Heaven Can Wait

The major exodus from work began after World War II. Social Security first paid benefits in 1940, expanded to include more workers through the '50s, was bolstered by Medicare in the '60s (when that early retirement option also appeared) and was further strengthened in the '70s, when Congress built in annual cost-of-living increases. Like the private pension plans also proliferating during this period, Social Security was meant to protect those who'd grown too ill or frail to continue working, but also to encourage older employees to yield to the incoming tide of youth.

It worked amazingly well: A graph depicting older workers' participation in the labor market over the past half-century resembles a ski slope. Nearly half of American men over 65 were in the workforce in 1950; by 1985, fewer than 16 percent had or were seeking jobs. The proportion of men age 55 to 64 in the labor force has fallen sharply as well. Most workers now retire in their early sixties -- because they can.

But also because retirement has become increasingly attractive. Greater wealth means that most retirees no longer need to move in with their children, but can live independently. Technology, as MIT economist Dora Costa points out in her influential book The Evolution of Retirement, has provided lots of affordable new forms of recreation, from RVs to TVs to PCs. Marketers, bent on persuading retirees to buy vitamins and Sun Belt condos, have created the now-familiar image of that silver-haired couple who spend so much time dancing on beaches and cruise ships.

"It's come to be an expected part of the life course," says David Ekerdt, director of the gerontology center at the University of Kansas. "We're encouraged to want it, plan for it, yearn for it. It's the new ending of the American dream."

Oops.

Vastly increased longevity isn't really a crisis; it's one of humanity's great accomplishments. That a man who retires at 62 will now survive long enough to receive Social Security benefits for an average 17 years, a woman for 20 years -- this is good news.

But how to finance all those additional years, with the largest generation in the nation's history about to retire? Starting in two years, the first of 78 million baby boomers will turn 62 and begin applying for Social Security benefits, then become eligible for Medicare three years later. FDR, and the other governmental architects of retirement, didn't anticipate this.

In May, economist Eugene Steuerle, part of a squadron of retirement researchers at the Urban Institute and a boomer himself at 58, warned a congressional committee that his generation's legacy might be "to bequeath a government whose almost sole purpose is to finance our own consumption in retirement." Steuerle, a leading alarm-sounder about such issues, predicts that tens of millions of additional early retirees could not only bankrupt the programs meant to underwrite their retirement but also soak up so much of the federal budget that there's virtually nothing left for any other purpose.

Moreover, after the boom comes the baby bust, the sharply smaller group born between 1965 and 1976. It's not only too small to support all the retired boomers, it's too small to fill all the jobs a healthy economy will require. For the first time in decades, analysts are worried about a labor shortage -- of about 10 million workers by the end of this decade.

So one prescription is obvious. Whatever else lawmakers do or don't do -- if they raise the age of Social Security or Medicare eligibility, if they establish private retirement accounts, if they index benefits for longevity -- it would be a fine thing, the wonks agree, if we'd keep working.

It's practically the public-spirited thing to do. If we remained in the workforce longer -- and labor force participation among older workers does appear to be inching upward -- we could postpone the age at which we receive Social Security checks, thus easing the drain. The higher taxes we would keep paying (including continued Social Security contributions) would help fill the federal coffers. And we could ward off a labor shortage that might threaten the whole economy.

We'd reap personal benefits, too, the keep-working partisans argue. "The biggest financial decision most people make is when to retire," Steuerle says. "It's far more important than whether they put their money in stocks or bonds." Most retirees, he points out, have few such private assets; they're mainly dependent on government. And in terms of Social Security benefits, "just working one more year often gives people a good 6 to 10 percent more income every year after that."