Necessity is a mother. Harvard economist Edward P. Glaeser looks at the rising ranks of elderly workers.
The numbers supply a vivid picture of America’s graying work force. Between 2007 and 2010, the number of working Americans over 65 years old jumped 16 percent; the number of under-65’s in the labor force shrank. The trend started before the current downturn: the number of Americans over 65 in the labor force increased from 10.8 percent in 1985 to 12.1 percent in 1995 to 15.1 percent in 2005 to 17.4 percent in 2010. Until 2001, most workers age 65 and older had part-time jobs; since 2001, full-time work has been far more common.
The need to work into old age is growing. I know people in their 60s who have saved nothing toward their old age. So they work out of absolute necessity. Some have suffered financial reversals. Others lived their lives with money flying in and flying out of their lives. Still others just didn't try that hard. They chose to do whatever was more fun and worked part time. Now they are in their 60s and have to keep on working into their 70s.
But even if you are a saver you need to consider the possibility of living into your 80s and 90s and how you'll take care of yourself as you get older. You'll have to pay a larger fraction of your health care costs out of pocket. Governments (not just the US government) will have to cut back on the richness of their old age medical programs. Too large a fraction of the population will be old with too small a working age population to support them.
Today nearly 450,000 Americans 65 and older are unemployed and looking to work. To get an idea of how dramatic a jump this is, consider this: the number of unemployed elderly job seekers has more than doubled in the last four years.
Tough economic times have caused a surge of 65+ looking for jobs. My advice: steer your career years in advance in directions that create opportunities for continued work in ways that beat working as a greeter at Wal-Mart. Back in the 1980s I met a guy who was in his late 60s working as a greeter at Wal-Mart. He invested in a real estate boom and found himself much poorer as a result. So there he was greeting people effusively. Don't wind up like him.
How much money will you have to save to cover your old age health care costs? If you haven't been saving for old age medical costs you probably need to work longer.
A man who has relatively average drug expenses needs to save $136,000 to have a 90% chance of covering his health-care costs in retirement, while a woman — given her likely longer lifespan — needs $156,000, according to the Employee Benefit Research Institute, a nonprofit, nonpartisan group. A couple with median drug expenses needs $287,000 to have a 90% chance of covering their costs. Read more about health-care costs on EBRI's site.
Advances in cell therapies, gene therapies, tissue engineering and other biotechnologies are going raise the life expectancy of most of the people reading this post. Start thinking about a longer work life and how to achieve it. Do you work for a company that will grow or shrink in the coming decades? Do you expect the area you live in to expand or shrink? Does your area have one or two or many employers who could potentially use your skill set? Do technological trends favor the continued existence of your job? If not, how can you shift into a longer lasting career path?
Money to spend in old age on medical treatments will have higher utility in the future because more treatments will be available to buy. Vat-grown replacement organs are already being grown for a few organs in small numbers and more for lab animals. Lots of other treatments will be coming down the pike even as government finances deteriorate. Your own buying power could make the difference in how many years you live. Work and save accordingly.
|Share |||By Randall Parker at 2011 November 20 06:41 PM Economics Retirement|