Last Updated Apr 6, 2009 4:57 PM EDT
Professor Alicia Munnell
Alicia Munnell could be enjoying her retirement, but she's
hard at work thinking about yours. Her message is a bracing dose of tough love: Like it or not, in today's economy you're almost certainly going to have to postpone your retirement by a few years.
That's not easy to take, and it may not be easy to do,
either. But it doesn't have to be a bummer. In an interview with
MoneyWatch, retirement guru Munnell, who heads the Center for Retirement Research at Boston College, outlines how to stay in the game as long as you
need — and enjoy it, too.
A sharp decline in market and home values has convinced many people they’ll
need to work longer. But can they?
The most obvious problem right now is the
economy. It is a very difficult market to keep a job. The irony is that just as
people recognize the need to work longer there are strong forces working
[But] after this crisis is over, older workers need to face
the fact that their productivity is, on average, equal to or lower than that of
a younger person, whereas their cost to employers is either equivalent
or higher. Basically, wages tend to go up and health care costs rise. And if
you happen to have an old-fashioned defined benefit plan, those costs to
employers are, of course, higher for you. So you have this basic mismatch
between the productivity and the cost of older workers.
So, if I am an older worker, I have a bull’s-eye on my back?
It would be helpful to recognize that, on
average, the cost-benefit calculation from the employer’s perspective
is not favorable for you. So you really have to sell yourself. That involves
saying to your employer, “Listen, I am planning to work until I am
67, and I am only 57 now, so that means you can count on me for ten years. I
know what this company is about, and I want to be considered for training and
promotion.” That goes over better with bosses than just sitting
around going through Florida brochures.
What happened to early retirement? This is depressing.
When you suggest that working longer is the
solution, there is this reaction: “I can’t work until my
90s!” [laughter] You don’t have to. We just want to get the
message out that working two to four years longer makes such a huge difference
[in your retirement security]. It’s not working forever. And we
shouldn’t feel so persecuted for having to work longer. It treats
work as this horrible burden. In fact, it is a calming thing to have that
structure, and the social interaction and sense of accomplishment.
Besides an investing plan, we need a work strategy?
What’s a good employment strategy if you’re
in your 40s?
You can’t bumble along. You need
to pick an age that it makes sense to retire and then, like a horse with
blinders, stay focused on that goal. And you need to recognize that the ideal
retirement age is your mid- to late 60s. Your 50s is no time to start moving
into part time or sliding into retirement. I find this whole notion of gradual
retirement just dangerous. At least it is when people in their 50s think that
it applies to them.
Given that what you are doing today you are going to be
doing for a long time, it is important to have a job that you enjoy, to the
extent possible. Have a job that you can age with. Or, if you have a
high-stress position today, start thinking about some trajectory that will take
you to lower-pressure jobs as you age, but still build on your skills.
As you get older, there’s this tendency to get rid
of things you don’t enjoy — people you don’t
like, furniture you don’t like, clothes you don’t like.
Psychologists we work with here refer to it as positivizing. To
the extent work is distasteful as you age, there is this tendency to say, “I’m
out of there,” and basically quit for what, in retrospect, look like
frivolous reasons. You come home from a business trip stuck in the middle seat
and say, “Never again.” Or you take a week off because of a
broken ankle and enjoyed it, so you think you don’t need to work any
Our hope is that if you know this about yourself — that it is
a natural response — that maybe you can censor yourself a bit and not
make decisions that don’t really work for you. We all just suck it up
when we are young. Now we’re just going to have to suck it up longer.
Interested in reading more on the topic? Consider
these studies from the Center for Retirement Research at Boston College:
Munnell’s most recent book, co-authored with CRR
colleague Steven Sass, is Working Longer: The Solution to the Retirement