For years, the average age of retirement for American workers has been increasing. For millennials and Generation X, still in the prime of their working years, the situation is only going to get more dire.
Both generations have had to deal with the fallout after 9/11, the Housing Bubble of ’06, the stock market panic of 2008 and the ensuing Great Recession; all of which took their toll on their financial well-being. The “prime working years” were once a time to save and invest for retirement. Not anymore.
A generation ago workers could count on a panoply of retirement benefits, including pensions, retiree health insurance, and more generous Social Security. For a host of reasons — including the fact that Americans are living longer but also the rise of a more cut-throat, me-first corporate culture — many of these have dwindled.
Pensions have been disappearing for decades. Health insurance costs for workers and retirees have been skyrocketing since the 1990’s. Let’s not forget that a less ‘generous’ Social Security may be replaced by… no Social Security at all.
Now a new study suggests that, for those born between 1955 and 1987, the situation is going to get worse, with the average age at which workers check out of the workforce climbing to 62.8 from 61.8, after already rising about two years since the mid-1990s.
While a shift in the average by a single year — or a total of three — might not seem like all that much, across the tens of millions of people included in the average, it represents a significant societal shift, says co-author Matthew Rutledge from the Center for Retirement Research at Boston College.
It gets worse: Rutledge adds that while future retirees might, on average, choose to hang it up at about age 63, many if not most would be smart to keep working even longer. “It’s going to 63. But ideally, it might move to 66,” he says, noting that the combination of increased savings and extra Social Security benefits accrued in those extra few years make the typical worker much more financially secure.
I think that those average age estimates are far too conservative, you can easily tack another 4-5 years onto those projections. Previous generations enjoyed the economic headwinds of Post-WWII America. Jobs that provided a decent living were easy to come by and the price of college tuition and student loans did not inspire the borrower to sell internal organs to pay it off.
The article does not mention the Student Loan Crisis. Save for the money that they will lose through Social Security, the fact that millions of young Americans are paying back student loans will force Millennials to work far past the age when their parents retired to Del Boca Vista. Don’t forget that if they are not paid back by the time you retire, Social Security will take that money from you.
What can change from all of this? Two things. 1- Millennials can fight for a reduced interest rate on their student loans. 2- Millennials, most of whom understand that Social Security will never compensate them for the money that they have put in, can demand that politicians allow us the chance to opt-out of Social Security. By doing this, we would have the option to use that stolen 6% of our income and address our finances as we see fit. If Millennials (and Generation X’ers) fail to take action, we will see many in our generations work ourselves until we drop dead.
-R.J. Renza, Jr.
Take a moment and sign the National Petition to Opt-Out of Social Security. The more signatures we gather, the more pressure we place on Congress and our political leaders.
This past month marked the release of my first e-book “How Are You Not Angry Yet: How Social Security is Destroying the Futures, Finances and Hopes of Generations X,Y and Z and How We Can Put and End to it,” which takes on Social Security from the perspective of young America in a visceral and humorous way. “Angry Yet” breaks down the complex topic of Social Security into a way that most Americans can easily understand and find entertaining and is available here.