When you think of retirement, your mind may jump to visions of travel and family and relaxation — not flipping burgers. But a report in Bloomberg News is telling a different retirement story, one of no retirement at all.
About 7.2 million Americans age 65 and older were employed last year. That’s a 67 percent increase from a decade ago. Federal Reserve data reveals that 59 percent of households headed by people who are 65 and older have no retirement account assets at all.
Carol Hymowitz of Bloomberg News, joins Here & Now to talk about her reporting.
JEREMY HOBSON, HOST:
It's HERE AND NOW, and when you think of retirement, maybe your mind jumps to visions of travel and family and relaxation, probably not flipping burgers. But a report in Bloomberg News is telling a very different retirement story. About 7.2 million Americans aged 65 and older were employed last year. That's a 67 percent increase from a decade ago.
And according to the Federal Reserve, 59 percent of households headed by people who are 65 and older have no retirement account assets at all. In a moment we'll be joined by a 77-year-old who is still working and not by choice. But joining us now from the Bloomberg studios in New York is reporter Carol Hymowitz. Carol, welcome.
CAROL HYMOWITZ: Thank you.
HOBSON: Well, first of all, explain the problem here. Is this about people who haven't planned for retirement, or is this about just hard luck?
HYMOWITZ: It's about a growing trend that combines several forces going on. You have people living a lot longer. If you make it to 65 in good health, you're likely to live another two decades. At the same time it's completely up to you now to save for your own retirement. If you're a middle-income earner, meaning you're earning in the high five figures, low six figures, it's really tough to save enough.
And so all of those forces combined have made it very hard for people to have enough money, and therefore they're working longer.
HOBSON: And how much worse has this gotten since the financial crisis in 2008?
HYMOWITZ: It's gotten a lot worse. A lot of people got badly hurt. They lost 30, 40 percent of their portfolios. The older you were when that hit, the worse it was for you because you have less time to make it up.
HOBSON: And you have focused on one person in particular who's going to join us in a moment who is now working a couple of jobs to make up for this. Tell us first of all about him and then we'll bring him in and speak with him ourselves.
HYMOWITZ: Tom Polome is a former marketing executive who worked at Oral-B, and he had a very successful life as an executive and consultant. He raised three kids, sent them all to college. He has been a very hard worker all his life. He is a very optimistic person. After the crash hit, he lost quite a bit of his portfolio, and also some of the part-time jobs he was doing in retirement evaporated.
So he suddenly found himself without savings and without jobs.
HOBSON: Well, Tom Polome, thank you for joining us. You're joining us from your home in Tampa. And what do you think was the problem for you? What happened?
TOM POLOME: Well, I think the problem, other than the fact that the market for me collapsed, OK, was that I really didn't have the intelligence to plan long-term. I didn't have that expertise. I have a lot of marketing skills, but in long-range planning financially, I was just surprised by it all. The fact I lived this long, OK, is even more surprising because it just simply withdrew even more monies. That's about it.
HOBSON: So you just were not saving enough, basically?
POLOME: Well, I can tell you today, that's right, I did not, all right. Although I thought I did, I did not.
HOBSON: Now, you do have some savings, and you also have Social Security coming in. Tell us about your monthly income situation at this point and what you're doing.
POLOME: Without working I do have enough, you know, to get through it, but that's not living. That's existing. I didn't want to give up living, all right, which was social aspect of it, OK, the travel, seeing the family and not having to avoid purchasing something I wanted. So that led me, as I said, in planning my retirement, the plan was I did enough background to know hospitality here in Florida.
I did everything that would take me to hospitality, and it worked out well. But when the market collapsed, and the jobs disappeared because upper-tier management had to take that job, that was a surprise to me, and I knew that I had to do something, OK.
HOBSON: And when you found yourself looking for work, I read that you even had to take some of the things off of your resume so that you wouldn't come across as over-qualified for some of these jobs.
POLOME: True, yeah, that happens a lot in business, where you don't want to - because you're not going to reach the level you were at, an executive, OK, world travel. That's going to be scary to an employer. So I pulled that out because I really wasn't looking for full-time work, I was looking for supplemental income work.
HOBSON: We're speaking with Tom Polome, and we're also speaking with Carol Hymowitz, a reporter for Bloomberg News, and you're listening to HERE AND NOW. And Carol Hymowitz, let me ask you about this number. The median 401(k) balance for households headed by people aged 55 to 64 who had retirement accounts at work was 120,000 in 2011. That's according to your story.
Is it the case that as we just heard from Tom, savings is a real problem?
HYMOWITZ: Savings is a problem. That's not enough money if you're used to living a middle-income life. That's going to give you about $480 a month, assuming you take out four percent a year, which is what's expected to save that money and stretch it out. So people haven't been saving enough. In some cases they don't have it to save.
HOBSON: So what needs to happen here? Because of course we've got this generation of baby boomers that are coming up to retirement, many of whom have not saved enough.
HYMOWITZ: It's going to be tough for the baby boomers because they don't have a lot of time to catch up. I think you're going to see a lot of baby boomers trying to find and keep the jobs they have, either find new ones or hang on to what they have, at least for a while, into their 70s.
Beyond that, everyone is saying we need more financial education so people learn how to save earlier. Many people, though, are calling for a new retirement system. They're starting to do that, saying maybe we need something beyond Social Security, everybody putting into a system five percent, seven percent, with a guaranteed payback, because pensions no longer exist.
HOBSON: And Tom Polome, let me ask you, a lot of people hearing this may think, well, if he's taking those jobs now at age 77, there's some kid that's getting out of high school that can't get a job because of that.
POLOME: Well, for the most part, OK, the kids out of high school don't want that kind of job. For the most part, I'm not competing against high school kids. I'm competing against people near my age looking for work or former managers who need to, you know, pound the pavement. It's just a matter of trying to get an employer to look at it age-free, if you want to expand the age. Seventy-seven is not as old as you think, at least I don't think so now.
HOBSON: Well, what would be your advice to somebody who's young right now, who's just getting into the working world, about retirement savings?
POLOME: I think you need - you know, and I wish I had, all right - a financial planner that would give me the years out in terms of financial planning. I didn't have that. I guessed it for myself, and I mis-guessed. And I didn't consider the market. So my advice is to spend time and some money with a financial advisor and stick to whatever plan is put together, which is, you know, reducing your income, maybe quite a bit, but that's OK because it's going to pay off in the long run.
HOBSON: Carol Hymowitz, finally back to you, did you find that more people are going to financial planners? Is there any little piece of good news in this story that you reported?
HYMOWITZ: I think people are definitely becoming more aware that they need a lot more than they thought. I'm not sure the financial planning solution is going to take on for that many people, but it certainly - financial literacy is starting to take on. But again, the real issue is do people have enough to save what they need.
HOBSON: Carol Hymowitz is a reporter at Bloomberg News, and Tom Polome, who lives in Tampa, is 77 and has two part-time jobs. Thanks to both of you.
HYMOWITZ: Thank you.
POLOME: You're welcome.
HOBSON: And the latest news is next, HERE AND NOW. Transcript provided by NPR, Copyright NPR.
Jeremy Hobson joins Robin Young as co-host of Here & Now in its new 2-hour format, from WBUR and NPR.
Mary Robinson, the former president of Ireland, was a friend of former South African President Nelson Mandela. She joins us and says, “He was the best of us.”Comment | more »
As the world mourns the anti-apartheid leader and former South African president, we touch down in Johannesburg and hear from two people who knew Nelson Mandela.2 Comments | more »