Postponement of retirement by default

Recently I had a class discussion with a group of high school seniors on their take on what age they think they would be completely engaged in the workforce; and at what age they think they would be capable of retiring. For 17- and 18-year-olds, these questions seemed like a distant future with regard to their entry into the workforce and eternity on retirement. I garnered some unusual responses to these questions, as it related to the entering of the job market, most of them indicated they expected to be fully employed at or about the ages of 25 or 26. On the question of retirement most indicated that by their mid-50s they should be able to retire. Two students, however, had the sobering reflection that they are likely to be working well into their seventies.

The direct responses of these students gave me pause to reflect on my generation and that of the generation of my deceased parents. The Traditionalist or Silent generation (1945 or before) entered the workforce in their late teens, while the Baby Boomers (1946-1964) and Generation X (1965-1976) entered the workforce during their late teens through early 20s. Many of the Boomers and almost all of the Gen X are still in the workforce. Data from Stats Can indicate that participants in the workforce in Canada aged 55 years and older account for 21 per cent in 2017 and it is projected that by 2036 it will rise to 25 per cent. In contrast, in 1976 this was only 11 per cent. South of the border with data from the Department of Labour, the trend is even worse with 40 per cent of the workforce being aged 55 years and over.

The question is why are the Baby Boomers staying in the workforce way into their sixties and seventies? People are living longer and healthier lives than ever before. If workers opt to leave their jobs at 65, they can still expect to live another 20 to 25 years. Living on pensionable income for that many years may be unviable. Many older workers are also heavily indebted, so they are working out of necessity. Some may be working to improve their retirement finances while others are doing so to maintain their cognitive abilities.

Here in Canada, there is no compulsory retirement age although workers are eligible to enjoy their pensions at the age of 65. Today if you shop at any of the big-box stores, Walmart, COSTCO and the likes you are likely to find three or four generations working simultaneously. The Millennials and Gen Z are starting off with a disadvantage as they are off to a late start. The Boomers and most Gen X went into the workforce after middle and high school and the fortunate ones who went to college. An undergraduate programme was adequate to allow them to rise to the top of their career quickly. However, an undergraduate degree is presently recognized as the equivalent to a high school diploma.

More students are going to college now 25 per cent more compared to 2000 and they are taking longer to finish. The apparent reasons are they are gaining more advanced degrees to allow them the competitive edge in the marketplace. In addition, the cost of post-secondary education is so expensive resulting in them spreading their studies over many years. The emerging generation who are entering the workforce five or six years later than the generation before, will they be able to retire at a reasonable age? Are they going to be working until they physically and mentally can’t? Will they be able to accumulate enough working years to repay their student debt, purchase a home, raise a family and save enough for retirement?

The Millennials, invariably, have substantial hurdles barring them from initial entry into the workforce which will force them to stay longer than they intend to. My dad entered the workforce at the age of 16 and spent over 60 years of active working life. I entered the workforce formally at the age of 22 even though I started working at the age of 17. I anticipate I will spend 50 plus years in the workforce. Many of the Boomers and Gen Xers will find it difficult to retire because working later has become a necessity. More senior workers are petrified because they don’t enjoy enough savings. A report from the National Institute of Aging finds that 77 per cent of Canadians aged 55 to 69 are worried about their finances. Retirees are living longer, and retirement costs are heading higher. They are likely going to face longer and more expensive retirement than their parents. For the emerging generation the problems will merely be compounded as they enter the workforce so they will likely be working way past the typical retirement age.

Fernon Wilson is a Jamaican born educator working in Toronto, Canada.