A Little Work Never Hurt Anyone

It's a good thing the American people have more common sense than their political leaders do. If the United States dodges Boomergeddon, the age wave apocalypse, we will have the citizenry to thank, not the panderers in Washington, D.C. Repeated opinion surveys have shown that Americans are changing their expectations about retirement. For the first time in more than 100 years, it's possible that Americans, on average, will start retiring later in life, not earlier. That could ease the excruciating financial pressure on the nation's old-age entitlement programs.

According to "Retirement at the Tipping Point," a report issued by the Age Wave consulting firm, pre-retirees say they will need to postpone their retirement by 4.2 years on average. Baby Boomers, who are closest to retirement, figure on delaying it by 3.6 years, Gen Xers and Millennials (Gen Ys) by as much as five years.

As the table below, taken from the Age Wave study, shows, the trend toward earlier retirement reached a plateau in the 1980s that has remain largely fixed for 25 years. Thanks to longer life expectancies, though, Americans are spending more years in retirement.


If you think about it, the social trends of (a) living longer and (b) retiring earlier are difficult to sustain. The Age Wave study discusses a concept called the "work-to-retirement" ratio, the number of years an average American works expressed as a ratio of the number of years they spend in retirement.

A century ago, when the average retirement age was 74 and life expectancies were far shorter than today, retirements tended to be short. Really short. On average, Americans spent 54 years working for every year they spent in retirement. By 1950 that ratio had improved considerably: On average, Americans spent 6.3 years working for every year they spent in retirement. That ratio has continued to improve, reaching the point in 2005 when Americans spent 2.2 years working for every year in retirement.

Let's express that another way: Americans are spending one third of their adult (post-education) years in retirement.

Americans are now realizing that expectations for so much leisure time are unrealistic. One reason people are having such trouble saving sufficient sums for retirement is that they aren't working long enough. (Remember, much of wealth accumulation comes from the simple power of compound interest.) Similarly, one reason Social Security and Medicare will run out of money is that the number of Americans working and paying into the system will be too small to support the number of retirees drawing benefits.

Many politicians and pundits persist in peddling the fantasy that we can continue expanding our entitlements without bankrupting the country. The American people have more sense: They know they have to work longer. Now, let's see if they actually do.

Postscript: European opinion seems to be going in the wrong direction. Governing elites understand the fiscal dilemma posed by their nations' rich retirement programs, but the people are less than enthusiastic about the idea of delaying retirement. Indeed, a majority of citizens in Spain (67%), Italy (60%), France (57%), Greece (57%) and Austria (54%) say they want to retire earlier, according to a recent French survey. Large minorities in northern Europe want the same thing.