Why You'll Work Through Your Retirement

The recession is only one of several trends combining to change the way Americans live out their golden years

By Chris Farrell

There is a major social and cultural message in the current economic collapse for the future retirees of America: Forget retirement.

That's right. The recession is making clear what we've suspected for a long time. The concept of not working and embracing leisure for the last third of one's life isn't practical for most people.

Put it this way: Survey after survey has shown that a majority of aging baby boomers plan on working in retirement. Well, that plan is coming true.

How Insecurity Led to a Security Net

Economic downturns often accelerate change. For instance, in the latter part of the 19th century, the country moved from a rural, farm economy to an urban, industrial one. The wealthy associated old age with leisure, but for everyone else it usually meant involuntary unemployment and a humiliating dependence upon family, charity, or community organizations for shelter and food. Policy reformers agitated for some kind of a financial safety net for the nation's impoverished and isolated elderly.

Not much happened until the Great Depression. It was an economic disaster for families, especially the elderly "as they watched their hard-won assets vanish, and with them their hopes for an independent and secure old age," write historians Carole Haber and Brian Gratton in Old Age and the Search for Security. (Sound familiar?) Traditional middle-class objections to a national safety net crumbled with the Depression. Social Security became law in 1935.

"The real or incipient collapse of individual households helps to explain the widespread popularity of Social Security," say Haber and Gratton.

Our image of retirement is still shaped by the early decades after World War II. The elderly poverty rate plunged thanks to Social Security. Older Americans gained universal health-care coverage with Medicare in 1965. And Corporate America offered workers defined-benefit pension plans based on a salary and years-of-service formula.

It was in these years that retirees developed a distinct lifestyle captured by the mass migration to Sunbelt communities, traveling in RVs and bus tours, spending long mornings on the golf course, and other recreational pursuits. The development of modern retirement is a great social achievement of the 20th century.

But in the 21st century, the underlying economics of retirement are changing.

Living Longer, Working Longer

On the positive side, we're living longer. Average life expectancy is now about 78 years, up from 61 years when Social Security became law. We're healthier, too. Disabilities among the elderly are declining, thanks to a combination of healthier lifestyles and medical advances.

A seismic shift in the economy and workplace is making it easier for an aging population to labor longer. An information- and services-dominated economy will ease the transition to longer working lives. Simply put, toiling away on a computer in medical diagnostics or government bureaucracy is far less demanding than manning an auto assembly line or mining for gold. The rise of an economy based on intangibles and longer life expectancy is behind more than a decade's worth of scholarly research, aging conferences, and popular press articles trying to redefine retirement.