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Retirement Grows Up

The idea of retirement is a relatively young concept that must finally grow up. To see what it may look like for many of us when it reaches maturity, consider a gentleman by the name of Tom Palome.

The Washington Post recently profiled Palome, a former marketing vice president at Oral-B (a brand now owned by Procter & Gamble). Palome, 77, returned to the workforce after the financial crisis of 2008 pummeled his modest retirement savings. He currently works two part-time jobs, one at Sam’s Club and one at a golf club grill.

Palome is both a role model and a cautionary tale. He epitomizes what I call the dignity of work: Whatever we do that is productive (and valued enough by others to bring us an income) is worthy of respect. As Palome told the Post, “You have to respect the job you’re doing and not be negative - or don’t do it.”

Moreover, for someone in his late 70s who is healthy and energetic enough to be out in the world, work serves as an ongoing connection to society. Palome greets customers and interacts with his co-workers. His days have a purpose.

Is it the way he pictured spending his time at this age? Almost certainly not. Is it a terrible fate? Not as far as I can see. Whether you are 45 or 75, you might prefer to spend your day on the beach or the golf course, but if you have to work, you have to work. Palome is clearly determined to do his jobs well, and considers himself lucky to be able to live independently without relying on his children or others.

Financial writer Todd Tresidder observed in a brief history of retirement that many of us still hold ideas about the practice that arose in the 1930s. “The idea that people should work 40 years until the magical age of 65 so they can enjoy a leisurely lifestyle in their elder years can be dated back to 1935 and the creation of Social Security. Prior to this time nobody thought a career was something you did for 40 years until you could relax and slow down.”

Some people must leave the work force because of the state of their health (though not all of those people are over 65); others choose to leave it because they have accumulated sufficient wealth to do so and prefer to spend their time on other endeavors. But as we live longer and stay healthier, clinging to the expectation of being able to withdraw from the workforce after 40 years, no matter what, has become less and less realistic.

The Post reported that, according to the Center for Retirement Research at Boston College, the median 401(k) balance for those between the ages of 55 and 64 was $120,000 in 2011. The recommended withdrawal of 4 percent annually will yield $4,800 - helpful for defraying expenses, certainly, but not enough for a leisurely post-work lifestyle without support. More Americans are evidently doing this math, and expectations are shifting as a result. Even workers with public pensions are realizing that those promises may be less solid than they once believed.

If he had planned more, maintained a different lifestyle or made a few different decisions, Palome might be spending his days another way right now. Like many middle-class baby boomers, who are past or fast approaching 65, Palome put his kids through college and shared the proceeds from selling the family home with them, to help them get a good start in life. He saved what he could for himself. His choices were reasonable, and in my view admirable, but making them created repercussions for his life today.

Even if he had saved more money for himself, however, it is not inconceivable that Palome might freely choose to work, even at low-wage jobs. It is good to get up in the morning with a purpose. Not everyone wants to hit the links or the beach every day. Some people love their work. Some people just love to work, period.

Work can also keep healthy workers healthy. Sustained social interaction and mental stimuli are both important to maintaining physical and mental health, especially as we age. Benefits range from lowering the risk of dementia or memory problems to potentially lowering the risk of cardiovascular problems or osteoporosis. Staying in the workforce is one way to stay engaged, and a growing body of evidence suggests that this sort of engagement can keep older adults mentally acute and emotionally well.

My own observation has long been that wealth and personal happiness are only loosely correlated. Most happiness comes from inside us, not the stuff on the outside. For many, working may be a boon; for many more, it may not be as much of a hardship as observers might assume.

Baby boomers, the oldest of whom will soon turn 68, were not a generation of savers. There are going to be a lot more Tom Palomes out there in the years to come. I won’t feel sorry for most of them. Instead, as with Palome, I will respect the work they do, and I’ll respect them for doing it.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book Looking Ahead: Life, Family, Wealth and Business After 55.

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