But there is a bright side…
The collapse of the industrial economy in 2008 followed by the COVID recession wiped out a substantial portion of the wealth of the younger Boomer cohort. These people, now in their fifties and early sixties, will likely never retire. Their golden years will be a scramble to avoid poverty.
Gallup surveys in November of 1995 found that only 12% of Americans anticipated working past 65. In 2004, that number had increased to about 30%. By 2018 41% percent of those surveyed thought they would do so after the age of 65. The actual age of retirement has risen from 59 in 1995 to 66 in 2018 (Newport 2018).
What happened?
After the fall of the industrial economy in 2008, the concept of retirement turned from a life of carefree leisure for people in their fifties into an anxious wait for Social Security funds. The COVID recession made things even worse. Retirement no longer means going on a permanent vacation. Many older Americans are seeing retirement as a time when social security keeps poverty at bay.
This is a much different view of retirement than that of the previous economy of the late 20th century. In those days, retirement was “sunset years” filled with unending leisure, travel and volunteer work. The factories of the industrial economy created so much wealth that generous pensions were common and affordable.
Things have changed dramatically now.
This is why we occasionally read a spate of news stories about “unfunded pension liabilities” related to bankruptcy of large companies, unions and even states and cities. Entire states now face bankruptcy because generous retirement benefits granted years ago are no longer affordable. According to the Pew Charitable Trusts (2018) only about two thirds of the states have solvent pension plans. Even entire cities have filed bankruptcy because of increasing pension liabilities (Governing.com, N.D.).
This is not the result of bad management. When the stock market crashed in 2008 billions of dollars that would gone to retirees in the form of pensions disappeared. The stock market is doing quite well now, but it is very different from what it was before the crash. The stock market no longer reflects the value of the creation of tangible products, but on intangible financial manipulations.
For many younger Boomers pensions, real estate and 401(k) plans earmarked for financing retirement funds are gone or diminished and will never return. Retirement studies project that almost half of retired couples will face financial hardship and downward mobility, and that even working though retirement will not be a remedy (Ghilarducci, Papadopoulos and Webb 2018).
But working past traditional retirement age does not have to be a disagreeable fate.
There is mounting evidence that the best thing that can be done for an older person is to make sure they have rewarding work. The idea that we turn 65 and no longer need the social and physical advantages of work makes no sense.
A recent paper from the Center for Retirement Research (Zulkarnain and Rutledge 2018) found that working longer before retirement is associated with longer lifespan, lower levels of depression and a lowered diabetes risk.
In other words, putting off retirement is a predictor of good health.
But this does not mean that any sort of work is healthy. Work must be rewarding and challenging in order to return the benefits of good physical and mental health.
In his book, Outliers, Malcom Gladwell argues that work has to meet three criteria in order to be satisfying.
First, it has to offer autonomy, or the freedom to make important decisions about the direction work will take. People are happier when they have responsibility to manage their work.
Next, work must be complex enough to offer a cognitive challenge. Boring, repetitive and pointless work is not satisfying.
Finally, work has to provide a consistent relationship between effort and compensation. Working harder or longer must result in predictably bigger returns in order to be satisfying.
Psychologist Mihaly Csikszentmihalyi has studied what he calls “flow” for decades. We have all experienced flow at times in our lives. It is “the state in which people are so involved with an activity that nothing else seems to matter; the experience itself is so enjoyable that people will do it even at great cost, for the sheer sake of doing it”. (Csikszentmihalyi, 1990, p.4). Click here to listen to a TED Talk in which Csikszentmihalyi explains it in his own words.
Csikszentmihalyi’s criteria for a satisfying job is remarkably similar to Gladwell’s ideas. He compares the properties of a rewarding job to the properties of an enjoyable game – variety, flexible challenges, clear goals and immediate feedback. Research on flow and working supports his argument.
When Csikszentmihalyi tracked people in flow while working, he found a high correlation when workers were addressing an especially challenging task requiring higher skills than usual. When engaged in these kinds of challenging activities and using higher-level skills, workers reported they felt stronger, more creative, focused and motivated. However, this finding was not present in unstructured leisure activities. People used words like weak, passive and dull to describe their state of mind when watching TV, eating at a restaurant, or reading a mass-market magazine.
This implies that work is intrinsically rewarding. That is, we find work rewarding, aside from payment we might receive for it. As it turns out, there is scientific support for the theory that we find challenging work rewarding in and of itself.
In his fascinating book Satisfaction, Neurologist Gregory Berns tells of an experiment by one of his graduate students, Cary Zink (Zink, Pagnoni, Martin-Skurski, Chappelow and Berns 2004):
It occurred to Zink that if we value money only because it has value, the pleasure center of our brain – the striatum, a structure in the mid brain at the top of the spinal column – would have a consistent reaction no matter whether an individual perceives they are earning money or simply accepting it.
However, if earning money has value, aside from the value of money, our striatum pleasure center should react more strongly when we perceive we have put effort into earning money.
And that is exactly what happens.
Far more striatum activity occurred when subjects had to press a button in order to receive a reward. Pressing a button in an fMRI machine may seem trivial, but it represents effort. Even that minimal effort generated a large increase in striatum activity indicating a pleasurable experience. The reward is in the effort we put into earning, not strictly in the tangible payoff itself.
Instead of resigning oneself to spending the rest of one’s life toiling away because economic fortunes leave no choice, working into older ages can be rewarding if managed correctly. Simply continuing to work at a job one finds disagreeable is not the recipe for happily working into ones older years.
The key to rewarding work for older people is managing the transition from traditional full time work to an innovative and rewarding retirement. Personality traits, financial situation and family considerations all influence how to manage the switch to a “working retirement” (Hansson, et al., 2017).
References
Newpaort, F. (2018). Snapshot: Average American Predicts Retirement Age of 66. Gallup. Retrieved from: https://news.gallup.com/poll/234302/snapshot-americans-project-average-retirement-age.aspx?g_source=link_NEWSV9&g_medium=TOPIC&g_campaign=item_&g_content=Snapshot%3a%2520Average%2520American%2520Predicts%2520Retirement%2520Age%2520of%252066
Ghilarducci, T., Papadopoulos, M. & Webb, A. (2018). “40% of Older Workers and Their Spouses Will Experience Downward Mobility in Retirement.” Schwartz Center for Economic Policy Analysis and Department of Economics, The New School for Social Research, Policy Note Series. Retrieved from: https://www.economicpolicyresearch.org/images/docs/research/retirement_security/Downward_Mobility_in_Retirement_P_N.pdf
Pew (2018). The State Pension Funding Gap: 2016. Issue Briefs. Retrieved from: https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2018/04/the-state-pension-funding-gap-2016
Governing.com (N.D.) Bankrupt Cities, Municipalities List and Map. Government Data. Retrieved from: http://www.governing.com/gov-data/municipal-cities-counties-bankruptcies-and-defaults.html
Csikszentmihalyi, M. (1990). Flow: The psychology of optimal experience (1st ed.). New York: Harper & Row.
Herzenberg, S., Alic, J. A., & Wial, H. (1998). New rules for a new economy: Employment and opportunity in postindustrial America. Ithaca: ILR Press.
Taylor, J., Wacker, W., & Means, H. B. (1997). The 500-year delta: What happens after what comes next (1st ed.). New York, N.Y.: HarperBusiness.
Jayawardena, C., McMillan, D., Pantin, D., Taller, M. & Willie, P. (2013). Trends in the international hotel industry. Worldwide Hospitality and Tourism Themes. Vol. 5 No. 2, 2013. pp. 151-163
Hansson, I., Buratti, S., Thorvaldsson, V., Johansson, B., Berg, A. I., & Henkens, K. (2017). Changes in life satisfaction in the retirement transition: Interaction effects of transition type and individual resources. Work, Aging and Retirement
Serrat, R., Villar, F., Pratt, M. W., & Stukas, A. A. (2018). On the quality of adjustment to retirement: The longitudinal role of personality traits and generativity. Journal of Personality, 86(3), 435-449.
Zulkarnain, A., & Rutledge, M. S. (2018). How Does Delayed Retirement Affect Mortality And Health? CRR Working Paper (CRR WP 2018-11), 52.