Plumb: Geezer boom has blessings

January 5, 2014 

The year to come holds untold surprises, but one thing is certain: The media will report that the sky is falling somewhere on a subgroup of the species Homo sapiens.

Thanks to the Associated Press, last week we received an early clue to one pending “demographic disaster” – the explosive growth of the elderly.

“Many people will be forced to work well past the traditional retirement age of 65 – to 70 or even longer,” the AP declared. “Living standards will fall, and poverty rates will rise for the elderly in wealthy countries that built safety nets for seniors after World War II.”

Causes of the impending retirement crisis are several:

• As people live longer and birth rates decline, companies and governments alike find they can’t cope with the cost of guaranteed pensions, in part because proportionally fewer working-age people are available to support the elderly.

• Companies are dropping traditional defined-benefit pensions, replacing them with defined-contribution plans such as 401(k)s.

• Like Aesop’s improvident grasshopper, people spend too freely during their productive years and fail to set aside sufficient funds to ensure a comfortable retirement.

And if those declarations aren’t enough to dampen one’s New Year’s enthusiasm, the National Institute on Retirement Security estimates that Americans are $6.8 trillion shy of saving what they need for a comfortable retirement. For people ages 55-64, the shortfall amounts to $113,000 per household.

How ironic is it that living longer is defined as a threat to the social order? Rather than consider the elderly a burden, would a better approach not be to celebrate the contributions of older people?

Cheer up. While it would be foolhardy to dismiss challenges presented by an aging society, such doomsday scenarios fail to consider some offsetting factors.

A lot of people nearing the conventional retirement age of 65 have no desire to quit working altogether, although they would like to step back from the 40-hour weekly grind. Rather than hand a long-time employee a gold watch (does anyone do that anymore?), it would make more sense to encourage companies to offer older workers the option of gradually reducing their hours. That way, employees could boost retirement savings and cut the number of years they draw Social Security – while still allowing them more time to spoil their grandchildren.

Similarly, why bemoan declining birth rates in the face of global warming, dwindling natural resources and other unwelcome effects of the population explosion?

Yes, fewer workers will be available to support their elders, but that also gives employers incentives to retain workers beyond the standard retirement age. Also, older, experienced workers can function as trainers and mentors for the younger generation.

The notion that everyone should retire at 65 is relatively recent. Social Security didn’t exist until 1938. Back then, life expectancy for an American male was a tad under 62 years. Today, on average, a 65-year-old male may expect to live another 19 years.

Granted, not every 84-year-old wants to punch a time clock, but knowing that many healthy seniors are not ready for the scrap pile gives the nation time to tweak the system. Options for ensuring the solvency of the Social Security system are well known: Raising the eligibility age, removing the cap on contributions, etc. The trick is building political support for reform.

Some things this nation could do to improve the retirement picture: Educating people about the importance of saving early, maximizing 401(k) contributions and not borrowing against those accounts. Merely making it more difficult for workers to opt out of their employer’s defined-contribution plan would boost retirement savings considerably, experts say.

Finally, the transition of Baby Boomers from the workforce to the ranks of the retired presents underappreciated opportunities. The U.S. Bureau of Labor Statistics estimates there will be a 70-percent growth in jobs in elder care in coming years.

That doesn’t begin to exhaust possibilities for retirement-related jobs. From smart phones to apps that allow children to monitor the activity of elderly parents, the market for products is endless. Assisted living facilities and retirement-oriented communities will constitute a major source of construction jobs for decades….

In short, geezerhood may present problems for the country, but it’s not without blessings.

Email former Herald Editor Terry Plumb at terry.plumb@gmail.com.

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