Abolish Retirement!
Pascal-Emmanuel Gobry has a brilliant idea for saving Social Security: Make people work forever!
Old age is a period of long, gradual, inevitable decay, but I think it is self-evident that the more active you are, the more these effects are postponed and mitigated. I don’t have many statistics to quote on this but I think it’s out there and this is one of the cases where anecdotal evidence convinces me. I think we all know at least one elderly person whom, once settled into retirement, has gradually but markedly become less alert, in the broadest meaning of the word. Any doctor will tell you that the best way to postpone the effects of aging is to remain active.
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Old premise: work sucks, and after decades of toil, one has “earned the right” to get paid to do nothing. New premise: work is self-defined, self-led and empowering. Small-scale and global-reach entrepreneurship is a reality and this will make work a joy rather than a painful necessity.
Old premise: most work out there is physically taxing, shortens our lifespans, and can’t be performed well after a certain age. New premise: most work out there is/will increasingly be intellectually engaging, will lengthen our lifespans, and can be performed on a part-time and/or at-home basis.
Gobry doesn’t advocate forcing people to work, simply changing the expectation. He figures that people will take frequent sabbaticals and choose more flexible schedules later in life.
This is all sensible, really, for people who remain healthy and whose jobs require no activity more physically stressful than hammering out an email, clearing a jammed copier, or lugging a mug of coffee back from the break room. I don’t envision myself ever quitting work; even if I won the lottery or otherwise became independently wealthy, I’d still want to engage myself in mental challenges.
Then again, I’m not a coal miner or construction worker or house mover. Not to be too terribly condescending, but I’m guessing those people get far less empowerment and joy out of their jobs than your average public intellectual or graduate of France’s top law school currently enrolled in France’s top business school. Further, while my technology crystal ball is cloudy, I’m guessing those jobs won’t allow telecommuting.
It seems to me that we need to figure out a way to ensure that people who work physically demanding, psychically unrewarding jobs are taken care of in old age without creating perverse incentives for the rest of us to quit work a decade too soon.
Photo by Flickr user 1Sock under Creative Commons license.
Sure. Now all you gotta do is to convince people to hire someone over 65. Good luck with that.
Written like an academic or other white collar worker. Things are different for construction workers, workers in heavy industries, or those who’ve worked in repetitive factory jobs.
Here’s my proposal. Let’s pass a constitutional amendment that denies licenses to practice to doctors and lawyers over the age of 60. Things may start looking a lot different.
And where will the additional jobs come from? Our economy hasn’t produced enough jobs just for the young people entering the market in quite some time now. This will aggravate that problem.
I would also like some support for the claim that most of the new jobs being created are “intellectually engaging, will lengthen our lifespans, and can be performed on a part-time and/or at-home basis”.
I read a serious article yesterday which argued that American wealth (and inequality) has been coming increasingly out of bubbles. The wealthy, or the lucky, are positioned to profit from from a bubble, and if they can keep their winnings safe, can be good for traditional retirement.
At the same time, I think it’s become harder for workers (blue or white collar) to put away funds for a real retirement. As a recent book puts it, A Million Is Not Enough.
In a way its doubly-sad, because the “vanguard method”, putting a healthy slug of savings into steady index stock and bond funds would get many workers to that million – but the bubble expectation leads people astray.
We don’t live frugally while topping up our bond funds. We risk it all with 100% stock allocations … we watch Cramer for God’s sake.
This leaves a generation with little. An average retirement savings of $88K? There is a little bit of a gap there.
“In a way its doubly-sad, because the “vanguard method”, putting a healthy slug of savings into steady index stock and bond funds would get many workers to that million – but the bubble expectation leads people astray.”
I couldn’t agree more. The instant gratification culture lures people into chasing yield vs slow and steady wealth accumulation. And yet the latter, plus diversification, are the oldest and truest axioms in investment.
For all the bitching and moaning about the “tea parties,” they really are just an adverse reaction to similar instant gratification proclivities. Overconsume and don’t save for retirement? Tax your neighbor. Buy too big a house? Tax your neighbor. Run your company into the ground? Tax your neighbor. Want some goodies? Vote for the pol who promises them. Those watching this, especially if they are footing the bill, are just plain tired of it…….not CNN of course.
Its just as unsustainable and bone headed an approach as 100% allocations to the stock market.
Does that even apply to most current jobs?
You’d probably need high savings rates on their parts, combined with possible assistance from the government if the wages in question don’t allow for savings in a significant way (and they frequently don’t if it is a low-level job). Maybe some type of “savings-matching” program up to a certain amount, tied to inflation? You could even transfer the money from a tax on investment income.
For that matter, perhaps you could just make it an extension of the welfare programs; if anyone’s income drops below a certain amount (regardless of age), they get support. If you want to discourage younger workers from taking advantage of it, have it shift from an “in-kind” support (like food stamps) to direct funds and/or voucher assistance after a certain age threshold.
@Drew
I’m willing to bet that most of the folks who’ve seen their 401(k)s decline precipitously over the last year were, in fact, going down the slow but steady route. I don’t have any statistical evidence for that, just what I’ve heard from some folks. Certainly, and close to home, in mine and my wife’s cases, we are pretty conserative in our retirement accounts, but that didn’t prevent us taking some pretty good hits.
The ancient rule was “your age in bonds.” Those older would have less in stocks, but would have also enjoyed the 80’s and 90’s run-up. That would have protected people fairly well. A good hit yes, but what can you do?
Those younger have the consolation that they can buy low now for their future.
(The ancient rule is was diluted though, as people became accustomed to long bull markets. I believe, for instance, that the common “Target” funds use lower bond ratios.)
sam –
I’ll take that bet anyday. The statistics on a diversified portfolio for any 20 year period for anyone alive today would make your assertion incorrect.
And for those who are young, and were all equity, the jury is of course still out.
Its a lifetime approach. That’s why they call it retirement money.
Drew:
Well, perhaps. But, as I said, just judging from whom I’ve talked to, I don’t get the impression that these folks were plungers of any sort. My take is that they had their money in fairly middle of the road, diversified funds (I know I did), nothing flashy, or too risky, or at least that’s what they believed.
Not to get too far off topic, but I had a pastor when I was young that denounced investing in the stock market as gambling. While it’s easy to laugh at this, it’s mostly true for many people who don’t perform the due diligence that equity investment requires.
An interesting statement. Perhaps they should be paid more for the toll their body takes?
Note: I’m trying a different name/e-mail as I’m getting blocked by the anti-spam filter no matter what I say. Perhaps JJ is trying to tell me something. -Franklin
sam –
The fields of finance and investment are serious subjects and have been subjected to rigorous study and commercial practice for years. They are an important responsibility for individuals and deserve more than a cursory “well my beer buddies say.”
Further, when you say “they were in MOR diversified funds” you appear to miss the point. Their portfolio should have been comprised of diversified investment funds distributed and appropriately weighted by age/risk tolerance over a set of asset classes.