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Worth a Read

Ken Cutler

DURING THE 1990s, I subscribed for several years to Worth, a financial magazine that targets high-net-worth individuals. I enjoyed reading articles that were, for the most part, geared toward folks in a far loftier tax bracket.

One article, in particular, stayed with me: “The Rise and Fall of Retirement” by Stephen M. Pollan and Mark Levine, which appeared in the December-January 1995 edition. Pollan died in 2018. His daughter is Tracy Pollan, the wife of actor Michael J. Fox. But I digress.

I’ve read the article probably a dozen times over the years. I actually tore it out of the magazine and have it filed away. Its premises and arguments became part of the fabric of my financial thinking. The summary blurb under the headline reads: “Scared you won’t be able to retire? Give thanks instead. Retirement is a weird social experiment, a historical blip. Its collapse will be a triumph of common sense.”

After an interesting review of the history of retirement—a quite recent development in the course of human history—the article goes on to argue that retirement is not only obsolete, but also unaffordable. It examined the future of five income streams that the average retiree lives on: government assistance, personal wealth, pension income, wage earnings, and other sources such as inheritances.

The first three sources of retirement income are headed downward, the article contended. We all know about the funding challenges facing Social Security and Medicare. The article’s argument regarding personal wealth is a bit dated, but it was based on the premise that the outsized investment and real estate gains that the Greatest Generation enjoyed would not continue for the baby boomers. Meanwhile, as the authors predicted, pensions—at least in the private sector—have become significantly less common than they were at the time the article was written.

With respect to inheritances, the authors said that even if boomers were to receive bigger inheritances, it would not be a silver bullet. The average inheritance was a bit over $70,000 at the time of the article, not nearly enough to guarantee a comfortable retirement. And so, wage earnings were left as the final source of retiree income, and the one that must be embraced for most older folks to stay afloat.

The authors’ conclusion: “Add up the numbers. The top three sources of retirement income are headed downward; only the smallest source (inheritances) has any chance of rising. For many people, that leaves a big gap to be closed by wages. Short of something unforeseen—the dawn of fusion power, huge mineral discoveries—there will be only two options. Work longer. Or live on less. That’s the end of retirement as we know it. It’s not bad news, though. Just the passing of a bad idea.”

Why a bad idea? Doesn’t everyone dream of a leisure-filled, stress-free retirement? Here’s some more from the authors: “More broadly, the idea of a discrete move from work to leisure must change. Work is not a cliff we scale and then get tossed off at age 65. Rather, it’s a hill over which we should plot our own course. Most people will begin descending the hill at some stage, but they’ll likely choose a gently sloping path. Many won’t reach the valley of complete leisure before they die—they won’t want to. What’s needed is a return to the kind of environment that predated industrialization, one in which older people are seen a resource rather than a drain.”

The authors advocated for flexible work schedules, telecommuting, job-sharing, more opportunities for part-time work for retirees, and eliminating the ultimatum of retirement, “the false choice between fulltime and no time.” In the years since the article was written, these formerly rare options have indeed proliferated, making it considerably easier for older folks to continue making workplace contributions.

Another thought-provoking quote: “The marketing of retirement has produced a society that’s ill at ease and full of contradictions. Think about it. Isn’t there something wrong when we kvetch that people with limited skills collect welfare rather than work—but ask our most valuable contributors to spend their days on a golf course?”

Many of my retired friends, most in their early 60s, seem quite content with their lives and have no desire to return to the workforce. Been there, done that. Yet, as the article states, “However it is defined, work is an integral part of human life.” Even after retiring from our primary career, we need activities that provide meaning and, for many of us, I suspect fulltime leisure doesn’t cut it.

Some of the happiest retirees I know are those who are actively involved in the lives of their grandchildren. Others are finding meaning doing significant work in their churches, volunteering in the community or working part-time in jobs where they can truly serve people. What about me? As my career winds down, I’ve been identifying meaningful activities for my retirement years.

Ken Cutler lives in Lancaster, Pennsylvania, and has worked as an electrical engineer in the nuclear power industry for more than 38 years. There, he has become an informal financial advisor for many of his coworkers. Ken is involved in his church, enjoys traveling and hiking with his wife Lisa, is a shortwave radio hobbyist, and has a soft spot for cats and dogs. Check out Ken’s earlier articles.

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