Retiring At 65 ‘Doesn’t Make Sense Anymore,’ Author Tells NAFA

The shifting U.S. demographics that foretold an expanding older population and a contracting younger one is no longer a futurist’s vision. It’s here.

And the collision of those megatrends of decreased birth rates and increased longevity are remaking our social and economic norms, profoundly impacting everything from home design and product marketing, to work-life environments, health care and retirement planning.

Bradley Schurman, author of  The Super Age: Decoding Our Demographic Destiny, told attendees of a webinar sponsored by the National Association for Fixed Annuities that all of our systems are predicated on constant growth and expansion of younger generations. But that’s not happening.

About 14% of the U.S. population is now in the “aged” period (65 years old and older) and by the end of the decade will be in “super aged” with more 20% of population past retirement age. For the first time, there will be more adults over the age of 65 than there are children. Everything from Social Security to employment to the age of retirement will have to change if the population is expected to age more while fewer children are born.

“The most visible change will be the shift in design,” Schurman said. “Our whole world is built for young, able people. Now homes will need to be smarter for populations that want to remain in them for longer periods; our transportation and tourism industries, and office spaces will have to adapt.”

'Can't Afford It'

But the real disruption, Schurman said, will be in work lives and retirement.

“You know 65, as a stopping point, really doesn't make sense anymore,” he said. “It doesn't make sense from an individual's point of view, and it really doesn't make sense from a national point of view because we just can't afford it.”

Retirement advisors may have difficulty convincing clients in their 20s and 30s to adjust to a new work dynamic, Schurman said.

“It's hard to get them to understand that this is a long-term play,” he said. “And they'll need a diversified set of assets in order to protect themselves against the challenges of later life and the funding of later life. Because at the same time we have this extension happening, we're also having a rebalancing occur between what the government is willing to give and what the individual has to put up.

"So over this period, we can expect that individuals will have to take a greater share of the burden of retirement planning, especially if we put off reforming things like Social Security.”

The Bureau of Labor Statistics released figures last year saying that number of people in the workforce over the age of 75 will double by the end of the decade. Meanwhile, the BLS predicts the number of people ages 16-to-24 will contract by about 7%.

As a result, Schurman said, there will be a need to reframe conversations about retirement and Social Security.

“We often lead with information that you can retire at 62 but there are a lot of negatives, but you could stay working until 70 and here are the positives,” he said. “Some thinking around behavioral economics suggests that if we turn that conversation around to say, ‘Look at what you can do at 70. And look at all the penalties you'll face at 62’ might be a better way to approach it to encourage people to stay for longer periods of time.”

Age Bias

There is an overarching age bias still ingrained in corporate America, Schurman said. Older workers are left out of the hiring process.

“Businesses do not want to adapt as it relates to their HR practices,” he said. “Diversity is a tough conversation for a business to have, it's even tougher to implement.”

But that doesn't mean it can't be implemented. He pointed at efforts made by German industries at managing demographic change.

“BMW was really the leader in this by asking their workers what they needed most to extend their working lives,” he said. “And - surprise, surprise - it wasn't just salary. It was things like flexibility. It was things like modifying the workspace, the ergonomics, providing opportunities for education, and perhaps even some caregiving leave and things that make the workforce more friendly to more people throughout their lives.”

Nearly a quarter of the U.S. “gig economy” is made up of people over 50 and a full third of them are over 65, Schurman said.

“So it illustrates that they want to work and they want to have some degree of flexibility in their approach to work,” he said. “We can't argue with the fact that Uber is a successful business, at least on the surface, or Lyft, or driving for Amazon, or perhaps working on Fiverr or some other site where you can share your expertise and knowledge.”

There are examples of some companies taking an inclusive approach to design, services, and building an environment with an older workforce and customer in mind, Schurman said. Apple stands out as a corporation that has successfully, and almost subliminally, designed products and features embraced by the aging population. He pointed out that men over the age of 65 buy more Apple products per capita than any other group.

“The Apple Watch, for example, has a median age of users around 44," he said. "That's pretty high when the median age of the national population is 38. And they're doing it in ways that people probably didn't expect. They've been intentional about including older people within their workforce, especially in their retail environments, so they can help translate technology for people who might be a bit technophobic.”

'Clear And Present Danger'

One warning flag, Schurman said, is in the area of financial literacy, which he said is “in the toilet in this country.” He said NAFA has a role in helping people better understand what they need to do to be prepared for financial responsibilities in the long term.

“People are constantly surprised to hear what it takes to retire,” he said. “The average person on the street doesn't necessarily know what it will take to retire comfortably. And I think we do a bigger service by being fully transparent with individuals about what those realities could look like. I do think that there is quite a bit of work emerging around behavioral economics; ways we can nudge individuals to do the right thing with their money.

"But I also think it's important that folks understand this is a clear and present danger right now that the system might go off the rails.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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