As Baby Boomers enter their traditional retirement years, many are faced with not only less in savings than they would like or need, but also annoying public lectures from experts and politicians about how it is all their fault. Public service announcements tell Boomers and younger generations that they need to stop wasting money on life’s little pleasures now and save more for tomorrow. Politicians tell them they need to work until age 69 or more to receive Social Security pensions because they are living longer than the government planned for.
Individual saving is, of course, an important part of retirement planning. However, these admonitions to save commit the ultimate attribution error: blaming the individual without taking into account the situation. In this case, the individual is held accountable for not setting aside enough money, and not having good saving habits. Meanwhile, the contributing factors outside of their control are ignored.
And there are more than a few. The economy increasingly has relied on a contingent workforce of part-time, contract and temporary employees. Along with layoffs, downsizing and frequent job changes, it’s no wonder that Boomers are less likely than earlier generations to have company-paid vested pensions or even 401(k) employer contributions. Sometimes, companies conveniently laid off workers or closed just before employee pensions would have been vested. Stagnant or lower wages, high individual health insurance premiums and increased job insecurity over this period have also made it more difficult for workers to set aside money for a distant future while still getting by in the immediate present.
In short, over the decades that Boomers have worked, full-time, well-paid, secure jobs with benefits have been largely replaced with less secure, lower-paid contingent work offering fewer or no benefits.
It is possible that a Boomer starting out in the late 1960s at age 17 worked for a few years but did not accrue any pension because of not being eligible the first year, and quitting before the 10-year vesting rule then in effect; spent several years out of the paid labor force in higher education; took a temporary contingent job with no pension or 401(k) matching; worked five or 10 years under new vesting rules at a corporation and managed to vest a small pension before being downsized out of a job; then continued to work multiple part-time contingent jobs with no 401(k) employer match or insurance, intermixed with years of full-time employment with employer 401(k) contributions.
During those years, a worker would have had higher health insurance costs for individual premiums as well as lower wages that barely met other needs such as home mortgage payments and home maintenance. That would have not left large sums to put into 401(k)s and would have not have grown as fast as accounts swelled by employer matching funds.
That worker might also have been hit by serious illness such as cancer that took him out of part-time work for an extended period (with no employer leave benefits), resulting in both reduced income and higher out-of-pocket expenditures. Meanwhile, along the way, his 401(k) has been partly wiped out by several stock market plunges and by the Great Recession that obliterated interest rates on bank savings. His part-time work could have been further reduced as a consequence of the federal Affordable Care Act, which redefined part-time work hours.
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As a Boomer myself, I have experienced some of this. Like Prince William and Malia Obama, I took a “gap” year before entering college. In fact, I took two. Those years at a large corporation gave me work experience and some opportunities to travel but resulted in no vested retirement benefits. Much later, a cancer diagnosis redirected my income toward treatment costs not covered by my insurance. Cancer had a way of forcing the focus away from a distant retirement that might never happen, toward the here and now of basic survival. Now I know I am likely to live long enough to retire, but I also realize it will not be at 65, the traditional retirement age of my parents.
Approaching that onetime milestone, the Boomer runs up against the reality of older age requirements for Social Security — 66 or 67 to get full benefits, 70 for the maximum monthly amount. He also finds himself in a work world of ageism, underemployment that drives the unemployment rate up to nearly 10%, and a diminished supply of full-time high-paying jobs with benefits — all trends accelerated and intensified by the Great Recession and its massive layoffs.
It has become a gig economy, and a toxic one at that. The situations Boomers have had to face in this changing economy, and the decisions they made at each step along the way, have conspired to leave even frugal, debt-free savers with smaller retirement nest eggs than they need.
Rebecca S. Fahrlander is an adjunct professor of psychology and sociology at The University of Nebraska-Omaha.
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