As people are living longer and in better health, they’re working longer, too. And opportunities for the 55 and up group are going way beyond the stereotypical part-time gig at the local supermarket, he says.
Farrell, who says he is still far from retirement, recently spoke with The Post about the modern retirement. This has been edited for length and clarity.
You say in your book that what scares people the most about getting older isn’t aging — it’s retirement. Why is that?
A lot of us haven’t saved enough for retirement, and we’re well aware of it. And I don’t think people haven’t saved enough because they couldn’t resist the mall or they just had to use that credit card. It’s expensive to educate kids and a lot of times people buy a house in a good neighborhood that they think will let them send their kids to a good public school. They spend a lot more than they want on their housing. Also, many private sector workers don’t have access to a retirement savings plan at work.
So then the story is if you don’t have $1 million your standard of living is going to come crashing down. Then the story that you’re going to have too few young people supporting too many older people. What my book is saying is I think this is fundamentally wrong. What people are doing instead is thinking: What does retirement mean? What does my last third of life mean?
When I would mention this 10 years ago, people would say “Great, so I’m going to be a greeter at Wal-mart.” Now when I mention it, people are saying “Okay, tell me more.”
So people are essentially more open to the idea that working later in life doesn’t have to be a bad thing?
That’s right. And there’s a couple of factors. If we were having this conversation in 1950, 1960, when the commanding heights of our economy were smokestacks America — fishing, farming, mining. When you became a senior, those jobs were hard jobs, hard on the body. Most of the time they were also hard on the mind because they were numbing. You were not supposed to use initiative. You were supposed to do the same thing over and over.
But today the commanding heights of our economy is social services, health care, information services. It’s much more practical to think about working longer if you’re working at a cubicle at a nonprofit. A medical diagnostics office. This older generation is well educated compared to the previous generations and their health and disabilities are less. And we are living longer. We are more receptive to this idea, and it’s much more practical.
Does it still make sense for people to work throughout their careers and then have 20 years where they sit in rocking chairs and by the beach?
I think what a lot of people need is a sabbatical to sort of think about what to do next. People don’t want to walk away from their skills or knowledge. But they don’t necessarily want to work a 40 to 50 hour workweek either.
So much of economics and finance is really storytelling. We have an image in our mind. My parents never moved to Florida or to a retirement community. But we could sit around and watch “Seinfeld” and when he visits his parents down in Florida we laugh at that. We think it’s funny. But that’s one of the images we have of retirement.
What’s the image of working longer? We don’t really have that narrative.
What is the single thing people can do to better prepare for retirement? Save more? Put it off for another year or two?
If you think about our whole discussion about retirement for the past 25 years, it’s really been dominated by the rise of the 401(k). So when we talk about retirement and preparing for retirement, it’s about how much do you have in stocks? How much do you have in bonds? Depending on what you save, what kind of withdrawal rate can you have? There’s all this discussion around asset allocation. And saving is important.
But if you’re in your mid 50s and you’re thinking about retirement, the most important question is not “What is my number?” –which has been the question. The question is, “What do I want to do next?” And it turns out that’s not obvious to a lot of people.
That’s where I think the sabbatical comes into play. The most valuable asset an older person has is their network. The people that they’ve known over the years. Tap into that and start exploring “What can I do next?”
What do older workers have in common with millennials?
The 20-something graduate comes talking to you and they’re exploring what it is they want to do. They want a job. They want to be earning an income. No, they don’t want to be living in their parents’ basement anymore. They also want to do something that has meaning, something that they feel makes a difference.
And the only difference between the 60-something worker and the 20-something worker is that the 60-something worker knows time is short. For the 20-something worker, time is infinity. So the fact that you know time is short becomes almost paralyzing. It’s not always obvious to people.
Most people don’t reinvent themselves. You’re not going to go from working in a cubicle to owning a winery in Napa Valley. So it’s about thinking about the skills and knowledge you developed over the years.
You’re a nurse and you’re working in a major hospital. Maybe you go to work for a clinic in the inner city. Maybe you’re a financial planner and what you do is you keep some of your favorite clients, the ones who have become almost like friends, and you teach financial literacy in East Harlem.
You take what you know, you take your skills, but you go to a different sector in the economy.That’s exciting. You meet new people. You don’t start your own business where you drain your 401(k) and then one year later you’re broke. You have to be smart about it.
You also talk about the personal connections people get from their jobs.
Work is a social institution. When someone has a baby, you get excited. If someone gets divorced, you help them through it. When you look at the surveys of people who are retired and ask “what do you most miss from your pre-retirement years?” You might think money. But it’s pretty far down. No. 1 is their colleagues.
There’s this idea that if people work longer they could be taking opportunities from others who are looking to move up in the workforce. What is your response to that?
My response to that is that until recently we’ve gone through the worst labor market since the 1930s. But overall, I think older workers and younger workers are on the same boat. When older workers are getting jobs, younger workers are getting jobs. When older workers aren’t getting jobs, younger workers aren’t getting jobs.
The analogy I draw is the women’s movement. If you think back to the 1970s, the early 1980s. There was a lot of concern that as women enter the market there’s going to be a lot less opportunity for men. But what happened is we just created a lot more jobs. The economy got bigger.
So I think overall, more older workers is not holding back younger workers. As older workers are going out and starting firms, guess what, they’re creating more jobs for younger workers.
For the past five years a lot of employers have been saying to do more with less. My suspicion is that a lot of aging boomers are going to say goodbye. But they’re not going into traditional retirement. They’re going into their own business or to be a consultant. They’ll have informal partnerships with people they know. I think there’s going to be a lot more job movement than that idea of the older worker sitting in their cubicle for another 30 years.
You think older workers are contributing a lot more to the economy.
By continuing to work, their employers are better off and they’re continuing to be productive and to generate revenue. But the other part of it is there’s real stereotypes about older workers — that they’re not productive.
When you start looking at the arts you find a lot of people get more creative as they age. Then you look at the law. Then at doctors. And then you start looking at management, at skilled craft people.
All of a sudden you start looking throughout the economy and you see there are a lot of really productive, creative people who are seniors. We need to break down this stereotype.