Conference Presentation, Panel
Is Retirement Extinct?
Milken InstitutePaul Irving, Arthur Bilger, Teresa Ghilarducci, Kathleen Kennedy Townsend, Penny Pennington, Rick McGee, Linnea McCart, Katherine Collinson
- Panel Focus: The session, titled "Retirement is Extinct," examines the future of retirement in the U.S. with a focus on redefining it beyond "disengagement" (decline, removal) to a model of "purpose, meaning, and dignity."
- Health Risks of Unplanned Retirement: Research indicates that retiring without a plan or financial security often leads to sedentary behavior, social isolation, cognitive decline, and depression.
- Financial Reality vs. Aspirations: Edward Jones Managing Partner Penny P. Peddington notes that while 7 million clients seek "dignified retirement," the reality involves a hyper-personalized "script" for each individual rather than a uniform model.
- Purpose as a Driver: Kathleen Kennedy Townsend emphasizes that seniors who volunteer, particularly with younger generations, report higher well-being and longevity than those who do not contribute.
- Health Impact of Low-Wage Work: New School Professor Teresa Ghilarducci cites data showing that for women in service/gig work, working past age 65 often erodes health and increases morbidity due to physical demands and lack of control over time.
- Wealth and Longevity Gap: U.S. longevity gains are disproportionately accrued to the top 20% of income earners; conversely, the bottom third faces shrinking life expectancy predictions and higher rates of chronic disability.
- Retirement Duration Disparity: Data from the Health and Retirement Survey reveals that women in the bottom wealth third have only 15.9 years of retirement, with one-third of that time spent in poor health, compared to 20 years of healthier retirement for the top third.
- Structural Unemployment Threats: Art Bilger highlights that the "slope of change" in job skills is steeper than ever, driven by automation (e.g., autonomous vehicles, AI marketing) which threatens middle-class jobs previously held for decades.
- Reskilling Imperative: Bilger asserts that lifelong learning is critical, noting that 48-year-olds now face the need to re-skill more frequently than any previous generation.
- U.S. Poverty Statistics: The U.S. holds the highest elder poverty rate among G7 nations, with one in five elders experiencing chronic deprivation, despite having banned mandatory retirement.
- Employer Coverage Gap: Approximately 60 million Americans, primarily in small businesses (under 100 employees), lack access to employer-sponsored retirement plans.
- Savings Behavior: The median U.S. savings rate is effectively zero, leading Gallup to report that 80% of Americans fear retirement more than death.
- Millennial Response: Millennials are starting to save at age 22 (13 years earlier than Boomers) due to anxiety over their parents' retirement security and exposure to the gig economy.
- Policy Solution Proposal (GRA): Ghilarducci and Townsend advocate for a "Guaranteed Retirement Account" (GRA) that automatically deducts 1.5% from paychecks for those without employer plans, matched by the employer and supplemented by a refundable tax credit for low-income earners.
- Political Messaging: Townsend reports that polling shows the term "retirement" triggers guilt; successful messaging reframes the issue as "peace of mind," "breathe easy," or a "personal paycheck."
- Legislative Activity: Proposed legislation includes a bipartisan bill to expand automatic enrollment (sponsored by Senators Brown, Klobuchar, and Coons) and efforts to increase tax credits for small businesses offering plans.
- Deaccumulation Reform: Peddington suggests replacing the term "deaccumulation" with "living comfortably" and advocates for expanding IRA withdrawal rules to allow continued accumulation for those working past age 70½.
- Investment Accessibility: Townsend and Peddington argue that individual investors need access to "patient capital" (e.g., private equity, real estate) typically reserved for institutional investors to improve long-term returns without the need for daily liquidity.
- Student Debt Barrier: Panelists note that $200,000+ in student loans for Millennials is a primary obstacle to early retirement savings, potentially forcing parents to dip into their own retirement funds.
- Educational Reform: Bilger warns that 25% of U.S. four-year colleges may close in the next decade, necessitating a shift toward workforce-aligned vocational training and community college partnerships.
- Financial Wellness Holism: Peddington stresses that financial security requires balancing emergency savings, debt reduction, and retirement planning, rather than focusing solely on one area.
- Mentorship Strategy: Bilger proposes leveraging the experience of older workers through mentorship programs to engage them in the workforce and provide value to younger generations.