As part of an assignment in a UIndy graduate Economics of Aging class, we were asked to study retirement and its impact on the aging community. We studied the trade-offs people make throughout their lives, and what options are available to both retired individuals and Baby Boomers facing retirement in the near future. Many factors, including the economy, public policy, and socioeconomic characteristics such as gender, ethnicity, marital status and education, influence the choices we make in life. (Schulz and Binstock, 2006) These factors also apply when making decisions about retirement.
Every day we are faced with decision-making, and each decision comes with a trade-off or cost. If we want to eat a high-calorie lunch, we may decide to eat a low-calorie dinner to minimize our daily caloric input. If we choose to retire at age 65, we must save early and often throughout our working lifetime. Or, we may choose to work beyond retirement, perhaps changing careers altogether, with the trade-off being less leisure time in retirement. Each trade-off depends on our individual plans, lifestyle and personal values. The key is considering the cost of any action in a trade-off.
When Social Security was first created in 1935, workers aged 65-69 had to retire before they could receive full benefits. Otherwise, they had to pay a penalty for remaining at work. (Quadagno, 2008) Today, seniors have many options when reaching retirement age—they can remain at work; remain at work and reduce their work hours; retire completely and have leisure time; retire and work another job part-time; retire from one job and work full-time at another job; or retire and volunteer their services. If a senior stays on the job, he may increase his odds of retirement security, but the trade-off could be that he becomes less satisfied with his life because he is forced to work. (Quadagno, 2008)
In 2006 Paul Magnusson wrote, “Many American workers may not have adjusted to the new economic reality that responsibility for funding retirement is shifting from business and government onto workers themselves—and many have not begun to save for the costs they’ll face" (Magnusson, 2011, p. 72-73).
What does this mean for baby boomers entering retirement and elders currently in retirement? This means workers need to plan early to consider when to retire, understanding that if they choose to re-enter the workplace after retirement, they may potentially face lower wages, ageism, longer periods of unemployment and fewer benefits.
So, how much does it take to retire? Magnusson claims that workers should plan on replacing 60–70 percent of their pretax employment income with savings and investments. And to follow this rule of thumb, many workers will need to make meaningful sacrifices today to put aside the income needed to live comfortably in their retirement years.
As part of my class, I created an Animoto presentation that gets the retirement message across using in a fun way, combining music and photos with limited text. Click the image below to be taken to the Animoto.
CAC Graduate Student
Virginia works full-time in the Publications Department at the University of Indianapolis while pursuing her master's degree in gerontology through the online Aging Studies program at UIndy's Center for Aging & Community.
Magnusson, P. (2011). Color Me Confident-Why many Americans may be working when they retire. In H. Cox, Aging Annual Editions 11/12 (24th ed., pp. 72-73). New York City, NY, USA: McGraw-Hill. Retrieved October 3, 2012
Schulz, J. H. & Binstock, R. H. (2008). Aging nation: The economics and politics of growing older in America. Baltimore, MD: The Johns Hopkins University Press.
Quadagno, J. (2008). Aging and the Life Course: An Introduction to Social Gerontology-5th edition. New York City: McGraw-Hill