The debate surrounding the ideal retirement age for Americans is gaining momentum. Proposals such as Nikki Haley’s—which advocates gradually raising the retirement age—have drawn criticism, yet they reflect growing apprehension about the escalating financial pressures on programs like Social Security and Medicare.
But is delaying retirement the universal solution? Economist Teresa Ghilarducci’s book, *Work, Retire, Repeat*, challenges this notion, proposing alternative approaches and suggesting that the dream of a comfortable retirement is out of reach for many, especially those in lower-paying jobs.
Ghilarducci points out that while policymakers might see retirement as a quiet end, for many low-wage workers, it’s a desperately sought escape from physically grueling jobs, demanding schedules, unpredictable job duties, and the persistent anxiety of potential layoffs, making retirement a true liberation.
The book starkly illustrates that a majority of workers, particularly those earning less than the median income, don’t have the luxury of choosing their retirement date, with 52% being pushed out before they feel ready due to health issues, job loss, or age discrimination by employers, a stark contrast to the mere 10% of the wealthiest who face such circumstances.
Ghilarducci contends that the common claim that retirement leads to declining mental health might be missing the point. She suggests that retirement often happens *because* people are already unhappy, perhaps due to challenging work conditions or health issues. For those with physically arduous or psychologically demanding jobs, she argues, retirement can actually improve health in old age. Furthermore, she posits that some forms of menial employment can actually get in the way of pursuing more meaningful activities later in life.
A significant concern Ghilarducci raises is the widespread lack of retirement savings, forcing many seniors to depend almost exclusively on Social Security, creating a vast chasm between a fortunate pediatrician retiring at 75 by choice and a janitor of the same age toiling due to dire financial need, as delaying retirement offers little financial gain for the lowest earners.
Raising the full retirement age, according to Ghilarducci, essentially acts as a cut to Social Security benefits. This cut disproportionately affects poorer retirees who, statistically, can expect to live fewer additional years to collect benefits compared to their wealthier counterparts. It’s a policy that hits hardest where the capacity to absorb the impact is lowest.
Ghilarducci also critiques the shift from defined-benefit pensions to 401(k)s, arguing these plans disproportionately benefit the wealthy and leave retirees vulnerable to market volatility and the risk of outliving their savings, as the lack of guaranteed income streams compels many to work longer out of fear of financial destitution.
As a solution, Ghilarducci advocates for a new national system featuring mandatory personal accounts for purchasing approved defined-benefit pensions, funded by a three-percentage-point payroll tax increase and supplemented by public subsidies for lower and middle-income workers, along with an additional three-point tax hike to bolster Social Security’s solvency.
While Ghilarducci’s book makes valuable contributions to the debate, particularly in highlighting the realities faced by many American workers, it has also drawn criticism regarding its proposed solutions and broader economic analysis. Some argue that the book is less practical when it comes to guiding policymakers through the complex costs and trade-offs of an aging population.
For instance, Ghilarducci points to a cross-national correlation between high spending on pensions and high spending on education and welfare benefits, claiming this shows “there is no evidence ‘the old eat the young’.” However, critics counter that this view overlooks who bears the burden of paying for these expenditures, which falls primarily on current workers. In reality, spending on pensions for the elderly often dwarfs other welfare expenditures, and more generous benefits for the elderly in some countries correlate with less aid for poor non-retirees.
However, the proposed six-percentage-point tax increase on American workers faces skepticism regarding its feasibility, even with the promise of individual fund control, and some view the transition to 401(k)s as less detrimental than Ghilarducci suggests, noting that younger generations like Millennials are accumulating more retirement savings than previous ones at similar ages.
Critics contend that current policies already favor older generations, citing 2019 data where households over 75 had significantly higher median net worth ($254,800) compared to those under 35 ($14,000), despite similar median incomes, indicating substantial wealth accumulation over a lifetime for older cohorts.
Adding to this, retirees generally have lower basic expenses compared to young adults. They typically don’t face the costs of raising children, commuting to work, or student loan debt. A majority of seniors also own their homes mortgage-free, further reducing their monthly outlays. While older adults do face higher medical costs, Ghilarducci herself acknowledges that Medicare beneficiaries often benefit from subsidies and mandatory discounts on medical services, leaving them better protected than many younger workers.
Some assertions—such as the idea that high earners making over $170,000 a year could face poverty if forced into early retirement—are being met with skepticism. Critics argue that those who struggle financially in later life are generally individuals who had low incomes throughout their careers.
