“We’ve lived beyond our means. We’ve used the equity in our homes for the last decade as cash machines,” said Daryl Eckman, a 59-year-old certified financial planner in Prairie Village, Kan. “We feel we have to live a certain way. … We feel we have to drive a certain car, put up appearances.”
If a friend his age has money, chances are Eckman is managing it. Their ledger, he said, usually reflects that even those with six-figure incomes live on the edge.
“The floor drops out on them very quickly,” he said. “They look to the government. They look to whatever the system will allow.”
Monaco is a 57-year-old Kansas City lawyer who feels he has little margin for error in his finances. He has diabetes and high blood pressure. He’s raised two daughters, and his retirement account won’t allow him to stop working anytime soon. He’ll keep working, he figures, as long as he’s able. If he’s able.
“I don’t see an opportunity for me to ever get out of the workforce,” Monaco said.
That necessity is, he said, partly the result of his own choices. He indulged his two daughters in childhood and insisted on paying for their educations to dodge student debt. He’s lived more comfortably, and less frugally, than his parents’ generation — a group sobered by the hard lessons of the Great Depression.
“I’ve got to pay for keeping up with the Joneses,” Monaco said. “We all seem to have to keep a profile, which is unnatural and unreasonable.”
If you’re not among the gilded 1 percent, it seems, there’s little reason to quit your job just because you’ve celebrated a 65th or 67th or 70th birthday.
Most Americans now calculate they’ll need a paycheck — either part-time or full-time — beyond the time when they can expect full Social Security retirement. (Depending on the year they were born, that falls between 65 and 10 months and 67.) A third will work to stay active. The rest will chase a buck out of necessity.
The good news is we’re living longer. The bad news is we can’t afford it.
This is where history reminds us that Social Security’s original retirement age was set when barely half of those who reached adulthood could expect to live to 65. Now, more than three-fourths cross that line. In 1950, a working man lived an average of seven years after retiring. A half-century later, a similar guy could expect twice as many years of elderly leisure.
In 1995, the average expected retirement age was 60. By 2011, it had been pushed back to 67. But life expectancy isn’t growing that fast. The difference in life expectancy between 1995 and 2011 is less than three years, not the full seven years that retirement got put off.
A Senate study in 2012 identified a $6.6 trillion retirement deficit — the difference between what people should have saved to maintain their lifestyles and the far smaller amount they actually set aside.
The fault is not entirely their own. They’ve seen the stock market cave in with some regularity — 1987, 2001, 2008, each time more painfully close to baby boomer retirement with less time to make up the losses. And each time making work harder to come by for the gray-haired workers.
“Our parents had mostly paid off their homes, had some pension or defined benefit. And Medicare covered most of their health care costs. None of those are true today,” said Dean Baker, the co-director of the Center for Economic and Policy Research.
“People still have pensions, but they’re fewer and dwindling rapidly,” he said. “Health care expenses … have exploded.”
His think-tank recently calculated the median wealth — savings, home equity, the works — of people between the ages of 55 and 64 at $170,000. That was about the same as the median home value.