Running Head: Retirement1

Retirement: Reprieve or Reclamation?

Randall L. Noggle

SOC402: Contemporary Social Problems & the Workplace

Instructor: Dr. Gina Rollings

5/12/14

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Retirement was once considered a reward for being in the workforce your entire life. It

was almost a reprieve, if you will, from the demands of daily life allowing leisure to be stressed

over making a wage. This is no longer the case in our current societal landscape. Retirement is

now a completely different social problem and has many implications that have not been

prevalent in the generations of the past. As our aging population creeps closer and closer to the

traditional retirement age, we are stumbling across new developments that are, and will continue,

to affect retirement. It is almost as if the earliest years of retirement have be reclaimed by

society as a continuation of workable years, out of the necessity of financial obligations and in

the absence thorough planning. According to the Pew Research Center in 2010, “By 2030, when

all Baby Boomers will have turned 65, fully 18% of the nation's population will be at least that

age" (Giraffe, 2011). The recent developments in retirement issues of reason for retirement,

dwindling social security, and the cost of healthcare are changing the way our society is handling

retirement on both an economic and social level.

The first step in retirement is deciding the reason for retirement. The reasoning behind a

person choosing to retire can vary widely and is a complicated decision. Choosing to remain in

the workforce is a difficult choice including many factors. A potential retiree has to consider

financial obligations, health concerns (physical and mental), ability to perform their job, other

potential areas of employment, and the type of lifestyle they wish to have during retirement. In

an article of Benefits Quarterly, it says about that when considering retirement, “The decision

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requires the skill of an actuary, the rationality of an economist, and the ingenuity of a lawyer”

(Tacchino & Tacchino, 2013).

There are so many things to consider when one creeps up on the traditional retirement

age. The initial thought process entails the financial aspects of continuing the individual’s same

standards of living while not earning a wage. This includes accounting for medication and

healthcare, clothing, food, entertainment, emergencies, and essentially, everything that may go

unnoticed while full wages are still being earned. One of the biggest issues that people face is

outliving their savings because the increase in life expectancy and inflation rate (Yakoboski,

2011). The life expectancy of 2010 was 78.7 years, which is retiring at the traditional age of 62,

gives an individual at least 17 years’ worth of financial planning to do (Murphy, Xu, &

Kochanek, 2013).

As the average life expectancy continues so slowly get longer and longer, the impacts of

healthcare in retirement become more and more obvious. Prolonged life means more than just

doctor visits and medication, but also the addition of health supports and healthy activity to

maintain a state of functional health. Or in some cases, it may mean the prolonging of assisted or

dependent living because of poor physical mental health. Very few people financially plan for

the costs associated with the potential need for assisted or dependent living.

While the financial and physical health aspects of retirement are the most commonly

discussed issues, the psychological aspect is equally important. According to Melissa Knoll, the

idea of “freedom” from being in a career and still having disposable funds, as opposed to living

on a highly structured budget associated with retirement from savings plans and social security,

is compromised when an individual retires (Knoll, 2011). This perceived loss of freedom can

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have serious consequences on an individual, especially after a life lived of being able to save or

splurge depending on their mood and situation. This can also lead to the aging population to

remain employed, even if part time, so that that sense of freedom is still intact and not solely

depending on their savings or social security as their only means of financial support.

There is also the matter of if retirement was a decision of choice, or whether it was a

forced action. “Forced action” does not necessarily mean an employer didn’t give them the

option. Rules on mandatory retirement age have been done away with in a lot of private sector

jobs. With the aging population, anti-discrimination laws against age have helped see to that

(Gokhale, 2004). Some examples of forced retirement are: loss of job due to downsizing,

disability, or caring for a spouse (Forced into Early Retirement…, 2007). There are still some

both private and public-sector jobs that have legal mandatory age retirement rules, but they have

to do with the emphasis on safety and effective conduct, such as police, firefighters, correctional

facility officers, air-traffic controllers and commercial airline pilots (Gorkhale, 2004).

Many employers offer severance packages and retirement benefits in order to tempt,

some daresay coerce, older employees into retirement. Some even allow very experience the

opportunity to be semi-retired while remaining within the company for training purposes,

mentoring, or consultation. While these employees can still earn a wage or salary, often times it

is earned with no other benefits because they are part-time vs. full-time. This practice allows

employers to still retain knowledgeable and value employers and not have to pay a great time for

younger talent. It also provides employees the chance to earn some income and still feel

productive in society, which is a common issue with retired persons. In addition, this part-time

work can also afford them the opportunity to still collect social security benefits.

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With the massive amount of aging baby boomers that have been and soon will be

collecting social security benefits, a great deal of strain has been put on the current system that is

in place for allocating benefits to those who have decided to retire, either fully or partially.

According to Rethinking the Social Security Start Date, “Over 50% eligible have claimed and

will claim their Social Security retired-worker benefits at age 62, the earliest possible age under

law” (Tacchino, Littell, & Schobel, 2011). The earliest baby boomers, or “leading edge” sub

cohorts as Migliaccio refers to the age group born between 1946-1951 in Urban Myths, Baby

Boomers, and the Effective Financial Professional (2013), are already in the process of

beginning retirement, and over the next ten to fifteen years we will see this increase dramatically

as the Middle and Trailing Edge sub cohort groups reach retirement age (Migliaccio, 2013).

This, with the added anticipated lower birthrates of post baby boomer generations and the

increase of longevity, the current Social Security system is facing challenges to keep up (Kovela,

2012).

For these people who decide to start collecting Social Security benefits early, they do so

at a cost. They will receive only part of their benefit pay, while those who wait can receive a

significantly higher amount. For instance, a person who starts drawing on Social Security at age

62 will only receive 75% of their planned monthly income, while someone who waits until they

are 70 will receive 132% of that monthly income (Tacchino, Littell, Schobel, 2011). As it can be

seen, waiting to collect social security has a huge difference in disbursement of benefits. It is

interesting that some many are opting to start receiving benefits early, since only 36% plan on

heavily relying on Social Security for financial support (Duska, 2013). If these individuals were

capable of working any additional years on a full time basis, not only would it help to support

them later in life, but it would also help keep the system from being over-stressed.

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As we can see, it is advantageous for country and self for an individual to remain

working past the minimum retirement age. However, this creates additional stress on bodies that

have already experienced years upon years of work, which can lead to health issues. The cost of

healthcare is simply just increasing all around, let alone with the generation of baby boomers not

being in excellent health. When long-term healthcare is also factored in as a very real and likely

possibility, retirement can be delayed or individuals may re-enter the workforce (if capable) to

combat unexpected expenses.

These expenses are not always unexpected though. In the article Worries and Plans as

Individuals Approach Retirement, it is estimated that a person retiring at age 65 today will need

over $100,000 to cover their medical expenses, and in some situations over $200,000

(Yakoboski, 2011). While this seems like an immense amount of money, it is an essential part of

retirement planning. There is an interesting correlation between physical health and educational

level and the likelihood of retirement security for covering medical bills. Those more educated,

healthy individuals are more likely to be prepared than those less-educated individuals in poorer

health. Likewise, those who are less-educated about what all to consider about retirement besides

dependence on Social Security and to save a little money to help out. It is a lack of public

awareness and education.

The advancements our society has made in the medical field are a double-edged sword

for retirees. These advancements has given us additional years of life and functionality to enjoy

retirement as it is supposed to be, and possibly prolonging our time until retiring on either a part

or full-time level. However, those same benefits can also be downfalls. We may receive an extra

two, four or six years of life, but at a significant cost and lowered quality of life. If an individual

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outlives their savings and is forced to rely completely on the failing Social Security system, then

their overall health—mental, physical, and financial—will suffer as a result.

With all of the previously stated issues to consider, more and more near-retirement aged

individuals are prolonging their retirement and choosing to remain in the workforce. For

instance, I work in a factory that handles mail, and in my department I have 18 employees on my

shift. Of those 18 employees, only five employees are under the age of 45. Of those 13 remaining

employees, one is over 60 and three are over 50. My department has the overall lowest

percentage of near-retirement aged employees. In short, the factory in which I work has an older,

aging workforce. I have had two employees retire in the last year, and both of which were over

60.

Retirement has been, obviously, an issue of discussion in my workplace. There are a

couple of benefits my employer provides to help with the transition out of the workplace. First,

once you are a full time employee, you are capable to start (or transfer over a pre-existing) 401K

plan. Also, upon retirement, you are allowed to “cash-in” any unused PTO time that you were

granted for that year. While it may not seem like a lot, I have employees for have almost two

months’ worth of PTO at their disposal. Every little bit helps for retirement.

Now, there are significant social issues to deal with in my workplace with an aging

workforce. There is a stark contrast in the approach to work for my employees. Those near-

retirement employees between the ages of 45 and 60 are the hardest working and most likely to

follow and stay within work guidelines for conduct, while the few younger and much older

employees are more inclined to not listen or have below average production. Neither instance of

below average production is related to physical capability, but rather approach to work. Also,

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learning new techniques, utilizing newer technologies, and adopting new processes that differ

greatly from “how it’s always been done” have cause a great deal of trouble in regards to

training.

To combat the difficulties in training life-long, older employees who have a slightly more

difficult time learning new processes that are in contrast to what they have been doing for years,

the training process has been spread out. My company allows ample time to learn new tasks and

further training is dependent on both the employee and trainer’s opinion of individual’s grasp of

what is being trained. This also entails employees who are not meeting production requirements,

which are predominantly the oldest employees. This, in turn, has lead a few employees within

the last two years to retire because of the inability to either learn the new processes or meet the

physical requirements of the job.

There are a variety of ways to improve the current state of retirement. The first is to

reduce the social stigma of being retired as being non-functional. Being retired seems to be a

social “death sentence” in some career fields such as manufacturing, and often retired person,

despite anti-discriminatory laws in place, are confined to gas station attendants and the fast food

industry. More companies should participate in allowing semi-retired employees to stay within

the company for training purposes being as that some career fields thrive on experience. While it

is understandable that some professions still have mandatory retirement age rules, these forced

retirements should be on an individual basis as opposed to a very ambiguous age that was set

decades ago and does not take into consideration the improvements of healthcare and also the

value of skilled employees needed to operate in a more automated society.

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How we are able to handle the new and increasingly widespread social and economic

issues of retirement lie in understanding and improving upon the reasons for retirement,

dwindling social security, and the cost of healthcare. By making more people aware of these

future decisions, we will be fostering a much-needed re-evaluation of retirement issues. Also, by

making individuals competent in proper retirement planning, we will be improving the overall

quality and ability of retirement. The entire concept of retirement has changed over the last two

decades because of improvements in healthcare which have led to people living longer and either

being in the workforce or retired for a longer period of time. This calls for not just a re-

evaluation, but an entire re-vamping of a system that will ultimately fail given the upcoming

challenges of an overabundance of retired persons.

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References

Batsell, M. (2013). The Role of Long-Term Care in Planning for Retirement. Journal of Financial Service Professionals, 67(5), 39-40.

Duska, R. (2013). Baby Boomers, Retirement, and Financial Services. Journal of Financial Service Professionals, 67(3), 13-16.

Five Key Issues in Retirement Planning. (2005). CPA Journal, 75(9), 20.

Forced into Early Retirement…. (2007). Journal of Financial Planning, 20(7), 10.

Giraffe, V. (2011). Contemporary social problems and the workplace. San Diego, CA: Bridgepoint Education, Inc.

Gokhale, J. (2004, September). Mandatory Retirement Age Rules: Is It Time To Re-evaluate? Cato Institute. Retrieved from http://www.cato.org/publications/congressional-testimony/mandatory-retirement-age-rules-is-it-time-reevaluate.

Knoll, M. (2011). Behavioral and Psychological Aspects of the Retirement Decision. Social Security Bulletin, 71(4). Retrieved from http://www.ssa.gov/policy/docs/ssb/v71n4/v71n4p15.html.

Koleva, Y. (2012). The Outlook for Social Security Reform: Proposals and Implications. Journal of Financial Service Professionals, 66(3), 26-31.

Migliaccio, J. N. (2013). Urban Myths, Baby Boomers, and the Effective Financial Professional. Journal of Financial Service Professionals, 67(3), 33-40.

Murphy, S. L., Xu, Jiaquan, Kochanek, K. D. (2013, May). Deaths: Final Data for 2010. National Vitals Statistics Reports, 61(4). Retrieved from http://www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_04.pdf.

Tacchino, K., Littell, D. A., & Schobel, B. D. (2011). Rethinking the Social Security Start Date. Journal of Financial Service Professionals, 65(5), 9-11.

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Tacchino, K. B., & Tacchino, P. S. (2013). 25 Factors Influencing the Choice of a Client's Optimal Retirement Age. Benefits Quarterly, 29(1), 39-47.

Yakoboski, P. J. (2011). Worries and Plans as Individuals Approach Retirement. Benefits Quarterly, 27(2), 34-37.