A few years ago I was at the Investment Company Institute’s annual conference where I watched a presentation by some company called Age Wave about the future of retirement.  Age Wave is run by Ken Dychtwald, a businessy guru “thought leader” type who sells consulting services to companies that want to take a long view of demographic changes.  My take is that I’m pretty much skeptical of all this stuff, having met myriad futurists and gurus in my time as a journalist and having learned that none of them are reliable trend predictors and that many of their greatest successes are accidents.  Example: one guy told me he worked on GM’s OnStar system in its earliest stages.  The idea of the original team was that urban blight would become so bad and carjackings so commonplace that city drivers would want a direct line to the police at all times.  Well, OnStar obviously serves some very useful purposes and is a successful product but it really took off not in response to increasing urban and societal decay but as a luxury item in a time of increasing wealth.

So, skeptical digression accomplished, let’s get back to the Age Wave and why I’m bothering you about it now.  The presentation I saw was all about the future of retirement, by which Dychtwald means there isn’t going to be one, at least not in the way your grandparents enjoyed it.

Dychtwald’s arguments, without my criticisms, go like this:

1)      Retirement is basically a new concept.  For most of history people worked until they no longer could and they died.  Outside of Western Europe and the U.S., many still do.  So people should probably stop expecting that our current definition of retirement is anything like a norm, it isn’t.

2)      Pension plans (public and private) are underfunded.  Existing obligations will largely be met but companies and to a lesser extent public agencies are not taking on new guaranteed pension obligations.

3)      Risk has been transferred to workers in the form of 401(k) plans and the like.

4)      Workers haven’t saved enough to enjoy the kind of retirements that fixed income pensioners do.

5)      People are living longer, beyond the benefits of decreased infant mortality.

6)      People are healthy and able to work for longer, assuming jobs are available to them.

7)      Companies actually need these people and their experience.  Whether or not they know that is another issue.

8)      We never said these people had no savings.  They have some, just not enough to stop working.  So part time, contractual and flexible positions might be the answer.  The new retirement will involve moving in and out of the workforce as needed or maybe maintaining some level of part time work up until the last moment.

9)      In this environment the insurance part of the financial services industry, including life policies and annuities becomes more important than the brokerage and money management parts.  Because this is your “retirement” life: part-time job, Social Security, annuity payments from your savings.

I let this go without much comment because I think we’ve discussed the problems with this before.  It’s better for office workers than coal miners.  Companies don’t hire older workers, even part time, this notion of moving in and out of the work force at will seemed more plausible in a time of 6% unemployment than in a time of 10% unemployment.

But I’m going to set aside the practical arguments for this post because it’s covered territory.  Instead I want to get to the moral argument that Dychtwald is making and has been making since the late 1980s which is, as I recall him putting it, is that we don’t want sit on the porch and shuffleboard retirements.  It’s not just that we’re living longer, but that we’re living healthier and so we will want to be more engaged with the world.  We’ve all seen how retirees can become distant from the culture – their clothes become dated, they watch Murder She Wrote, they don’t get the kids and their crazy music, they want you to get off of John McCain’s lawn… do the hyper-hispter, hyper-media, hyper-hyper 20 and 30 somethings of today really want that?  Well, says Dychtwald, getting up and going to work is what keeps you engaged.

Dychtwald is very much a marketer.  His success is partly a self-branding success and his consulting services are often used by companies trying to figure out how to sell something more than what to sell.  One thing he’s selling, and I think you’ll hear this a lot around the deficit debate, is the palatable end of retirement.  You want to go to work.  It’s better for you.  Would you rather be at the sales meeting or playing bingo at the senior center?

It’s almost convincing.  Partly because it’s right – an engaged retirement is probably better than a slow withdrawal (though I do morbidly wonder if that might make death a little more of an emotional shock – is some withdrawal also a preparation for the ultimate separation?).  But why should this mean a part time job?  Why should this mean, after a lifetime of working for the man, more work for the man?  Shouldn’t it mean writing books and building web sites, traveling and composing music?  In his presentation, Dychtwald talked about seniors working as Wal-Mart greeters.  He insists that this is something seniors love to do.  I’ll leave it to you to decide if you’ll want to do that.  But Wal-Mart greeter is his worst case scenario anyway.  What he’s really selling is the fantasy that you’ll retire but maintain a lucrative consulting or part time relationship with your former employer.  Well, it does happen.  It also happens that people get pushed out as they age.  It’s frankly more hope than plan.

This kind of stuff is why I think we have to go back to the beginning of our work and retirement discussions.  When it comes to some jobs, strong unions were able to negotiate fair pension agreements based on time of service.  Work 25-30 years and you can retire with full benefits.  These agreements are roundly criticized today but they actually serve a moral purpose.  You spend a substantial portion of your life devoting your energies to the service of others and you get the assurance of some time to pursue your own goals.  People get mad because if people get these jobs young they can retire in their early 50s and then take their pensions and work part time (as Dychtwald suggests they should do anyway) but they’re mostly angry because most people don’t have this arrangement, not because there’s a moral problem with it. 

Dychtwald says retirement is something new that we shouldn’t count on.  I say it’s an achievement we shouldn’t give up on.  Kind of like air travel.  Of course there are powerful forces at work who would rather have cradle to grave work.  Can they sell that to the citizens.

I actually think they can.  The Boomers are part of the problem.  See, everybody wonders how they’re going to retire.  Their 401(k) balances are too low.  But they will also get full Social Security benefits and many of them have pensions too.  Why?  Because the switch from pensions to 401(k) plans was a process, not an event.  In some cases, people got both pensions and a 401(k) option.  In some they got smaller pensions and a 401(k).  It’s mostly Gen X and younger who were never given a pension in the first place.  The Boomer retirements are funded in four ways: pensions, savings, social security and the kind of profitable after-retirement work Dychtwald talks about.

Gen X, Gen Y and the Millenials have already lost the pension leg and will probably take a blow to the knee of the Social Security leg.  So they will have savings, less Social Security and work.  They are the generation that will never retire, particularly if they have kids to put through school.  Their only real hope will be inheritance.

It’s a big deal that’s really not being discussed and it’s all tied to the deficit commission, the Social Security debate and income inequality.  Every time you hear somebody squawking about “how will the boomers retire?” remember that there is an effort in place to basically end retirement for everyone younger.