Amid the relentless news coverage about how unready Americans are for retirement, it can be easy to miss the bright spots.
As Charley Ellis points out in his new book, Falling Short: The Coming Retirement Crisis and What to Do About It, many people mistakenly take the easy way out of jobs, leaving at 62 — the earliest possible retirement age — and just hope that their savings and Social Security will keep up as they age. A former investment chairman of the Yale endowment, Ellis is a member of the Investment Committee of my firm, Rebalance.
The “real” retirement age for most people, Ellis explains, is not 62 but 66 (for most Baby Boomers) and as late as 70. Medicare begins at 65 for everyone, but when to take Social Security benefits is a choice. Delaying will get you an extra 8% for every year you wait.
What to do in the meantime? It’s easy to say “keep working” I know, but for many retirees that will in fact be the only reasonable option. Interestingly, new survey data show that many skilled, experienced boomers could soon find themselves in a job market hungry for their talents.
A recent survey by the Society for Human Resource Management spells out a clear expectation gap between the opinion employers have of their senior workers and the looming problem of what happens as 10,000 of them a day retire every day for years and years to come.
In the survey, a strong majority of employers (77%) saw their workers over 50 as more knowledgeable and skilled than their younger peers; most saw in them a stronger work ethic (70%), more reliability (59%), and considered them more mature and professional (71%).
To that you might say, well, yeah, they’re clearly more experienced and mature, but so what? In the same survey, however, just in one in four (24%) of employers saw losing older works as a potential problem. Meanwhile, employers already worry about how to fill technical and management positions they have today, never mind hundreds more five years from now.
It’s a classic “brain drain,” one likely to be partly relieved by immigration and by financing specialized education for mid-career workers. There will be some degree of automation as well, perhaps.
But nothing on the scale of qualified, talented older workers quitting for good. The U.S. economy will not shrink to fit a suddenly smaller management class.
Real retirement solutions
What does that mean for professionals in their 50s? Keep your job if you can and go to school if necessary. The coming job market is very likely to reward a graying employee who can bring a one-two punch of experience and qualifications to the thousands of senior-level jobs that will open.
Mobility is likely to be a key factor. It’s hard for people with kids and grandkids in one town to pick up and move. Decades of roots don’t untangle in a week. Retraining matters, too.
Nevertheless, it seems clear, even obvious, that the approach Ellis advocates in his book is in fact a very real solution for folks who aren’t quite financially ready to retire: Delay your Social Security and be ready to reinsert yourself into the job market.
While not the most comforting news you might read this week, it certainly beats quitting and “winging it” until your savings runs down.