Rethinking retirement

Here in Paw Paw, Mich., the locals call this kind of March day “false spring.” The sun is shining hard, and thermometers dare to post readings over 50 degrees. Even so, snow piles sit unaffected beside plowed streets. Flurries, mixed with a little sleet, will fall by late afternoon.

The flurries will not surprise Anita Uhlir. She’s lived through her fair share of false springs, and she has a better understanding of the capricious nature of weather—and life—than most. At 69, Uhlir is a widow with no children, and her days of maximum earning potential are long gone. She’s learned the hard way that financial security, much like sunshine during a Michigan winter, can be fleeting.

As Uhlir leaves Hiemstra Optical, she clasps a prescription from an eye exam, her first in four years. She managed to convince the optometrist she’ll get new lenses—she will—but not new frames. Old ones in a closet at home should do just fine.

Home is a clapboard two-story Uhlir and her husband built themselves, and she heads there in a basic model Subaru with cloth seats. Left on East Michigan Street. Right on M-40. It’s 12:30, and her stomach knows it, but along the way Uhlir bypasses several lunch spots. She rarely eats out. She can’t.

Uhlir is one of the estimated two-thirds of U.S. workers who haven’t saved enough to maintain their standard of living in retirement. This means they’re at substantial risk of financial insecurity, even poverty. But with a 401(k) in her name, Uhlir is better off than most. Half of households aged 55 and older have no retirement savings at all. Still, Uhlir debates each withdrawal from her nest egg. This is how much I have to live on for the rest of my life. How far will it go?

An increasing number of Americans are outlasting the Biblical span of “three score and ten,” even as Social Security teeters toward crisis. What will living longer mean for retirees struggling to make ends meet?

Uhlir sits in her husband’s chair, wearing his flannel shirt. Photo by Kim Henderson

WHILE SCRIPTURE doesn’t address retirement specifically, it does teach that work, rest, and lifelong fruitfulness are all God-ordained concepts. But the Bible also makes clear that the effects of aging are some of the surest signs of the Fall. Even the Levitical priests ceased certain duties once they turned 50.

Riley Moynes is a Canadian author and speaker who uses the term “retirement tsunami” to describe the exodus of 10,000 people from the North American workforce every day. In a TED Talk with more than 3 million views on YouTube, he makes a startling prediction: Most of those former workers can expect to live one-third of their lives in retirement.

But unlike their parents and grandparents, this group will confront a stark financial landscape. Few private employers continue to sponsor pension plans that guarantee steady income to retirees. Instead, they offer defined contributions to savings plans, placing the ultimate responsibility of financial foresight on the employees themselves.

That was Uhlir’s experience, and her retirement reality is very different from what she imagined.

For 26 years, she worked as a chemist for a spice extraction company. Her hands get expressive as she describes the intricate blending required to make branded food products uniform.

“Piperine gives you the bite, and essential oils give you the aromas,” she explains, her smile widening when she moves on to the science behind that work—processes like fractional distillation and spectrophotometry.

What she wished she’d taken in addition to college chemistry, though, is a semester of economics. She blames her current state of scrimping on her aversion to risk. “I was only willing to be very conservative with my 401(k), so it couldn’t grow a whole lot.”

That cautious bent set up like concrete in Uhlir’s machinist husband Larry, too. The couple painstakingly avoided debt. It took them decades to build their house, and interior windows are still waiting for trim. That won’t happen anytime soon, though. Larry died in 2020, taking with him his carpentry skills and the muscle necessary to cut seven cords of firewood each August. Without that wood, the cost of electricity to run her geothermal system can exact up to a third of Uhlir’s Social Security check. And when something critical breaks on the system? She dips into her 401(k). She got practice doing that after doctors diagnosed Larry with Parkinson’s disease. Uhlir had to work, and hiring sitters was expensive. Before she knew it, a third of her savings was gone.

Consequently, Uhlir’s bank account is dependent on deposits from Social Security. She fits in with the nearly 90% of Americans aged 65 and older who receive monthly benefits. Almost half of those who are single like Uhlir rely on it for nearly all of their income. That could be a risky gamble. In its annual report last year, the Social Security Board of Trustees acknowledged that without federal action, the surplus in the trust funds that disburse retirement, disability, and other Social Security benefits will evaporate by 2035.

Rachel Greszler, a senior research fellow at the Heritage Foundation, notes that Social Security’s retirement program, legally separated from its disability insurance program, will reach insolvency even earlier—2033. She throws in another tidbit: If you’re a member of Generation X or younger, you’ll never see your full Social Security benefit. “The program is self-­financed. By law it’s only allowed to pay out as much as it takes in, so by 2033, it will be able to pay about 79% of the currently scheduled benefits. That means the average retiree expecting $24,000 a year from Social Security income will get about $5,000 less.”

Greszler says Americans must decide between maintaining the program as is, with all the necessary tax hikes to keep it sound, or reforming it. Social Security started in 1935 as a 2% payroll tax, later known as FICA (Federal Insurance Contributions Act). Today, it takes more than 12% of our earnings, and to keep current benefits rolling, it could claim as much as 18%.

Even that might not be enough. Greszler acknowledges that some recipients who are dependent solely on Social Security live in financial despair. “So you could argue that the program hasn’t actually met its intended goal of keeping elderly people out of poverty. And that gets to what I think could be a solution for reforming the program, gradually shifting to a universal benefit.”

A flat Social Security payment amount provided to all retirees, regardless of their income or assets, would allow for a lower Social Security tax rate. Workers would have more money to save on their own. “It doesn’t really make sense for a social insurance program to provide the highest benefits to the people who already have the highest incomes, and likely the highest savings,” Greszler explains.

Photo by Kim Henderson

ANOTHER SUGGESTION for reforming Social Security is to amend the retirement age to 70. When President Franklin D. Roosevelt signed the program into being, benefits were available to those 65 and older, and life expectancy was 62. But today life expectancy is nearing 80. Americans are living longer and living healthier than prior generations did. We have more work capacity.

But for Uhlir, working until she was old enough to claim maximum benefits—66 years and 2 months—was a challenge. The complications arising from Larry’s Parkinson’s increased over a nine-year period. He couldn’t move without assistance. He couldn’t bathe or dress himself. Muscle spasms woke him at all hours. Still, healthcare officials couldn’t understand why Uhlir pushed for help at night.

“I needed to be able to sleep to go to work, and not just a few days a week,” she explains from where she sits in Larry’s power lift recliner, a remnant from those hard times. She’s wrapped up in one of his old flannel shirts. “If I had an experiment going, I might have to go in on Saturday to pull samples and get them refrigerated so I could test them on Monday.”

Uhlir moved Larry into a nursing home in 2018, but the years of conflicted priorities had taken a toll on her career. The company eliminated her job in 2019. She found other work—for less pay. She wasn’t able to replenish her savings as she’d planned. Working longer wasn’t an option, either. Uhlir says her laboratory prowess had started to slip.

Some of her same-aged friends are still working because they can’t make ends meet on a $1,000 Social Security check. One wears a uniform at Paw Paw’s Family Fare grocery store. Others work at McDonald’s and Wendy’s.

All that standing and serving can be tough for 70-somethings. In contrast, it’s often discrimination that hinders seniors in the white-collar world.

Matt Rutledge is a research fellow at Boston College’s Center for Retirement Research. He says stereotypes of older workers as dead weight are changing. “Most jobs have grown more comfortable with the idea that older people are going to be around, in part because it’s a virtuous cycle. Once a few people stick around and keep working and being productive, it informs others that it’s a possibility for them as they age.”

But working longer isn’t possible for everyone. Balance is a problem for aging roofers. Lifting is a problem for aging nursing assistants.

Employers hesitant to jump on the “work longer” bandwagon argue that under most health insurance programs, older workers cost more and have more health-related absences. Also, removing under-­performing employees is hard without a fixed retirement age.

Rutledge acknowledges any Social Security reforms must consider those factors, but he contends most fields have space for older employees, especially second-career jobs that can trade off past knowledge of an industry and connections. He believes the younger generation’s normalization of advantageous job-hopping, something he calls “the death of the long-term job,” is a boon for aging workers. “I think it actually creates some opportunities for us to move jobs as we get older, because we’re a lot more comfortable with it than our parents might have been in their 50s and 60s.”

But Rutledge points out the payroll tax may actually discourage individuals from staying in the workforce. “If you’ve been working a pretty good job for 35 years, you’ve already almost maxed out what you’re going to get from Social Security. ”

That’s why policymakers intent on reform are floating an end to FICA for workers above a certain age or after they’ve worked 40 years. Rutledge says it makes sense. “I think a lot of them would stick around. Modify the system in such a way that it doesn’t discourage work at older ages, like it sometimes does right now.” Still, he acknowledges the change would come at a price for all other workers, requiring greater tax increases and/or benefits cuts to avoid exhausting even earlier than expected the trust fund that bankrolls Social Security.

Meanwhile, state governments have discerned the signs of the time. All but three have active mandates in place or are working toward implementing automated savings programs for residents. That should help the 56 million private sector employees who lack access to 401(k) or IRA savings opportunities through their work. Automatic, however, doesn’t mean autocratic. Workers can opt out, but states sure hope they don’t. If savings rates don’t increase, retirees will put a severe strain on state social services—$334 billion over 20 years, if number crunchers at the Pew Charitable Trust are right.

BEYOND THE GOVERNMENT’S HELP, Anita Uhlir has little in the way of financial safety nets. Two rooms upstairs in her home are painted lime green, a reminder of dashed hopes that they would be filled with children. Adult kids might be a blessing now, but she’s seen it go both ways. “I have a friend whose kids are fully involved with helping take care of their dying father, but I also have a friend who only sees her son if she makes the trip. He doesn’t seem to care that she lives on $700 a month and has a 20-year-old car that shouldn’t be driven that far. Then some are busy raising their own families. In this financial day and age, how can they help?”

As for Scriptural admonitions regarding the Church and widows, Uhlir shrugs her shoulders. She says her church is “itty bitty.” Members help each other with transportation and grocery shopping, but she can’t imagine asking for financial help. “I’m almost 70, and I’m one of the younger members of the congregation.”

She’s more apt to help them. Her greatest concern upon retirement wasn’t tarnished notions of golden years. It was charitable giving. Two years ago, Uhlir knew she had to make some changes. She was living on a third of her former income, and things had gotten tight.

“I had to chop everything. The Institute for Creation Research, a Christian radio station out of Grand Rapids, two children sponsored through World Vision. I didn’t want those ministries to hurt, but I had to make sure I could support myself.”

Longevity is a blessing, but the price tag is high. Inflation and medical costs are rising. So is the need for long-term care. Even with a cushion of savings, 60% of those who want to age in place with services and support can only fund it for two years.

Gazing too long into that kind of future, or just at a newscast predicting Social Security’s impending insolvency, isn’t good for Uhlir. She knows what it takes to live. Gas is $3.09 a gallon at Speedway, and she just paid off a loan for a new roof. She’s priced the gravel it will take to repair her driveway—$5,000. A major appliance repair? The thought of it makes her cringe.

Sometimes she feels as alone as Job on the ash heap.

“I have to go to God in prayer, or I’m going to sit here and have turmoil and not sleep at night,” she said. “I just have to trust Him that the money will be there.”

Average Social Security Benefit at Every Age

Social Security benefits vary depending on when you retire. The longer you wait, the more you get, up to age 70. According to the Social Security Administration, the average full monthly benefit for Social Security recipients who retire at 67 is about $1,976 in 2025. Several factors can affect the amount of benefits, but the age you decide to cash in is the biggest variable. For comparison, this chart shows the different average benefit amounts based on retirement age:

62

If people born after 1960 claim their benefit the month they turn 62, they will only get 70% of what they would have received had they waited until the full retirement age of 67. What could have been an ­average monthly payment of $1,976 drops by 30% during the first month of eligibility to $1,383.

63

If you wait until you’re 63, you’ll get 75% of your full benefit, about $1,482.

64

If you wait until you’re 64, you’ll get 80% of the full average monthly payment: $1,581.

65

Those who claim at 65 will receive 86.7% of the full monthly benefit: $1,713.

66

At 66, the reduced benefit jumps to 93.3% of the full average monthly payment: $1,844.

67

If you wait until you’re 67, you’ll receive 100% of the full benefit: $1,976.

68-70

If you wait even longer to draw Social Security, you’ll receive an extra 0.7% for every month you delay—up to 124% of the full benefit until you turn 70, when the delayed retirement credits stop. | 68 (108%): $2,134 | 69 (116%): $2,292 | 70 (124%): $2,450

Source: Go Banking Rates

Read the next story in this June issue cover package on retirement: “Super savers”