effect, she denied the gray ceiling exists. She proposed that the job market is flexible and as in the past, our economy will be able to absorb both older workers living longer and younger workers starting their careers. Maybe she should run for President!


She cited this example: from 1970 to 2000, the number of working women increased 87 percent. The number of jobs increased 40 percent. In other words, to repeat history we will need to create 40 percent more jobs. Currently we’re on pace to create approximately 2 million jobs, or 1.5 percent annual growth. With technology and globalization we live in a very different era than our parents and grandparents, even our adult children. I’ll stop short of saying the notion that we can create 52 million (130 million x 40%) new jobs is b#!!$&!t, but does anyone else see a problem?

The U.S. economy is no longer the job engine that could. We still have an industrial age workforce trying to get jobs in a Cyber-Mental age economy. The definition of work has changed. The definition of retirement has changed.

The likelihood of our economy creating enough middle class jobs for both Baby Boomers and Millennials, and still keep Generation X actively employed, is not very likely. I’m not even sure it’s possible. Unfortunately that scenario is the very problem plaguing our nation right now and employers, government, and politicians are in denial.

Employers who are waiting for politicians and government to fix our job markets need to get a grip on reality. We’ve got an election year coming up and a Congress that is more committed to self-interest than governance. Despite all that pessimistic sounding rhetoric, the economy and job markets are improving and companies that take control of their own destiny will survive and thrive.

Do I think we can create enough jobs for all the under-employed and unemployed? No. But 2012 is the time to shed the rose-colored glasses. Now is the time to ask yourself,” what will WE do differently this year to recruit, hire, retain, and develop talent?”


Ira S Wolfe