Retirement 'American Style' Means Work and Poverty: Ghilarducci

Teresa Ghilarducci, the influential economics professor at the New School for Social Research, painted a grim picture Tuesday of the current state of retirement in the United States.

"Retirement, American style, is about work," she said, and "a great deal of poverty."

Speaking in Washington at a policy conference for the National Institute on Retirement Security, a pro-pension research and advocacy group, Ghilarducci laid out what she called untruths about retirement, many of which are chronicled in her new book, "Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy."

Unlike other G7 countries, retirement in America is about work, Ghilarducci said.

"There are even people who say they are retired but they show up in the data sets as actually working 15 to 20 hours per week," she relayed. "In America, if you say you're retired, you kind of have to pivot and apologize — 'It doesn't mean I'm not doing anything.'"

Or, "if you're planning your retirement, you have to actually demur and talk about how you are needed elsewhere — maybe you'll do volunteer work," Ghilarducci said. "You have to create a vision of yourself as a productive member of society because retirement in America is a very complex state."

In other places, however, "it's not — it's dignified, secure, it's not a shameful activity," Ghilarducci maintained.

Further, retirement is also "not affordable" in the United States.

"Earnings of those 65 and older is quite high among Americans," which is "just not a reality in other countries," Ghilarducci said.

Busting Myths

There is a "working longer attitude" in America, Ghilarducci stated.

The notion is that "the cheap fix to our pension financing problem is just a few more years of work from everybody who is, after all, living longer, and for everybody whose jobs are getting easier because of the wonderful technology — of the computer and decline of physical labor," Ghilarducci said.

"All of those things aren't true."

The United States also "stands tall among the G7 (our rich competitors) [with] the highest poverty rate of the nations like us."

Ghilarducci also opined that "everybody has an outsized reliance on Social Security and the retirement savings promise has not met its marks."

The voluntary, tax-incentive-heavy aspects of retirement "have mostly failed," said Ghilarducci, who has proposed replacing 401(k) plans and their income tax break with a mandated government savings plan for all workers.

The idea that working longer can boost retirement security has a few big catches, Ghilarducci said.

"On paper, working a few more years does give you more preparedness for retirement if you don't draw down your 401(k) while you're working at 63," Ghilarducci stated. This theory also holds "if you accumulate more income while you're working — you stay in the retirement system," she relayed, "and if, this is crucial, you do not claim your Social Security while you're working."

Yet another myth: Everyone is living longer. With longevity, "class really matters," Ghilarducci said. "A wealthy man will live a lot longer than a poor woman."

Retirees' "subjective well-being" is also better when they have a defined benefit plan — with much lower levels of stress and anxiety — as opposed to having a lump sum to manage, Ghilarducci stated.

Ghilarducci wrapped up her remarks by laying out her "Gray New Deal."

"We need Social Security, we need universal pensions, we need to lower the Medicare age to 60 — and my research can make the case for 55 — we need to make it first payer so that employers when they have the older worker their health care insurance is a lot cheaper; we need comprehensive retirement reform … Secure 3.0 is just not going to cut it — and the next generation isn't any better off than we are."