More work, less free time for US seniors

He paints a picture of older workers in the US who increasingly need to rely on their savings to have a good retirement. Cahill points to three factors that are crucial for older workers in the United States as they decide when to make the transition from working life to life as retirees:Expected contributions from Social Security – in other words, the American public retirement pension. The age at which one receives a full pension is slowly being adjusted upwards every year towards 67 years.Payments from the old-fashioned, salary-oriented, private pension plans, which the Americans call defined benefits schemes. Such benefit-oriented schemes are in decline in the United States, just as in Europe. They are being replaced by defined contribution schemes, which seldom give future retirees the same benefits, at least if defined contribution savings from the employee and employer get off to a late start.Individual private savings. This has remained low for a number of years in the United States and this year will amount to around 5 per cent of real disposable income, according to figures from the Federal Reserve Bank of St. Louis.While it is true that 14 per cent of Americans have savings amounting to more than USD 250,000 (over NOK 2 millioner), at the other end of the scale, 28 per cent of American workers say that they have saved less than 100 dollars.Financial pillars“These three elements constitute the traditional pillars of income for American retirees. And all three factors point towards more work and less free time,” says Cahill. He points out that this trend is also reflected in numerous studies and statistics from the United States.“What about future developments?”“There is very little that indicates that the trend for these three pillars will be reversed in the years ahead. We can safely assume that a longer working life is here to stay,” says Cahill.“Would you go as far as to say that chances are simply high that older workers in the United States will have to expect a reduced standard of living in the coming decades?”“For most older Americans the choice is really very simple: continue working – maybe one, two or three years longer – or accept a reduced standard of living,” says Cahill.“But what about the savings rate in a country like the US, where individual savings means a lot – do you believe that saving will increase in the US in the coming years?”“We can always hope,” says Cahill, laughing.No faith in increased savingsThe American economist believes that private savings is actually a factor that may change in the future. Savings rates are higher in other parts of the world than in the US. “But the reality is that large loans dominate the economic situation for young Americans today. People who take an education must pay down large student loans over a long time. Car loans are very common. And then you have mortgages on top of that. So, many consumers simply have no opportunity to increase their savings.“In fact, the opposite is true: Many Americans have a substantial total debt that must be repaid first,” says Cahill. He works at the nationally renowned Center on Aging & Work at Boston College, but commutes quite a bit from his home state of Idaho. Cahill recently attended a conference in Oslo where American researchers met policy makers and researchers in Norway. The conference was organised by the Centre for Senior Policy.Much of his research work has focused on how older workers in the United States fare in the face of downsizing in the workplace. Temporary jobsHe has looked at the rise in the number of temporary jobs, a phenomenon in the American labour market with parallels to a number of European countries following the financial crisis, including Spain and Portugal, but also Germany.Not least, Cahill works with macroeconomic analyses on the situation for older workers in the United States. He points out that the real retirement age for male workers in the United States long exhibited a downward trend, from around age 73 in 1910 down to 62 years of age. In other words, the retirement age fell continuously after the First World War. However, progress stalled in the mid-1980s. Since then, the retirement age has increased, slowly but surely. Now it is around 65.Better health, living longerCahill points to some of the same factors as his American colleague Elizabeth Fideler to explain this rise. In addition to the economic outlook, better health, longer life expectancy, increased job satisfaction and less physically demanding jobs all contribute to more people making the decision to extend their working life.Cahill is concerned by developments in the market for the odd jobs that many older Americans perform. Many transition from permanent employment to these kinds of jobs to improve their prospects during retirement. They are often called “bridge jobs” but have actually become a fairly widespread phenomenon in the American labour market.Low-income jobsIn addition, there is also a market for similar jobs called “re-entry jobs”. They include not least these odd jobs that older pensioners take on after they have actually retired from their employer and have long since started withdrawing their pension. “Can these types of jobs become a kind of role model for labour markets in our part of the world?”“It depends. A more flexible labour market gives people the opportunity to try their hand at new industries, or perhaps follow their own interests more than before. They are not as shackled to a long-term employer to the same extent as previously.“That is an advantage. The downside for many older Americans is that they cannot find a job that corresponds to their previous permanent positions. They are forced to look around and get something else. Many likely experience this as negative,” says Cahill. He also points out that the more casual jobs that pensioners generally take are often paid far more poorly than they are accustomed to. It could be that most Americans accept such income adjustments to a greater extent than many Europeans.“To what extent does age discrimination play a role in the United States?”“It’s hard to say; it is difficult to measure such factors. Don’t forget the kind of discrimination that you have against yourself. You don’t think you can manage a job because you are too old. That could be a question more for psychologists and sociologists than for economists,” says Cahill.