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Farrell: New generations will redefine retirement

  • Article by: CHRIS FARRELL
  • November 16, 2013 - 2:00 PM

The power of stories is vastly underestimated when it comes to economics, managing money and other aspects of everyday life. Earlier this month, I attended a talk on big data and employment by Patrick Riley, chief executive and co-founder of Modern Survey, an employee engagement firm.

Big data and employees. Lots of number crunching and quantitative analysis, right? Hardly. Riley, a former screenwriter and musician, mostly talked about the scripts — the stories — pulled from the underlying data.

Of course, the storytelling in economics, finance and similar endeavors doesn’t reach the narrative power of a Herman Melville (brilliant at capturing the 19th-century whaling business) or even the “Godfather” movies (insightful about basic economics).

Yet the stories we tell end up creating a dominant picture, a compelling narrative that shapes our desires and expectations, our savings strategies and spending habits. That is, until the evidence becomes overwhelming that the narrative no longer holds.

We’re now at the “get-me-a-rewrite” moment with retirement. Growing up, boomers absorbed a simple model: Attend school. Work hard. Retire. The popular image of old age was dominated by images of retirement communities like Sun City, Ariz., with people living off traditional employer-sponsored pension plans and Social Security, playing golf in the morning and enjoying cocktails on the patio in the evening. Truth is, a majority of retired Americans didn’t move to a retirement community and didn’t have a pension plan. (They did have Social Security.) It’s an unaffordable lifestyle for a majority of aging workers.

We know the main plot elements for the rewrite: An aging workforce realizes it hasn’t saved enough for the elder years. People will need to earn an income well into the traditional retirement years. The tension at the core of the script is the uncertainty about what does “working longer” really mean?

Writers of gloom tell a tale of many aging, spendthrift Americans living in penury in their old age. A competing story is being written about a series of broad, mutually reinforcing changes in the United States — from the rise of an information economy to higher levels of health and education — that will make an aging population more of an economic asset than before.

Enter Encore.org and its latest annual list of Purpose Prize winners. The prize highlights seven people over 60 who harness their passion and their experience to address social ills. Encore.org is a nonprofit organization founded by social entrepreneur Marc Freedman and its focus is on practical encouragement for aging workers to find meaning and often an income in the latter stages of life.

The prize winners are inspiring. Among them is Ysabel Duron, 66, a journalist and cancer survivor who started her encore career by founding Latinas Against Cancer. Another is Edwin Nicholson, 71, military veteran and former defense contractor executive who created Project Healing Waters, an organization that helps disabled soldiers and veterans heal through fly-fishing.

This more-positive vision of aging has practical personal finances implications. Yes, having savings is important. But the key investments in preparing for our elder years aren’t stocks and bonds. No, it’s investing in the skill and education, the networks and connections that will open up opportunities for meaningful work. Now, that’s an intriguing, compelling theme.

Chris Farrell is economics editor for “Marketplace Money.” His e-mail is cfarrell@mpr.org.

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