The future of retirement security in the United States: laying the groundwork for public discussion.

Author:Whalen, Charles J.
Position:Notes and Communications

Retirement-related policies and programs have changed greatly throughout the past century. That's true for both the public and private sectors. As a result, the connections and fit between government policies and private retirement programs have been in a near constant state of transition.

The evolution is likely to continue. Current programs haven't even caught up with recent changes in the economy, life spans, population, and conditions affecting workers' health-all areas where further developments are almost certain. Policies and programs will also need to keep up with changing attitudes toward work, aging, and retirement.

As legislators, corporate leaders, and employee representatives begin to examine possible changes, the nation could benefit from a public discussion about retirement security and the appropriate goals and direction of public policy in this area. Such a discussion can help decision makers choose the right mix of policies and institutional arrangements. It can also help citizens make sound individual choices.

The Interactivity Foundation (IF) began laying the groundwork for a public discussion of retirement security in early 2002. (1) A few months earlier, the President's Commission to Strengthen Social Security released a report outlining three options for introducing personal retirement accounts into the Social Security system. (2) Rather than rethink America's retirement policies in the broad context of a changing society, the Commission looked only at the program details of Social Security-and did so under the constraint of six "guiding principles" that restricted the alternatives to be developed. In contrast, IF sought to provide background material to spark the missing, broader discussion. (3)

To generate this background material, IF established the Retirement Security Project. It was directed and facilitated by this author, who resides near Rochester, New York. A diverse group of project panelists was recruited, selected, and convened from a three-county western New York area containing urban, suburban, and rural communities. (4) In accordance with the IF discussion process, a dozen panelists met monthly from November 2002 through January 2004, initially working as two panels-one for retirement-related professionals and one for interested citizens-but eventually combining to form a single project panel. (5)

Panelists had three tasks. One was to explore the meanings of retirement and dimensions of retirement security. Another was to outline a range of alternative policy directions for addressing this area of concern. The third was to consider the likely consequences of the various alternatives. Rather than strive for consensus on an appropriate course of action, panelists were to develop a range of alternatives that could encourage and enrich public discussion. (6)

Meanings of Retirement

Retirement Security Project panelists began their work by discussing what "retirement" means to Americans. Decades ago, the meaning of this term may have been clear, but not today.

Most often, retirement involves a change in a person's relationship to paid work. It can involve (voluntary or involuntary) separation from the paid workforce with no expectation of returning. Or it can involve separation from a certain position, occupation, or profession but can leave the expectation of eventually returning to--or even remaining in-the workforce. Retirement can entail a brief time of rest or just a movement from one position to another.

For those returning to (or remaining in) the workforce after "retiring," the motivations for doing so--and activities engaged in upon their return-are quite varied. Financial considerations are sometimes, but not always, a deciding factor; some people choose to work simply to remain productive or to experience the social aspects of work. Similarly, work done in retirement might be identical to work done prior to retirement--or it could be radically different. Hours worked by retirees can be more, less, or equal to those worked before retirement.

As panelists continued their exploration, it occurred to them that retirement doesn't have to be viewed in terms of a job change at all. Retirement can be just a "state of mind." That is, it can mean the recognition that one no longer needs paid work to live (and the various reasons could include eligibility for certain public- and/or private sector benefits or the recent acquisition of additional wealth). To a large extent, today a person is "retired" when he or she says so.

"Identity Change"

Discussing the possibility that retirement can sometimes be "a state of mind" led panelists to consider the "identity change" often associated with leaving a particular job and entering retirement. Panelists stressed that such retirement frequently affects how we view ourselves as well as how others view us. The following are possible aspects of the retirement identity change as described by the project panelists. In particular, panelists were asked to consider how Americans might view themselves when entering (or while in) retirement.

Favorable views include the following:

* More ability to do what one wants with his or her time.

* Freedom from rigid schedules and regular obligations.

* An opportunity to engage in enjoyable hobbies and new pursuits.

* More time to devote to community service.

* (Since working people tend to define themselves by their occupation) a chance to define oneself in other ways.

* Not being locked into one geographic location (free to travel).

* Less need for a large home-can downsize to a unit requiring less maintenance.

* A "badge of honor"-some are excited or proud to be retired.

* Less stress when work is a choice, not a necessity.

Unfavorable views include the following:

* For people who defined themselves by their occupation, difficulty losing that identity (this has traditionally been an especially significant challenge for men).

* Fear of social isolation (a fear that retirement will mean the loss of contact with an important social network).

* Difficulty introducing oneself in a society where introductions often focus on "what you do for a living."

* A feeling of being less valued by society; anxiety that others use the label "retired" as an insult.

* Self-criticism for laziness (due to a strong U.S. work ethic).

* Less influence over others; less ability to affect change.

* Anxiety resulting from uncertainty about how to spend one's time (many people worry about finding a way to fill their retirement time meaningfully).

* Awareness that abilities and functions are in decline.

* Worries about finances and other aspects of retirement security (these issues lead some people to delay or refuse retirement).

Other possible views include the following:

* Some people experience no retirement "identity change" because they continue to devote their time to the same professional activities that they engaged in before "retiring"-for example, some people are always "for hire" in their field.

* A "retirement identity" is dynamic; that identity often changes as a person ages.

Panelists generated a similar list when asked how Americans might view other people entering/experiencing retirement. What emerges is clear: "Retirement" means different things to different people; not everyone interprets retirement the same way. A retiree and an observer of that retiree, for example, may differ greatly on what retirement is and/or should be.

Why Retire?

In addition to describing retirement and the associated "identity change," project panelists discussed why a person would retire from the workforce or from a particular job. A key finding is that retirees don't always view their separation from the labor force as entirely voluntary. Panelists also discussed why a person would choose to not retire (and this too might not be considered an entirely voluntary matter).

Reasons to retire include the following:

* The financial means exist.

* Retirees can pursue other interests, which can range from hobbies and community service to travel and enjoyment of leisure time.

* One's spouse, grandchildren, and/or parents need care.

* Physical abilities and/or skills are declining.

* In some fields, workers "get burned out."

* As occupations evolve, a worker's education and training may fail to keep pace; a worker may lack interest in the direction his or...

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