The Changing Face of Retirement
Wharton professor Olivia Mitchell says the aging of the baby boom generation is reshaping the workplace and society.
The U.S. is in the midst of a sea change when it comes to retirement. As the first wave of baby boomers enters its mid-60s, many plan on working longer, whether by choice or necessity. Meanwhile, the social safety net is showing frayed edges. Just this week the Social Security Board of Trustees released revised estimates showing the Social Security trust fund is scheduled to run out of money in 2033, three years earlier than previously thought. Olivia Mitchell, a professor at the Wharton School of the University of Pennsylvania, is an expert on retirement issues and executive director of The Pension Research Council. She responded to Morningstar's questions about retirement issues confronting the baby boom generation and other topics.
Many baby boomers talk about working in retirement, yet this is not the traditional American retirement model, which for decades was about reaching age 65 so you wouldn't have to work anymore. How is the definition of retirement changing, and where do you see it heading in the future?
We are in the middle of a massive demographic revolution that is changing how we must look at education, work, saving, and retirement. In the year 1900, U.S. life expectancy was about age 45; today it has risen to almost twice that age. Better health and longer lives mean lots of older people: Currently 10,000 baby boomers (born 1946-66) are retiring every day, and this will continuefor the next 19 years. As the 77 million of us in the unusually large cohort of people moves into our 60s and beyond, population aging will have unprecedented effects on health care, private pensions, housing markets, national social safety nets, and, indeed, the entire economy.