Opinion | Working in Old Age Can’t Be the Only Answer to the Retirement Crisis

Teresa Ghilarducci, a labor economist, begins her new book with a story about an 82-year-old cashier at Walmart who was able to retire — finally — after a customer started a GoFundMe campaign for him that blew up on social media. “Is this what America’s retirement system has come to?” she asks. “Are we heading for a TikTok pension system?”

Ghilarducci argues that working longer is not the solution to America’s retirement crisis, in which millions of people don’t have enough money for a comfortable old age. The most important fix, she says, is to shore up Social Security and complement it with a new automatic-enrollment pension plan for workers who lack access to an employer-sponsored retirement plan. Low- and moderate-income workers would get matching contributions from the government. (People could opt out of contributing, but then they wouldn’t get the match.)

I’ve been arguing that working longer kind of is the solution for the retirement crisis, or at least part of the solution. Now that I’ve read her book I’m more sympathetic to her point of view, even if I’m not all the way over to her side.

The book is “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.” Ghilarducci is a professor of economics and policy analysis at the New School for Social Research in New York. She frequently testifies before Congress on retirement insecurity. The book sums up decades of research in a fiery style. “Yes, Granny deserves a good job if she wants one,” she writes, “but working until you drop is not a civilized plan for a civilized society.”

I’ll start with a chart that shows why I’ve always thought that working longer makes sense as a partial solution to the retirement crisis. It shows the average number of years Americans spend in retirement rising from around 13 in 1970 to nearly 20 in 2010 before declining a bit in the following decade.

From a look at this chart, it seems obvious why people are having a hard time paying for retirement. It’s because as longevity has increased, they have had to stretch their savings over more years out of the work force. Working longer helps solve that problem, as well as the problem of chronic labor shortages, which I’ve written about frequently.

I always knew that working longer wasn’t easy for people doing jobs that are physically, mentally or emotionally taxing, but I’ve figured that problem could be addressed with lower retirement ages for such jobs along with generous exemptions for other older people who can demonstrate that they’re no longer capable of working.

My view seems to make sense from the perspective of efficiency, but Ghilarducci argues convincingly that how long people need to work is more about who has power in society than anything else. “There is no such thing as a scientific answer about the proper age of retirement,” she writes. “Retirement is moral, political, and social, not scientific.”

Ghilarducci condemns the media and the public for accusing retirees of being “greedy geezers” and for “shaming and blaming” people who run into financial difficulties in retirement. She argues that having a large number of older workers clinging to jobs because they need the pay and benefits is bad for younger workers, whose wages and promotion opportunities may be depressed, as well as for employers, because many of those older workers have become less productive but can’t be easily let go.

Her strongest point is that working longer may be just fine for lawyers, journalists and presidential candidates, but is harmful to a lot of people whose stress levels and mortality risks are elevated by working in old age.

The core of her case is a table that she created based on data she extracted and analyzed from the landmark Health and Retirement Study, based at the Institute for Social Research at the University of Michigan.

Ghilarducci said she realized years ago that the Michigan data source would be valuable but had to wait 20 years or so until enough people had passed through retirement — that is, died — so that she would have enough data for the findings to be statistically significant.

“That table is my jewel,” she told me. “That’s the pinnacle of my career.”

I’ve created two charts from her table. The first shows how important a good retirement plan is. One in eight people with no financial plan dies without ever having retired. Far fewer people die without retiring if they have a defined-contribution plan, such as a 401(k). Even fewer die without retiring if they have a defined-benefit plan, which is an old-fashioned pension in which the employer sets money aside for you based on your pay and job tenure.

This next chart, which I also extracted from her table, shows the number of years people spend in retirement based on not only what kind of retirement plan they do or don’t have but also gender, race and education. The people who have the least years in retirement are Black people, men and the less educated. One look at this chart and you can see there’s a problem. (The figures in this chart don’t line up precisely with those in the first one because the data sources and methodologies are different.)

I still think that working longer can be a partial solution to the retirement crisis, but it’s more partial than I once realized. Every person is different, so trying to vary retirement ages by people’s jobs and abilities — as I’ve advocated — is complicated, as this study by the Organization for Economic Cooperation and Development makes clear.

I also think Ghilarducci is right about the need for a new retirement savings plan. Because it would require contributions from employees (in addition to the federal government for below-median-income workers), it would be a new form of induced savings. The government match portion couldn’t be tapped for anything but retirement. Those concepts are embedded in the Retirement Savings for Americans Act, which is based on a paper by Ghilarducci and Kevin Hassett, who chaired President Donald Trump’s Council of Economic Advisers. The bill has bipartisan sponsorship, including from Senator Thom Tillis, a Republican from North Carolina who lived in trailer parks during part of his childhood.

I asked Ghilarducci whether practically forcing people to save is compassionate. Sure, she said: “I talk to people who want to be shoved into forced savings. Women will often say, ‘I need a pension plan that my kids can’t touch.’ Otherwise a woman’s 401(k) plan becomes the family education plan or goes for a down payment on a house for the kid.”

People who want to work in old age should, of course, have the opportunity. Even if they’re not running for president. But imposing what are effectively work requirements on older people is harsh.

The Readers Write

The web is built on a foundation of sand. There has been a long string of bad decisions from the outset, some technological, some political, some driven by business interests, some by just plain hubris. The internet is a demo that was never productized. Why do I know all of this? I was at the University of Illinois at Urbana-Champaign in 1970 when we were the sixth site to come up on the net and have been involved in various aspects ever since.

John Day
Foxboro, Mass.

Quote of the Day

“Money is only a tool in business. It is just a part of the machinery. You might as well borrow 100,000 lathes as $100,000 if the trouble is inside your business. More lathes will not cure it; neither will more money. Only heavier doses of brains and thought and wise courage can cure. A business that misuses what it has will continue to misuse what it can get.”

— Henry Ford and Samuel Crowther, “My Life and Work” (1922)