Teresa Ghilarducci Debunks Working Longer Consensus
Proposes Gray New Deal
In my latest Risking Old Age in America podcast, Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at the New School and author most recently of Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy, eloquently debunks the myth of the “working longer consensus.”
The working longer consensus, she says, is the idea that if we don’t have enough workers, and older workers don’t have enough savings to retire, “they can just work longer.” She calls this “a convenient untruth,” explaining that it’s based on several myths.
The Working Longer Myths
Myth 1: Working longer is good for you. Ghilarducci says that the reality is that for most people retirement is healthier than work. She points out that the types of people who like to work longer are those who make policy, senators and economists. Working longer might be what they want, but not what most people want or can do.
Myth 2: Working longer makes retirement more affordable since it means more earnings and a later start to dipping into retirement funds. The reality, however, is that most people who work after age 62 are also collecting Social Security, either because they needed to do so due to a gap in work or that they’re just not earning enough to make ends meet.
In addition, many people still working in their sixties lost higher paying jobs they may have had when they were younger, meaning that they’re earning much less than they had in the past.
The word “retire,” Ghilarducci says is something of a misdirection. Most people don’t retire. Instead they are reitred by their employers.
Myth 3: Since we’re all living longer, we should work longer so that we do not have to finance so many years of retirement. But the reality is that we’re not all living longer, just the most fortunate of us. Over the past 40 years we’ve seen a growing disparity in longevity.
Median retirement is 14 to 15 years, though it hits different populations differently, seven years longer for white women (19 years) than for Black men (12 years).
Myth 4: People work longer because they love the work (remember the senators and economists making policy). In fact, just about a third of people working after age 62 are doing so because they want to work. Given the small number of people actually working after age 62, this represents just one in 10 of Americans aged 62 or older.
Gray New Deal
Part of the problem, Ghilarducci says, is that the 401(k)-based retirement system only benefits the most affluent of workers. She proposes that we create a national system modeled after the thrift savings plan that’s available to federal employees. Under her porposal, everyone would contribute 3% of their income from day one. Every other advanced country, she says, has this layered system that mixes a pay-as-you-go system, such as Social Security, and an enforced savings and investment plan.
Her plan is too late for the baby boomers, most of whom have already left the work force, but it can still help those in their forties and fifties. At the very least, it will give them sufficient resources to postpone taking Social Security until age 70, which is the most secure investment anyone can make.
For baby boomers, Ghilarducci says, Congress tneeds to improve long-term care financing and shore up the Social Security system.
Topics
00:28 Guest Introduction: Teresa Ghilarducci
00:53 Debunking the Working Longer Consensus
02:56 The Reality of Retirement and Health
10:26 Economic Disparities in Longevity
17:52 The Gray New Deal: Solutions for Retirement Security
24:49 The Thrift Savings Plan Proposal
30:22 Conclusion and Call to Action