The University of Michigan Retirement Research Center just published a Policy Brief by Sylvester Schieber called ‘Beyond the Golden Age of Retirement (link). First of all you should be aware that Schieber is one of the great authorities on benefits. He was on the President’s Commission on Social Security, was a Vice President for Benefits at Watson Wyatt, and his book, ‘Private Pensions’ is probably the authoritative work on that subject. How many books make it to an Eighth Edition (or more - that was just my copy in 2005).

Schieber analyzes the cost to have a hypothetical worker (starting to work at 22, $30,000 per year, continuous employment and salary increases) receive retirement income (combination of private and government benefits) that is 75 percent of preretirement earnings. A top-line summary that does not do justice to his work is that the total cost of the ‘own retirement saving and health insurance’ for someone who wanted to retire at 65 in 2005 would be ‘approximately 14% of their pay’ and that would go to 23.6 percent in 2030. Add government programs to that and the cost goes from 31.3% of pay to 52.4 percent of pay in 2030.

You get the picture. It is going to be impossible to continue with a 19th century definition of when workers should expect to retire (thanks to Count von Bismarck). We need more efforts like those of Senators Kohl, Smith, and Conrad (mentioned here in the last post) so the many who want to stay on the job can do so, and hopefully, over time, bring the median age of retirement up to a more realistic level. 

This entry was posted on Monday, May 5th, 2008 at 4:42 pm and is filed under Pensions, Working Longer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.