Today's observation on social change comes from reflecting on the difficulties of living on a fixed income after spending a lifetime having a solid reliable income. Brand new money, deposited in the bank twice a month.
I believe I, and all the other baby boomers my age, are part of the first group of people to achieve retirement age after the collapse of the defined-benefit retirement plans. Defined-benefit retirement plans were the kind some of our parents had, if they were lucky. You worked for a company, and when you were old enough or had enough years of service, you retired and the retirement income just kept on coming. Income replacement coverage, where you no longer had to work for it, but the money was guaranteed.
These wonderful plans were replaced in the 1980's and 1990's with defined-contribution plans. You worked for a company, and each year they contribute a small amount to a retirement fund in your name. Usually they offer a contribution if you also contribute, up to a certain small percentage of your salary, say, 3 or 6 percent maximum. These plans were much better for the corporations. They could adjust their contributions as they wished. They would never again have to pay 'retirement benefits' to older workers who retired. They could get rid of the older workers even before the people wanted to retire, and that was fine because after all, they would have already 'funded' their retirements.
So now, here we are, retiring on our 401K funds, some social security and a patchwork of small pensions that did survive. The problem is that there is a big difference between spending a 401K and spending retirement income that arrives as a check each month. It's like when sick time got merged with vacation time as 'Personal Time Off' or PTO. What happened when people were sick? They came to work, of course, because no one wanted to sacrifice a vacation day just because they were sick. They wanted the sick time to be additional vacation time, not the other way around. It's like that for 401K distributions also. If you don't spend it, you get to keep it. And you might need it in the future. You could live longer than planned, which is not likely, or costs in the future could rise, which is very likely. Medical costs especially might rise. Social security contributions to your income might decline, depending on political will. Or you might be thinking that if you die before you use it up the kids would be able to benefit. Hopefully they would.
So I think we baby boomers will find the whole experience of retirement to be different than the retirement that our fathers and mothers experienced. No worry free rocking chair on the porch for us. We will spend a lot more time worrying about the future.
