Why do we think retirement is supposed to occur at age 65? Does something happen to us at 65 that doesn't happen to us at age 64 or 66? No, there's nothing unique about age 65. Retirement age is about longevity and resources. Retirement was "invented" by Chancellor Otto von Bismark of Germany who introduced a social security system in the late 1800s to counter the power of the Socialist Party. Somewhat cynically age 65 was chosen because he knew the average German worker never reached 65. When the United States passed a social security law in 1935 the average life expectancy in America was only 61.7 years. Social Security, by the way, was never intended to serve as a primary source of income but to act as a supplement or safety net to avert becoming destitute. Over the years changes have occurred in the Social Security system and dire predictions are made about it's insolvency in the next few years. Younger people have almost a fatalistic attitude toward it, assuming that it won't be there when they're ready to retire. All this, plus the most recent financial crisis inspired the Age Wave organization and Harris Interactive to conduct a national study exploring how four generations are rethinking retirement entitled Retirement at the Tipping Point: The Year That Changed Everything. The full report can be accessed at the Age Wave website (http://www.agewave.com/). Age Wave, headed by Ken Dychtwald, PhD is one of the first organizations to recognize and follow the aging population and the effect it has on society. Harris Interactive is a polling organization with whom they teamed up to conduct the study of four generations of adults 21-84 years old: The Silent Generation (ages 64 to 84), the Baby Boomers (ages 45 59 63), Generation X (ages 33 to 44) and Millennials (ages 21 to 32). Exactly one year prior to the current study, before the stock market crash, they had conducted a survey, Rethinking Retirement. By asking the same questions one year later, they were able to assess the impact of the economic and financial crisis.
I have summarized their findings here but you can print the full report by going to www.agewave.com/retirementtippingpoint.pdf .
Today's pre-retirees say they will need to postpone their retirement 4.2 years on average, which would be the first time in history that retirement age significantly increased in America. The uninsured costs of healthcare are now considered the biggest potential financial wildcard in retirement. Almost seven in 10 people will need some long-term care, such as home care, assisted living, or nursing home care, after age 65. In 2008, the average annual cost for a private nursing home room was $76,460 a year.
- After decades of out-of-control spending, Americans have been jolted into realizing that they must get back to basics and learn to live within their means in order to find financial peace of mind. Women worry more about security than men but all generations agreed the best thing about having money is "feeling secure" as contrasted to having "independence" or "freedom".
- Above all else, Americans define success as having loving family and friends. But with these relationships and connections come significant responsibilities to provide care and support for parents, children and even siblings. According to the survey, having strong relationships has become twenty times more important than wielding "power and influence". Rather than just being the sandwich generation (caring for parents and young children), families have become multigenerational "Rubik's Cube" families.
- In the midst of today's crisis, Americans are beginning to re-vision retirement as a time of new purpose, new priorities, new careers, and new opportunities to give back to the world. Sixty percent of all Americans described retirement as an "opportunity for a new, exciting chapter in life" and 70% told Harris Interactive that they wanted to include work in their retirement. More now think of retirement as an opportunity to continue learning, contributing and remaining productive, not as a time of retreat and withdrawal.
Truly, with the Silver Tsunami bearing down on us, not only will the current generation of elders need to rethink their hopes, plans and dreams for retirement, but all of society will have to learn a new way of readjusting the ratio of their work years to their retirement years. A good friend of mine with whom I have shared many committee meetings and discussions of the role of long term care said to me: "Dr. Root, you shouldn't say you're retired. You should say you're re-purposed." Right on, Mary. Thanks for the good advice.
