The Longevity Revolution

Is it realistic for people to spend about 25 percent of their adult lifetime in retirement? To spend half as much time in retirement as they spend at work? Can society afford it? Is it good for men and women? Can they afford it? Does it serve health, longevity, and quality of life for a person to be idle? Should millions of baby boomer retirees have no work to do while collecting Social Security and using Medicare?

Live Longer, Work Longer: Productive Engagement

These questions are especially pertinent in the industrialized world. Early retirement becomes wasted productive capacity. Yet until very recently, people retired at an increasingly early age, despite declining birthrates and longer lives. Most people over sixty-five are not working full time; neither are 50 percent of those between fifty-five and sixty-four. For example, between 1950 and 1990 the median age at which people retired in the United States declined steeply from age sixty-seven to sixty-three. By 1996 the average retirement age was 61.5 years and people averaged about twenty years in retirement.

In the United States in 1900 a man spent about 3 percent of his life in retirement. By 1980 he spent 20 percent, or fourteen years. In the early 1900s, fully 75 percent of men over sixty-five were in the labor force; by the mid-1980s it was only 18 percent. Since the turn of the twenty-first century there has been a slight increase in the age people retire, influenced by improved life expectancy, economic downturns, inadequate savings, stock market losses, reduced health insurance coverage, and an improved outlook for older workers (e.g., looming worker shortage, age discrimination laws). The number of employed workers seventy-five and older grew from 669,000 in 1994 to just under one million in 2004, according to the Labor Department. Many of these people are working out of necessity.

In 2007, the Bureau of Labor Statistics reported, surprisingly, that older people are receiving the biggest raises. In Europe since the 1960s there has been a marked decline in labor force participation, especially by men ages sixty to sixty-four. It is below 20 percent in Belgium; 35 percent in Italy, France and the Netherlands; 50 percent in Germany; and 40 percent in Spain. There have also been declines in employment between ages forty-five and fifty-nine! The rates of labor force participation between fifty-five and sixty-four are less than 50 percent for both men and women in Finland, France, and the Netherlands. But in Europe there has not been an upturn in retirement age comparable to that in the United States.

Given these trends in the developed world, how will people without considerable wealth finance their longevity in long retirements? Can we keep older persons healthy, reeducated to prevent job obsolescence, productive, and on the job? Can we ever hope to achieve a society in which everyone in good health who needs to work will be able to get a job?

Restructuring, downsizing and redundancy threaten workers of all ages, especially the youngest, the oldest, and the unskilled. Yet in truth, there is never really a shortage of work to be done. There are so many needs to be met. Rather, the private and public sectors have failed to establish mechanisms to link work with jobs and skills both on a paid and voluntary basis and to create full-employment societies.

Do We Need Early Retirement?

Retirement is a great human victory when work is backbreaking, toxic, and boring. But now we face problems of retiring too early and living too long. Early retirement decisions are a function of health, disability, desire to retire, contract agreements, financial status, and the nature of the job. Pension plans can be an incentive to retire. In the early 1940s and prior to World War II, just as Social Security began to kick in, older men began to withdraw from the world of work. They returned in force during the war when there were temporary labor shortages. Then in the 1980s we saw downsizing of corporations, often with “sweeteners” to encourage better-financed early retirement. But as James Burke, one of America’s most imaginative CEOs and former CEO and president of Johnson & Johnson, noted, this may prove only to be a short-term savings measure. It could be a long-term disaster.

What are the long-term consequences of early retirement? An American Management Association study in 1995 found that fewer than half the companies that downsized since 1990 saw improved profits. Kodak, in Rochester, New York, cut its workforce by half and its payroll by $1 billion over an eight-year period. However, this did not improve Kodak’s fortunes. Downsizing is not a substitute for innovation.

If people remain in the workforce longer, will they take jobs away from young people? In recessionary times this question becomes even more important. However, the United Nations International Labor Office (ILO) in Geneva, Switzerland, has found that the continuing participation of older persons in the paid workforce does not measurably reduce opportunities for younger workers. Age Concern of Great Britain reports similar findings. It is a mistake to assume that a sixty-four-year-old will be instantly replaceable by a twenty-year-old in jobs and industries. As noted earlier, there is no validity to the idea of a “fixed lump of labor.”

It is time to overcome the factors that encourage early retirement, introduce shared work and more flextime and phased retirement, advance the ages of eligibility for Social Security, and secure more effectively the employment and rights of older persons and the disabled. Productive aging and engagement will help quell the three great fears of longevity—that there will be an unprecedented number of economically dependent older persons, that old people will drag down economic productivity, and that there will be intergenerational conflict.