National Retirement Expert: 75 needs to be the new 62

Last Updated Jun 3, 2010 12:24 AM EDT

Olivia Mitchell is one of the nation's foremost retirement experts, having spent an impressive career studying the evolving nature of retirement planning issues for individuals, corporations and government. The short version of Mitchell's resume is that she is a professor at the Wharton School at the University of Pennsylvania and executive director of the Pension Research Council. I'll let you peruse Mitchell's full 23-page CV at your own leisure.

So I was interested to read a recent PRC paper Mitchell penned that digs into some of the most pressing retirement security issues in the wake of the financial crisis.
Sugarcoating is not her way.

My message is straightforward and, I fear, not particularly upbeat: current and future generations of managers and employees will not be able to use the 'old fashioned' model of provisioning for retirement. Instead, the 21st century economy will require an entirely new perspective on retirement risk management.
From there Mitchell ticks off the big risks weighing on the current model: We're not saving enough, we don't have a clue how to deal with longevity risk -- in fact, we don't have a clue about basic financial concepts -- traditional pensions are in major trouble, the PBGC is not exactly rock solid, and then there's the little issue of Social Security, a topic near and dear to her heart, having served on the 2001 bipartisan presidential Commission to Strengthen Social Security
The Retirement Fix
Mitchell concludes the report with a perfectly serviceable call to action:
Part of the task is to enhance financial literacy and political responsibility. We will also need to save more, invest smarter, and insure better against longevity. Another task will be to develop new products which can be used to hedge longevity and better protect against very long term risks including inflation.
What struck me in her report was this final thought:
But when all is said and done, most of us will simply have to work longer to preserve some flexibility against shocks in the long run.
And there it is: one of the nation's foremost retirement thinkers concludes that at the end of the day, it's working longer that is going to be our ticket out of any shortfalls and "shocks."

Retire Early....at 75
Mitchell points out that working two to four more years can go a long way to closing a retirement funding gap. But that's directed at Baby Boomers. Given ever-expanding longevity forecasts for younger generations she has this bit of advice for Gen X and Gen Y:

For the younger generation, age 75 might be a good target for early retirement, and later if possible!
Confirmation, from one of the country's leading retirement thinkers, that 75 may indeed be the new 55.

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