Straight Story: Retirement

Economics editor Chris Farrell


TESS VIGELAND: Our economics editor Chris Farrell thinks about retirement a lot. He gets questions about it. And of course, he'd like to actually retire himself someday.

Here's his assessment of the next American Dream for retirement.

Chris Farrell: The message in the current economic collapse to America's aging population? Forget retirement.

That's right. We're going to be working during the last third of life. Put it this way: Survey after survey, shows that most aging baby boomers want to work in retirement.

Well, that wish just got granted.

Our image of retirement is still shaped by the early decades after World War II. The poverty rate plunged, thanks to Social Security. Older Americans gained universal health care with MediCare. Corporate America offered workers good pensions. And it was in these years that retirees developed a distinct lifestyle, captured by the mass migration to the Sun Belt -- places like Sun City -- traveling in RVs, and long mornings spent on the golf course.

The rise of modern retirement was a great social achievement of the 20th century. But in the 21st century, the underlying economics of retirement has changed. The risk of getting laid off is high, health care is increasingly expensive, our pension is now the 401k. And for the second time in eight years, savers have watched in horror as their retirement money was badly beaten down by a bear market.

We've learned that most of us simply can't save enough to create a solid foundation of savings for old age.

The solution? Work longer. Fact is, the longer you work, the less you need to save for old age. Pocketing even a small income lets savings compound over a longer period of time.

The idea of working longer sounds horrible to anyone who has dreamed of retiring in a place like Sun City. Not all seniors will be physically and mentally healthy in retirement.

That said, for most people, the change will be for the good. After all, we're living longer, healthier lives. Work keeps the mind active. It's a community, where we have friends and acquaintances.

Here's my bet: Instead of talking about retirement, we'll discuss second, third, maybe even fourth careers over a lifetime.

The challenge for all of us, employers and employees, entrepreneurs and legislators, is how to make this change an even better vision of old age than life in Sun City, in the early post-war years.

It won't be easy.

About the author

Chris Farrell is the economics editor of Marketplace Money.


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