One of the few great twentieth-century accomplishments of the American welfare state was the alleviation of poverty among senior citizens. Some pockets of senior poverty persisted, but financial precarity was largely conquered. Social Security, which began paying benefits in 1939 and which became more generous and nearly universal over time, played a large role in this story. So did traditional pensions, the old-fashioned employer-provided retirement funds that provided a defined benefit—usually a percentage of pre-retirement pay—for life.
I write in the past tense because these financial protections for older Americans have withered, with the majority of seniors poorly prepared for and compelled to work in “retirement.” Indeed, working as long as possible has become the go-to solution prescribed by personal financial professionals and academics alike.
In Work, Retire, Repeat, the dean of American retirement scholars, Teresa Ghilarducci, collects her years of findings on the many shortcomings of Americans’ retirement security. Her critique focuses on the “working longer consensus” promulgated by lawmakers, employers, financial services firms, and scholars. Today’s seniors and near-retirees are woefully unprepared for retirement. The majority do not have enough savings to add to their Social Security benefits to maintain their standard of living. The oft-proposed solution? Work longer. By remaining in (or rejoining) the workforce, older Americans can greatly improve their situations by adding to their retirement savings and reducing the number of years they have to support themselves out of those savings. Working longer also means they can begin Social Security benefits later, which bolsters retirement income because benefits grow each year one delays retirement between age 62 (the minimum age) and age 70 (the maximum age beyond which benefits no longer grow). And why shouldn’t people work longer? After all, Americans live longer now than when Social Security was passed back in 1935.
Ghilarducci argues that every assumption behind this working-longer consensus is wrong. And the lawmakers, employers, and financial services firms who have promoted this solution are utterly self-serving, while seniors, in this rich country, are the hapless victims. Her rage is palpable.
Counterintuitively, Ghilarducci shows that working longer makes seniors worse off. Those forced to work are precisely the ones who do not have access to high-paying jobs in which they continue to accrue retirement savings (only half of workers have access to retirement plans at work). Because they are desperate, employers can treat them badly, offering them part-time hours and low pay. (Younger workers suffer the spillover effects: they, too, get paid less because employers can call on the reserve army of the distressed aged.) Because the jobs they can get pay low wages, these seniors cannot put off claiming Social Security. Instead, they both work and file for their public pension benefits, which are lower because they claimed earlier. They end up in worse financial shape, and often in poorer health, as the jobs they can get are physically grueling (standing all day as a cashier, hauling goods as a warehouse worker, or bending and lifting as a home health aide).
We got into this situation, Ghilarducci argues, because lawmakers since the 1980s have sought to avoid raising taxes or making Social Security more generous, especially at the low end, where there is no minimum benefit. Seniors’ straits will only worsen in 2032 when the Social Security trust fund is exhausted, and the program can only pay three-quarters of promised benefits, unless Congress acts.
The other reason for senior precarity is the move away from traditional defined-benefit pensions to defined-contribution retirement savings. Employers managed DB pension funds professionally, and workers could retire safely in the knowledge they had an income stream for life (most with Social Security as well). After Republican lawmakers learned the hard way in the 1980s that directly attacking the beloved Social Security program was politically treacherous, they focused on developing attractive private alternatives. The financial services industry was happy to help, as the creation of Individual Retirement Accounts and 401(k) programs meant millions of new fee-paying customers. Employers hopped on the bandwagon, too, as DC pensions are much cheaper for them than DB pensions. (Even so, many employers offer neither.) But defined contribution plans are only more attractive for the affluent who can afford to save enough and for the financially savvy who know how to invest appropriately. For everyone else, this “DIY retirement system,” as Ghilarducci terms it, has been a disaster. Many do not save, and those who do typically have small balances. The present system penalizes women and minority workers, especially. And it represents an abandonment of the mid-twentieth-century idea that all workers deserve time off and leisure at the end of a long working life. She is particularly incensed that a country as rich as the United States gave up converting its wealth into leisure for the aged and instead instantiated in old age the same inequalities that characterize the rest of the economy.
The book makes for a bracing read, with Ghilarducci’s wealth of findings skillfully woven into a narrative that indicts one set of assumptions and one set of actors after another. Some of her findings are truly startling. The headline: only one in five seniors can afford to retire. Among these, half are comfortably retired and half work because they love it. The other 80% cannot afford to retire. This group consists of half of all seniors who were unprepared for retirement but who were pushed into it (by layoffs, by caregiver responsibilities, and by age discrimination by employers). They are barely scraping by on their insufficient incomes. And the remaining 30% of all seniors are those who cannot afford to retire and are working, often in bad jobs.
Ghilarducci ends, helpfully, with policy suggestions to improve both jobs and pensions. As a political scientist, I cannot help but wonder more about the forces she touches on, such as the financialization of the economy—how and why the financial industry became such a large sector—as her findings show the devastating implications of this broader shift for retirement security. And she could have said more about the rise of the conservative movement in the Republican Party. Its rigid anti-tax stance and embrace of oligarchic policy have fanned the inequality that now forces seniors to work in their “retirement” in low-paying, back-breaking jobs that threaten their health. The individualization of retirement risk further enriches those at the top of the income spectrum but has been devastating for everyone else.
Work, Retire, Repeat reveals the logical outcome of the insatiable valorization of work in the United States. It’s not enough that workers are not guaranteed paid time off (no mandatory sick leave, paid maternity, or paid parental leave, etc.) or that workers with such benefits do not use them (consider the many who leave vacation days on the table for fear of appearing insufficiently committed to their job—from which they can be fired at any time for virtually any reason). It’s not enough that almost all means-tested safety net programs now have work requirements attached to them. Now we force people to work in “retirement.” And we believe that they should: they live longer and are healthier, right? Wrong, says Ghilarducci. After reading this compelling book, you will be as furious as she is.
