What does the future hold for “emerging” retirees?

As a society, we are just starting to grapple with the wide-reaching implications of population aging and its effect on working lives. Many reports and surveys have described the changing expectations about work and retirement for the Baby Boom generation. (See for example, recent reports from SHRM, AARP, and Careerbuilder). There is still work to be done on the part of researchers, employers, and individuals to adapt to changing ideas about work for this generation, the largest in history. That said, the context of work and retirement continues to change rapidly, and future generations may face even stiffer challenges. For the sake of conversation, let’s call these future older adults “emerging” retirees, building on the idea of emerging adulthood.

Older adults of tomorrow — the “emerging” retirees — will face financial pressures unseen by previous generations of retirees: changes in eligibility for Social Security retirement benefits, a slower-growing economy, increasing healthcare costs, and changes in the availability and design of employer-sponsored retirement benefits (see surveys by MetLife and Transamerica).  The employer/employee relationship may also be changing — we read about the “uberization” of the economy, the “gig” economy, and precarious jobs. There is even discussion of a “no-growth” economy. With these kinds of pressures and instabilities, the expectation of a secure retirement is becoming increasingly unrealistic for many people.

Older Baby Boomers and the generation that preceded them seem to have done better than did cohorts of retirees that came before them. As such, they appear to be just ahead of being seriously affected by the aforementioned trends, at least in terms of financial resources and planning. A recent New York Times article described how well these cohorts are doing. Younger Baby Boomers, however, are not faring as well, and things are even less promising for the ones just behind them, Generation X.

Furthermore, the Great Recession affected Gen Xers at the point that would typically be considered, or at least hoped, to be the highpoint of their careers. While Gen Xers were hit by the recession when they would have hoped to be doing their best, Millennials were hit right as their careers were starting. Added to this hitch in the path to later life, Gen Xers and Millenials, more so than preceding generations, have had to borrow uncommon sums of money to acquire their education. They have also been more likely to have intermittent employment spells making it difficult for them to save in preparation for retirement. Today, job security is disappearing, higher education is becoming a necessity, and student loan debt strains even good incomes.

Available research on these trends, however, can be contradictory. For instance, Transamerica reports increased optimism about retirement from all cohorts in recent years, while according to the National Institute on Retirement Security 86% of Americans in 2015 believe that we are in a retirement crisis. Clearly these trends reflect very important and complex issues that warrant increased attention and more research.

The one thing everyone seems to agree on is that, moving forward, retirement in the future simply will not look like it does for today’s cohort of retirees, which is complicated enough. Increased longevity means that, even without financial hardships and career setbacks, typical retirement plans will be insufficient for a growing number of people.

We believe that action needs to be to taken now to avoid a crisis for emerging retirees. What do you think?  We welcome your ideas about action steps in terms of research, policy, and/or advocacy.