A 'new era' of retirement: This is what it means for you

The retirement “crisis” is real and worsening for America’s workforce, experts are warning.

Turns out the “traditional view” of the life course in America is no longer applicable to the situation facing most workers. This means the idea that working a traditional career will allow you to pay off your debts and accumulate enough savings to live robustly without having to work beyond the age of 65, is no longer relevant.

“[People are] living longer, working longer – we need to modernize our view of retirement,” Lisa Marsh Ryerson, president of the AARP Foundation – the charitable affiliate of AARP – told FOX Business. “I think we’re in a new era.”

Marsh says rising housing prices, rising debt levels and age discrimination in the workplace are among factors complicating the ability of pre-retirees to save at sufficient rates.

According to the most recent report from the Government Accountability Office (GAO), nearly 30 percent of people over the age of 55 have no retirement savings and no pension plan. Meanwhile the personal savings rate has declined from 14.2 percent in 1975 to 6.8 percent in 2018.

Insufficient savings, combined with low wage growth – which the GAO says remains near 1970 levels – rising health care costs and longer life expectancies are combining to create trouble for many American workers hoping for a full retirement.

Retirement security is only going to become a larger problem as Americans age. The number of Baby Boomers turning 65 is expected to increase from an average of about 10,200 per day in 2018 to more than 11,000 per day in 2029, according to the GAO.

So what does retirement look like in the current environment and into the future? It’s changing so much so that Marsh said she no longer even likes to use the word “retirement” to describe late-life conditions for today’s workers.

Older Americans will need to continue working across a lifespan, Marsh said. She notes that on the upside working can help older Americans feel valued in society through applying the skills they have acquired throughout their careers.

Many, for example, could take up jobs in the gig economy – like driving for a ride-hailing service. As a growing number of Americans turn to online services to fulfill daily needs, Marsh notes older Americans might think about offering their unique skills on sites like TaskRabbit.

Many Americans have already started out on this pathway. The number of workers above traditional retirement age (65) remaining in the labor force, either part-time or full-time, climbed to nearly 19 percent in 2016, up from 12.8 percent in 2000, according to data from the Pew Research Center. Less than half of those employees reported that they were working part-time, as the percentage working full-time rises. By 2020, the Labor Department forecasts that 25 percent of the labor force will consist of workers ages 55 and older, which is up from about 13 percent in 2000.

Meanwhile, lawmakers are advancing legislation aimed at making it easier for employees to save and for employers to offer retirement savings plans. Among the provisions included in the package of bills advancing through Congress is one that would allow individuals to stash money away into IRAs beyond the current age limit of 70 1/2, and delay the age at which individuals would be required to begin taking required minimum distributions to 72.


Employers would receive tax credits for automatically enrolling workers in retirement plans and lawmakers are hoping to make it easier for companies to band together to offer 401(k) plans.

Marsh notes the most important thing needed to boost retirement prospects is to increase awareness and financial literacy regarding savings across the lifespan.