If 60 Is the New 40, Is 80 the New Retirement?

Mature female executive using smartphone in office, smiling.?
Mature female executive using smartphone in office, smiling.?

In Europe, 2012 has been named the year of "Active Aging and Intergenerational Solidarity." It may sound like a mouthful of bureaucratese from Brussels -- and maybe it is -- but it hits a critical nerve. In a world where multiple generations must share everything from cubicle space to budget deficits, cooperation among the generations will prove essential to social, political and economic health. If the 20th century was made better by great leaps in racial and gender equality, the 21st century's progress will hinge upon how we manage the "aging populations" challenge.

Should European policymakers be applauded for dedicating 2012 to "intergenerational solidarity"? Maybe. The verdict is still out, and it will take follow-through from government, businesses, NGOs and what the Europeans like to call "civil society" in order to validate the year-long ado.

Has a European business, for example, been inspired by the EU's sloganeering to create an age-friendly workplace? Has the WHO's Age-Friendly Cities initiative taken better hold across European cities because of it? Will Europeans increase funding to biomedical research to find the next generation of cures for age-related diseases like diabetes, cardiovascular disease and Alzheimer's?

We'll have to wait and see. And European leaders should take note: The stakes are high, and the cost of failure is becoming better known. As the world is well aware, the United States is about to enter what is hyperbolized as "the most important election in history." But, as The National Journal points out, the U.S.'s greatest division might not be its political split. From the U.S.'s loudest political voice comes a new assessment of a non-political divide in America. According to The National Journal, this one's generational.

In "My Father, The Parasite," Jim Tankersley analyzes how the Boomers "took the economic equivalent of a king salmon from their parents and, before they passed it on, gobbled everything but the bones." At the heart of Tankersley's argument is the rising costs of Social Security and Medicare, two expenses that, he contends, will prove crippling to younger generations who are already burdened by the inflated educational costs that are required "to move into the middle class, or even to simply hold on to the middle-class lifestyle."

Tankersley cites one study from the Urban Institute that estimates that "a couple retiring in 2011, having both earned average wages, will accrue about $200,000 more in Medicare and Social Security benefits over their lifetimes than they paid in taxes to support those programs." And last year, "Social Security and Medicare payments accounted for over half of what the federal government takes in, compared with 21 percent in the 1970s."

It's a disturbing arithmetic indeed, one that has been in part brought about by two forces. On one hand, life expectancies are up, and the Baby Boomer generation is passing into retirement age. This is putting unprecedented force on age-related entitlements, and the bill is being passed on to the working population. On the other hand, a new phenomenon has arisen that George Will of The Washington Post calls the "gaming" and "defrauding" of disability entitlements. Will cites a new paper by demographer and economist Nicholas Eberstadt, which argues that there has been "an unprecedented exit from gainful work by adult men" over the past few decades. In 1960, "roughly 134 Americans were engaged in gainful employment for every officially disabled worker; by December 2010, there were just over 16." And this increase, Will points out, has occurred as workplaces have become far safer. This is exactly the opposite of what we need to happen during an era when we are living over three decades longer than when these "entitlements" were invented.

But, if these two trends add up to a deluge of entitlement spending, there is some good news. We are beginning to move past the old ideas that we should retire in our 60's. This retirement age, more and more people are beginning to realize, is neither desirable nor feasible.

A recent survey by Wells Fargo, for example, shows that more and more people believe that a realistic retirement age is 80. Indeed, "30% of middle-class Americans believe they will need to work until they are at least 80-years-old in order to retire comfortably," an increase of 25% from a year ago.

The survey also shows that Americans are beginning to take greater ownership of their finances for retirement, "saying their savings and investment should make up 50% of their retirement funding; 27% through a pension and 24% through social security."

But if the numbers don't drive home the point, perhaps MediaBistro's take on the survey will: "If 65 is the new 40, then 80 is the new retirement age. Or something like that."

The point, ultimately, is that a new set of ideas is emerging about retirement and retirement funding. The daunting figures that The National Journal cites are projections of past perceptions on the future. But as we're seeing -- from finance to politics and pop culture -- a new "culture" of aging is emerging, and a healthier, more active, and more productive aging process is going to ease the financial crunch that younger generations are feeling.

To be sure, it's hard to argue with Tankersley's piece about Boomers being "leeches." But this is also the generation that brought the world everything from Bill Gate's PC to Stevie Wonder's synthesizer. The Boomers have changed the world, and it would be a shame to write us off now as intractable blood suckers. Thanks to The National Journal for bringing it up, but shame on you for selling us short.

Michael Hodin writes the Age and Reason blog for The Fiscal Times