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Correspondence: Address correspondence to David J. Ekerdt, PhD, Department of Sociology and Gerontology Center, University of Kansas, 1000 Sunnyside Avenue, Lawrence, KS 66045-7555. E-mail: dekerdt{at}ku.edu
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Abstract |
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 TOP Abstract Retirement Is Colonizing...ImplicationsConclusionReferences |
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Key Words: Financial planning • Pensions • Social Security
Retirement planning? For high school students?
As it turned out, the intent of the daylong session was to instill some financial literacy in the teenage audience and encourage the students to develop lifelong habits of saving and investing. Local high schools released entire classes to attend with their teachers. The group was diverse. In all, it was a worthy effort toward financial education. Yet, in the course of the day, speaker after speaker directed the audience's attention to retirement as a stage of life for which they must prepare. Graphs and worksheets illustrated ways to become a millionaire by age 65. The seminar's sponsor was politically well connected, and so a U.S. senator and a congressman each stopped in to explain their stands on Social Security and promote their proposals for lifting the nation's rate of retirement saving. The congressman told the students that they would be grateful for such reforms even though "you're 50 years away from retirement."
The wonder was not the day's facile reference to an event that is indeed decades off in the lives of those students. Long-term saving, after all, needs a long-term goal. Because the accumulations that flow from the "miracle of compound interest" are unimpressive in the short run, the case for consistent saving requires a remote event like retirement to illustrate the argument. Indeed, there are other reports that retirement planning exercises are becoming part of the content of math and money management classes in high schools (Gross, 2003).
No, the wonder was that grown-ups would so easily take for granted these students' interest in retirement. Before they have made major educational, occupational, marital, and family decisions, before they have even rented apartments or owned cars, with most of them years away from being able to invest much of anything—teens are presumed ready to pay attention to retirement.
Retirement is no longer a concern or event for the second half of life. The idea that we will someday retire is increasingly present to all adults, and it is even urged on adolescents. When painters use the technique of foreshortening, they enlarge part of the scene or object to make it seem closer to the viewer. In an analogous way, retirement's rising topical profile is telescoping the life course to make this distant event seem immediate. In this article, I will describe developments that bring frequent reminders about retirement to adults of all ages. These reminders primarily urge adults to undertake a lifelong project of retirement preparation for this desirable, inevitable stage of life. I discuss possible implications of this increasing emphasis that is making it seem as if we are born to retire.
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Retirement Is Colonizing Adulthood |
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People's images of the American Dream have tended to terminate in idealized jobs, families, and home settings, but the goal may now extend out to retirement as adulthood's great project of deferred gratification. We should not be content until our nest has a nest egg. When anxious parents try to get their children into the right kind of college at age 18 by getting them into the right kind of preschool at age 3, we can shake our heads, reflecting our belief that there's more to childhood than some long campaign of achievement. Let kids be kids, we say. But what is an adulthood that spends 30 or 40 years getting into the right kind of retirement?
I have found the youth-specific promotion of retirement saving in all media. A columnist for our campus newspaper, in a piece titled "Invest Early, Retire Rich, and Be Happy," advised fellow students, "Sooner, not later, is the time to think about retirement, especially because our generation will live longer and require more retirement savings" (Kaiser, 2000, p. 4a). The Sunday financial section of my local newspaper held up the example of a 17-year-old high school girl who has been saving for retirement since she was age 9 because Social Security "might not be there in 50 years when I retire" (Rosenberg, 1998, p. F1). A national daily heralded "Retirement Foresight From the Younger Set" with a picture of a 16-year-old who is "proud of his individual retirement account." Having started the IRA at the suggestion of his father's accountant, the youth says, "I know I have a secure future" (Eisenstadter, 1998, p. 6). This article points out, as others do, that a 40-year investment horizon can generate substantial wealth, but kids would do even better if they began at age 10. For this purpose, there are personal finance books that encourage parents to start their children's retirement accounts (McKinley, 2002). As a final example, Robert Samuelson (2002), financial columnist for Newsweek and The Washington Post, recently said on radio, "It is a real dilemma that we as a society don't begin to start saving early enough for retirement. My kids are 12, 15, and 17, and one of the many things I intend to tell them is that they should start saving early for retirement."
There are a several reasons why the retirement topic is infiltrating adulthood. First, the pension mix is changing from plans of the defined-benefit type to plans of the defined-contribution type (U.S. Department of Labor, Pension and Welfare Benefits Administration, 2001–2002). This ushers in a new way for workers to think about their pension—from something that is eventually received to something that is slowly achieved. In defined-benefit plans, pension income to the retiree is based on an administrative formula applied to one's earnings history and length of employment. The pension is calculated and managed by others, and the retiree is a passive beneficiary. In defined-contribution plans, a portion of wages is regularly deposited in an account. The long-term proceeds from the account, such as in a 401(k) plan, are the funds for retirement. Because the worker has a choice to join or not join the plan, may designate the amount of contributions, and has some say in how the account is invested, the pension is the lifelong responsibility of the individual who has nominally managed it.
Defined-contribution plans also appear to enhance individual control because a worker can voluntarily commence withdrawals beginning at age 59
to finance retirement. Workers in defined-benefit plans, however, must wait for their pensions until they attain certain ages or lengths of service that are specified by plan rules.
Whereas only about half of American workers participate in pension plans, the majority of these workers participate in defined-contribution schemes (U.S. Department of Labor, Pension and Welfare Benefits Administration, 2001–2002). Add to these the workers with an IRA or Keogh account, then 52% of households have retirement accounts, according to the 2001 Survey of Consumer Finances (Aizcorbe, Kennickell, & Moore, 2003). Thus, a sizable share of the population can spend decades watching account balances grow, and sometimes shrink. The topical significance of the 401(k) is magnified further because plan participants talk to their families and friends, their affairs are a subject for print and broadcast journalists, and they are a target audience for the general marketing of financial services. Note in particular one mode of magnification. The more that individual retirement saving is organized through financial markets, every swing in those markets will generate news accounts about individual retirement prospects. Bull markets ("How to Retire at 55") and bear markets ("Can You Afford to Retire?") are both occasions to take the public's retirement pulse. In this way, the daily news from Wall Street is a running reminder about retirement.
Second, Social Security has become a regular part of political discourse. This program symbolizes retirement and is rarely out of the news. It has lodged itself in electoral politics: Witness the senator and congressman stopping by the Kansas City seminar to tell students about their stands on Social Security. Sometimes the issue is the proper disposition of the Trust Fund surplus relative to the U.S. federal budget. Sometimes the issue is the proposal, supported by the Bush Administration, to divert payroll taxes into private savings accounts (President's Commission to Strengthen Social Security, 2001b). This particular reform is an explicit appeal to younger voters, with their weaker confidence in the program and outsized confidence in their ability to save. Twentysomethings are urged to flex their political muscle now and support private accounts in order to ensure a secure retirement someday. If Social Security were refashioned in this direction, then every American worker would become a retirement account holder, and the market-related nest-egg watching that is currently the experience of workers in defined-contribution plans would become universal.
Third, there is the cultural hegemony of the baby boom generation that burnishes to higher significance every stage of life that it occupies. With that large cohort now positioned in its preretirement years, it is small wonder to see a picked-up pace for mentions of retirement and retirement planning. The baby boom generation also holds an incantational allure for commentators who vie to preannounce the future. Every trend, from health care to housing to hair transplantation, is held to be more meaningful because baby boomers will be retiring.
Fourth, advertisements from the financial services industry keep retirement and retirement savings continually in the public eye. Once rare, ads for retirement financial planning now appear in all media, their message present to adults of all ages (Ekerdt & Clark, 2001). The banks, insurance companies, and brokerage houses placing the ads are competing to manage the trillions of dollars that individuals hold in their defined-contribution pension accounts, their IRAs, and other contractual and voluntary savings. Though the human "models" pictured in such ads (with which the viewer is to identify) have typically been middle-aged and older, younger faces now routinely appear. The companies offer their services with an appeal to people's anxiety about the complexity of investing. They also play on people's doubts about their own efforts ("Am I doing enough?"). Ads intimate that everyone shares a desire for a season of self-indulgent leisure, but a good retirement will take wealth, and that wealth will be the fruit of individual responsibility and effort. A good retirement awaits you, but only if you act to achieve it.
Fifth, less important to popular dissemination but notable nonetheless, the promotion of retirement saving by all adults is official policy of U.S. government agencies. Congress, in the Savings Are Vital to Everyone's Retirement (SAVER) Act of 1997, directed the Department of Labor to maintain public outreach programs on the importance of saving. The legislation also directed the agency to convene three national retirement savings summits. A background paper for delegates to the 2002 summit urged generation-specific social marketing on personal retirement savings strategies. The message should be tailored not just to persons over 40, but also to "Generation Xers" in their 20s and 30s and to the "Millennial Generation" under 20 (Conger, Drinkwater, & Dighe, 2002). The Social Security Administration, in partnership with the American Savings Education Council and State Farm Insurance Companies, has announced its own national "Save for Your Future" campaign for 2003 (www.ssa.gov). The three-part rationale for all these efforts is that (a) Social Security is insufficient, (b) not all workers have pensions, and (c) people don't save enough for retirement. Therefore, it is the individual responsibility of every American—the neoliberal mantra—to develop personal plans for income security in old age.
The changing nature of pensions, the politics of Social Security, the aging baby boom generation, and the interests of a powerful industry and of government are daily compelling adults' attention to retirement as a lifelong goal. If it is not in the political news, then it is in the financial news. If not in the lifestyle section, then retirement insinuates itself into ads and commercials.
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Implications |
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As a result of these messages, American workers will think, prepare, and save more for retirement and old age. Beginning early in adulthood, they engage in the prescribed behaviors that will secure their future. They save consistently, formulate goals, track their finances, know their net worth, assess progress, adjust strategies, talk with family and friends, consult financial planners, visit the company benefits specialist, stay current on investing and financial management, and lay plans for the lifestyle and expenses of retirement. In a word, they face life foresightedly. Consistent with the life-cycle hypothesis of savings and consumption, workers accumulate sufficient wealth across adulthood for later "dissaving" after retirement (Hurd, 1990).
If this occurred to a greater extent than it now does, that would indeed be good. It would put people on a more secure financial footing for retirement and lift the nation's rate of saving, fulfilling both private and government policy for retirement. The prospects for this happening are not certain (Akerloff, 2002), so one can consider other, unintended consequences that could flow from the lifelong focus on retirement.
A Stronger Retirement Norm
The thrumming message about retirement planning assumes that retirement is the inevitable destination of a work career. "Your retirement isn't optional, is it?" asks a recent ad for Merrill Lynch (Merrill Lynch, Pierce, Fenner & Smith, Inc., 2002). If people spend 30 or 40 years saving and preparing for retirement—the consequence of starting at age 25 or so—then they will certainly want to assume that status. Not that workers don't already want to retire. Today's workers clearly feel entitled to their retirement income because they have "paid into" Social Security or "put time in" for the company pension, and they will feel no less deserving when they have foregone current consumption in order to "purchase" retirement. A retirement that is bought one paycheck at a time over many years will be a prize to be seized. And being inevitable for ourselves, it will also seem obvious that others should retire, too, thus solidifying the social norm that work careers should end, prior to death or disability, in a period of retirement.
Researchers in the 1990s noticed a new variability in the timing of retirement (Henretta, 1994). In addition, the boundary between work careers and retirement seemed more flexible and the paths between more diverse (Han & Moen, 1999; Mutchler, Burr, Pienta, & Massagli, 1997). These trends suggested a dissolution of the rigidly specified life course (Guilemard & van Gunsteren, 1991; O'Rand, 1996). As Han and Moen (1999) have commented, "The retirement regime is being reorganized, if not undone" (p. 196). Yet, this variability in timing and form does not necessarily mean that public demand for retirement is diminishing or that employers see it as a weaker imperative for older workers. A strong, enveloping retirement norm can admit diverse behavior. Retirement may become de-standardized as to the incidentals of timing and form, but not as to its eventuality.
The lifelong emphasis on retirement could forestall Riley and Riley's (1994) vision of "a veritable revolution in the age structure of society" toward greater age integration of the life course. They saw adulthood interspersed with periods of education and leisure rather than wholly devoted to work roles. This is not, however, what one sees in advertisements for retirement financial planning. Work life is shown to be a period of sober, dutiful responsibility in contrast to retirement, which is for fun and self-indulgence, the two phases of life held separately in tight compartments (Ekerdt & Clark, 2001). Indeed, if the task of adulthood is to save for retirement, the pressure to build wealth would tend to obviate any extended leisure consumption in midlife or time-out for education. As one of the cultural contradictions of capitalism, Bell (1976) observed a tension between the ethos that underpins the economic sphere (discipline, self-restraint) and that of the cultural sphere (self-expression, hedonism). The lifelong retirement savings imperative tells us to manage the tension between lives of discipline and of gratification by taking them in sequence: work, then play.
There is some irony in a stronger retirement norm. Retirement saving is being urged upon the public so that individuals will have wealth that should eventually give them options, choices, and control in decisions about when and whether to work. Instead, the saving effort and the emphasis on it solidifies the desire for, demand for, and norm of retirement, thus creating a constraint on behavior. Theoretically, greater savings should favor work exits that are elective and voluntary, but the promotion of saving leaves the adult life course nonetheless strongly channeled toward retirement.
Children as a Competing Cost
In a foreshortened life course that is looking past one's adult years to the day of retirement, perceptions of family life might change. If building that nest egg becomes a central financial project of one's life, then children may come to be seen as an impediment to this goal. The attainability of savings milestones mapped out at age 25 would certainly be advanced by limiting one's family size or by having no children at all. At our financial planning seminar for high school students, the audience saw projections of increasing wealth from consistent saving but then was shown a slide that said, "30% of Household Income Goes To The New Baby!" It was, I think, an unintended message, but it was a clear one nonetheless: That smooth upward function—your growing wealth—will be interrupted by the cost of child rearing.
And children are costly. The U.S. Department of Agriculture estimates expenditures on children from birth through age 17 in order to help policy makers develop guidelines for child support and foster care payments. The agency projects the average total cost of raising a child in husband–wife families at $124,800 in a low-income household, at $170,460 in a middle-income household, and at $249,180 in an upper-income household (Lino, 2002). These estimates vary by region and family size, and they do not include college costs, but they clearly indicate that even one child will hamper an adult's goal of saving a million or a half million dollars for retirement.
Children can hamper the wealth accumulation of women in particular. In addition to the expense of child rearing, women have been shown to incur a wage penalty from motherhood, earning less over their lifetimes because of breaks in employment and perhaps because of lower productivity and employer discrimination (Budig & England, 2001).
A high household priority on retirement saving will pose difficult decisions for parents who may choose to stint the college fund in favor of their own retirement fund or perhaps forego having another child. If the retirement savings imperative were to affect family formation decisions and reduce the birth rate to some degree, the eventual result would be an even lower ratio of workers to retirees during the 21st century. It is this falling ratio—heading toward two workers for every retiree—that is already driving the alarm about Social Security's future financing and the call to save early and often for retirement (President's Commission to Strengthen Social Security, 2001a). It would be yet another irony if the solution to the demographic imbalance of workers and retirees—aggressive private saving for retirement—actually made the long-run problem worse.
Outsized Expectations for Retirement
As noted earlier, increasingly frequent reminders about retirement mainly emphasize the effort needed to secure it, but not any canonical content about the kind of life one will have. Yet people can imagine this for themselves. The message to the Kansas City teenagers, the message to viewers of advertisements, the message of government campaigns to encourage participation in pension plans and individual savings are all one: that financial security will give you the ability to control the uncertainties of later life and therefore live as you please. The prospect of controlling the unknown, of "rationalizing" the uncertain, has a powerful appeal (Ritzer, 1998). Retirement planning buys a better retirement, one with freedom and agency.
Retirement presently has the capacity to disappoint its occupants. Marketers dangle high-end consumption before the eyes of prospective retirees: forms of housing, travel, tourism, recreation, and the means to indulge grandchildren. Few people attain a home-on-the-fairway retirement or can sustain such consumption past the first decade of retirement, not when 50% of households headed by a person aged 65 to 74 are relying on the modest Social Security benefit to make up more than half of their income (Social Security Administration, 2002). Money aside, workers with limited pension prospects can still foresee themselves partaking of the active, robust life of the young-old (Featherstone & Hepworth, 1995; Katz, 2000). But this way of being in retirement also has the capacity to disappoint because it eventually fades into the fourth age or "deep old age" of disability and physical decline (Blaikie, 1999). Indeed, at this stage of life there arise the expenses of long-term care, for which one really does need to save, yet this form of consumption remains quite invisible in the lifelong promotion of retirement.
Most current retirees, at least those in their 60s, do not claim to be dissatisfied with retirement. Among retirees aged 62 to 65 in the national Health and Retirement Study, 93% say that retirement is moderately or very satisfying, and only 14% of men and 15% of women say that the retirement years have been "not as good" as the period just before (Ekerdt, 2002). The cohort now retiring is still of an age that was not importuned about retirement across adulthood and probably did not, until the 1990s, see ads for retirement financial planning or rely on defined-contribution schemes for a pension. As has been the life-course pattern until recently, the individuals in this cohort only turned a corner toward retirement in their 50s to focus on it in a salient way (Karp, 1989). Their expectations about the physical and material possibilities of retirement are tempered by their bodily experience of aging, by their relative success at saving, and by familiarity with near-age peers who are retiring.
Oncoming cohorts, who will have had the attainment of retirement as a decades-long project, will also be seeking its release and relief. The question is whether their wealth and health will allow them the "possible self" that they have projected (Cross & Markus, 1991). Goldman (1992) held that advertising unintentionally has overidealized the American family as a haven for fulfillment. The rising emphasis on retirement may likewise promote impossible expectations for that stage of life. Will today's 25- and 35-year-olds find at midcentury that the promise has been oversold?
Oncoming cohorts could be frustrated in trying to meet or better the retirement experience of their elders. For one thing, some observers think that American workers must imagine longer work lives in the years ahead. A later average age of retirement is suggested as necessary, both to relieve pressure on Social Security retirement pensions and to ease the labor shortages arising from a demographic undersupply of younger workers (Burtless & Quinn, 2002; Rix, 2000). In addition, any retrenchment in Social Security and Medicare benefits, including a later eligibility age, would (in the absence of greater private savings) make retirement less affordable and cause its day to be deferred. Rising expenses from health and long-term care, if self-financed, could crowd out resources for leisure consumption. Thus, there are the seeds of a confrontation between a strengthening retirement norm and a receding ability to fulfill it. As Hardy (2002) pointed out, "Unless changes in retirement programs produce further improvement in the experience of retirement, future cohorts will view the changes as a loss, since they will compare their experiences to how and when previous cohorts retired" (p. 16).
As retirement colonizes the earlier reaches of adulthood, there are other issues that could be explored. For example, what is the meaning of work and work careers when a principal, long-term goal of the life course is not to work? Will a nation of worker–investors—savvy about the vagaries of financial markets—ultimately be less or more supportive of social insurance programs for income security in old age? Finally, will retirement savings become an important basis for moral self-satisfaction among the "good squirrels," those who, by virtue of their personalities or location in the social structure, are able to build a nest egg? Will judgment fall on those who fail to fit their lives to the idealized narrative of the sophisticated, self-reliant investor?
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Conclusion |
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In the foreshortened life course, retirement seems closer, more immediate, to young and middle-aged adults. Preparation for retirement is also distilled to financial preparation, and this overlooks the other kinds of capital, such as health and social resources, that are necessary to sustain a satisfactory quality of life in retirement. At the same time, long financial preparation may stimulate a broader imagination of retirement: when to exit, where to live, what do to, whom to love, what to value, and what to leave behind.
The impression that we seem born to retire is an indirect consequence of activities undertaken for other purposes. To illustrate the time value of money to young adults, financial planners need a savings goal with a long accrual period. Hence, they talk retirement to people who are 40 years away from it. In the ideological battle over the American welfare state, the partisans specifically urge young adults to become concerned about Social Security (Ekerdt, 1998). New pension forms now compel more adults' attention to financial markets, whose ups and downs register a daily barometer of our retirement hopes (Zernike, 2002). Commentary about the inescapably large baby boom cohort is increasingly commentary about its retirement.
All this talk about retirement, though it arises for various reasons, converges to raise its profile in the everyday life of adults of all ages. Much like a journey that is dominated by thoughts of the destination, retirement seems to be morphing from just another of life's stages into the place where adulthood arrives. This is an oddly new view of the life course, and it presents certain puzzles for consideration. Reminders about retirement preparation, extending even to teenagers, may motivate workers to greater readiness for their later years, and this would have individual and social benefits. Yet, there could be other unintended outcomes: a stronger retirement norm, reluctance to spend money on children, and expectations of retirement that it cannot fulfill. The overall effect of the foreshortened life course may be to color adulthood with more anxiety about later life when the intention of all this foresight is, ironically, to create more peace of mind.
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Footnotes |
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1 Department of Sociology and Gerontology Center, University of Kansas, Lawrence.
Decision Editor: Linda S. Noelker, PhD
Received for publication October 16, 2002. Accepted for publication April 21, 2003.
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