Why now is the time to retire the idea of retirement.
Remember the Social Security lockbox? It seems a long time ago, doesn’t it? Almost quaint. There was good old Al Gore in his first presidential debate against George W. Bush arguing passionately that he had found a way to ensure that America’s elderly received retirement support from their government. It was 16 years and a lifetime ago. Back when winning the presidential election by almost 500,000 votes and still losing the presidency seemed the worst travesty imaginable.
Now if you think I’m heading into another screed about the rancid mess that is the American political process at this moment, you are wrong. It is a travesty. But candidly, I’m all screeded out. Besides, the biggest changes that have taken place between the first U.S. election of this century and now have nothing to do with retail politics. Nor are those developments linked to the Russian hack of the election or the death of truth — momentous as those developments were and as ominous as their implications may still be — the 2016 election is just the most recent infamous day in U.S. history.
No, there is something much bigger going on than what has been dominating your Twitter Feeds for the past year. The financial iceberg America seemed to be careening toward for the past 30 years, the unfunded retirement health care liability that many sound-minded politicians and economists warned would bankrupt us all, looks quite different now. What once seemed like America’s terminal calamity — a looming problem that was so large it could never be managed — has not only diminished, it has actually changed character. This once-existential threat to the U.S. economy now looks very much like a potential bonanza.
You can see it in the gleaming billionaire faces of U.S. President Donald Trump’s cabinet — and indeed in the face of the president himself. After all, he is the oldest president in U.S. history and his cabinet has the highest median age (65) of any in the country’s 240 years.
But in a strange way, this group of billionaires and former generals is a manifestation of what may be the most positive transformation that has taken place in America since the IT boom. They are, by any traditional standard, old. And, as their new boss would note, they are energetic. They are working. At the time they took office, their median age was roughly that of retirement. But they, like lots of other Americans in their mid-60s, are just getting started on a new chapter in their careers.
It used to be a paradox of the workplace: The physical burdens of labor would force the most experienced workers out of the marketplace. They would enter retirement and become a costly burden on society. Then, having less to do, many lost a sense of purpose and value and would begin to decline, compounding their cost quite apart from breaking the hearts of their families.
This detrimental pattern was a result of the nature of work and the nature of life. For many Americans, working in the 20th century was hard and physical. Correspondingly, the average life expectancy of the American man in 1900 was 46 years. It is often observed that when the conservative Prussian statesman Otto von Bismarck — the first to propose government-sponsored retirement in Germany in 1881 — set retirement at age 70, it was roughly as long as most people could ever expect to live.
But today, the picture is different: Life expectancy for women in countries like Japan, Switzerland, and Singapore is in excess of 85 years, while the life expectancy for men has reached 80 years in at least a dozen countries. These statistics are only changing more rapidly. Today, a 1-year-old in the United States has a 50 percent chance of living to 100. And it is likely that over that 100-year life, that child is likely to work from age 20 through age 80 or even older.
But far from being a drain on society, these individuals are increasingly important economic assets. According to the AARP, which advocates for older Americans (and, in the interest of full disclosure, is an active FP advertiser and sponsor), Americans 50 and older produced $7.6 trillion in economic activity and were responsible for over a third of new businesses in America. It isn’t surprising the group is economically powerful: Today, there are roughly 1.6 billion people in the world who are 50 or older, a number that is expected to double over the next 34 years.
According to the National Institutes of Health, the number of older people who choose to continue to work has increased during the past two decades. Today, roughly a third of U.S. citizens age 65 are continuing to work past the typical retirement age. And those numbers are increasing — especially for women. In 2008, the U.S. Bureau of Labor Statistics reported that the number of workers 65 and older grew by 101 percent between 1977 and 2007. While male employment grew for those 65 and older by 75 percent, female employment for the same age cohort grew at almost twice that rate.
Working without retiring has become an ambition for many Americans. According to a 2015 Federal Reserve study, 27 percent of Americans said they would “keep working as long as possible.” Another one in eight respondents said they don’t plan to ever retire. And while many keep working for financial reasons, 44 percent reported to the insurance company Transamerica that they kept working to stay active and engaged.
Of course, having so many people who are continuing to work raises challenges. If productivity makes jobs harder to come by, there may be resentment against those who stay in the workplace longer and competition for jobs may grow more intense. But throughout history, similar concerns have been resolved through economic growth. (The same argument was made when women started to enter the professional workforce in the 1960s.) Certainly, the huge economic output of older workers now suggests that might well be the case again.
Government and corporate leaders alike will have to consider new training requirements for careers that extend 60 years. But workplaces that contain more experienced workers also contain greater means for training new workers and more institutional memory. If people work longer, they will pay taxes longer rather than drawing down on retirement-related entitlements.
As a result, it could well be, as it often is, that while politicians dithered over possible solutions on how to pay for an aging society, medicine and the marketplace came up with another idea — having an aging society help pay for everyone else.
Indeed, it could well be that Bismarck’s big idea has finally hit its own retirement age — at around 135. We are going to need new ideas and vocabulary to define the promise of what could be the next big development in the productivity boom — making the most of our most experienced workers in ways that are better for us and for them alike.
A version of this article originally appeared in the January/February 2017 issue of FP magazine. Subscribe to FP Premium for 20% off now!
Illustration by Matthew Hollister