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Posts Tagged ‘Ageism’

The REAL Reason for the “Wealth Gap”

Wednesday, November 16th, 2011

I’m a bit disgusted with CNN Money. They make it sound like the old are getting richer at the expense of those under 35 when that’s not what’s going on at all.

The Pew Research Center  just released a report that found that younger people do not have as much in assets as people in that same age group 25 years ago while those over 65 have significantly more set aside than their 1984 counterparts.

The resulting CNN article was headlined:  Older Americans are 47 times richer than young.  The article went on to conclude that “Younger Americans have been left behind as the oldest generation has seen wealth surge since the mid-1980s.”  Oh, come on!

For starters, those over 65 are no longer really “the oldest generation.”  We have a lot of centenarians out there now.  But more to the point, Annalynn Censky suggests that the plight of the younger generation was caused by the older generation.  (Wanna bet how old she is?)  Get real.

The Pew study points to increases in home values over the last 25 years to explain the difference in wealth trends.  And that’s a big piece given that those under 35 who do own homes are likely to have purchased them at inflated prices and are thus carrying significant debt on them.  (Net worth takes debt into account.)

But I’m a former college statistics instructor.  When I see this kind of stuff, I always ask “What else could be going on here?”  The answer in this case is 401 K’s.” This is not about “a wealth gap” as much as it is about changes in the approach to retirement funding.

In 1984, most major companies had defined pension plans where the company put money aside, managed it, and used it to pay retired workers a monthly pension.  The company owned the fund and counted those assets on their books.

In the last 25years, the approach to funding retirement has switched to 401K’s.  The company matches individual contributions as some level and the account is held in the employee’s name.  This makes sense for a lot of reasons, not the least of which is favorable tax treatment and greater flexibility in rehiring workers in some capacity after they’ve retired.  But since these accounts are held by the individual employees, they are now counted as part of their net worth.

The impact of this retirement funding change wasn’t that dramatic when Pew collected data in 1984.  But for those over 65 now, most have at least some of their retirement funding in 401K’s or similar accounts.  Many have all their retirment funds in those accounts.

This is not “the old getting richer.”  It’s simply money that was used the same way but counted differently before.  (Next they will say that corporations are much poorer because they are no longer listing those assets on their books.)

We have enough to worry about in the country right now without the media encouraging anger between classes for any reason.  Younger people do have a big challenge in getting their financial ships effectively launched.  There are a lot of reasons for that, but “the old getting richer at their expense” isn’t one of them.  Offering them that explanation just means it will take them even longer to figure out how to get themselves on the right track.  What a disservice.  Try again CNN.


New York Times Drivel

Wednesday, January 5th, 2011

Just because it’s in the Times doesn’t mean it’s good.

Dan Barry”s article in the Dec. 31 edition is a great example of that.  He used the milestone of first boomers reaching retirement age to lambast  them for being self-absorbed and focused on entitlement.

I’d be willing to live with his assessment if he had support for the claim.  But to reach that conclusion, he relied his own impeccable insight, a book written by an Oklahoma history professor published in 2004, and a Pew Research study from June, 2008.  He’s a Pulitzer Prize winning journalist.  What the hell happened?  (The best part of the piece was the 305 mostly more informed comments it generated in just a few days.)

As the Pew report he quotes concludes, “Boomers are a big, complicated generation.”  But there is another force at work that Barry totally missed.  Things are changing and relying on information that old was a bad idea.  And a disservice to the generation and to the country.

On Jan 2, an article on the same subject by Ellen Goodman appeared in syndication.  She’s a Pulitzer Prize winner, too.  She may be smarter about this stuff than Barry because she retired earlier this year and is looking at it first hand.  She’s read a lot of the more recent books by leading experts on the subject.

And she came to a much different conclusion.  She gets it.  There are two very different opinions about older age right now.  One sees the huge potential for giving back and solving problems in those stepping out of the fulltime workforce.  The other focuses on the “glum” generation that Pew reported on–a generation focused on how to make it on what they have to work with–slim employment opportunties because of ageism and the shaky state of Social Security and Medicare.

This is a paradign shift of the first order.  It’s long overdue.  The version of retirement we are currently trying to use was already ineffective in 1960. Most likely, the kind of generation boomers are will make the outcome better rather than worse. Since they became old enough to take a stand, Barry’s “self-absorbed” generation challenged the unfairness of racial segregation, the legitimacy of a war we probably should not have been in, and the right of the good ol’ boys to deny women the chance to do challenging work and decide what their bodies will and won’t do.

Ageism is now another unfairness that needs to be addressed.  The way this society marginalizes older people is criminal.  It is also a tragic waste of resources that could be applied to many many problems we face as a nation, in business, and in our communities.  My guess is that boomers will step up to this one, too.

Entitlements are only an issue if empowerment is denied.  The members of the largest generation as well as those who follow will have a better world if we get rid of the idea that once people are old enough to retire, they’re not capable of contributing anymore.  (According to Penn State’s Seattle Longitudinal Study, verbal ability doesn’t even peak until your 60’s!) We’re turning people out to pasture who still want to work, and pretending we’re doing them a favor.

As early as 2005–before the financial meltdown, 83% of the 2400+ boomers in a Merrill Lynch study reported they wanted to work in retirement.  They are glum because finding work when you get to that point is extremely difficult.  They support aging parents and boomerang kids and still have to deal with the prospect of being replaced by someone “younger.”

That this group gets labled as “self absorbed” baffles me.  They make noise about things they don’t think are right, but it wasn’t just black boomers who protested racism.  It wasn’t just the guys who didn’t want to get drafted who protested the Vietnam War.

Anything large creates its own weather, be it Mount Rainier or the rocket hangar at Kennedy Space Center.  The boomer generation does change things, because it is BIG.  Hopefully, it will help move us to a smarter, more meaningful way to live the last third of our lives.  And then all those who come after who are griping about those self-absorbed boomers can reap the benefit of that, too.


AGEISM: How Long Can We Afford It?

Thursday, June 3rd, 2010

We’re setting ourselves–and the country–up by relegating anyone over 60 to the “discard pile.”  How long are we going to keep doing this same dumb thing?

Why are we setting these people adrift instead of using what they know and what they are good at?  As the population bulge that is the Baby Boom moves into the “retirement” phase of life, the cost of this folly will skyrocket.  Is that what we want our grandkids paying for?

The current assumption is that as you age, you become inept, but research doesn’t support that. Seventy percent of what we blame on aging is the result of lousy lifestyle choices.  And a lot of what we assume to be so about the marauding ineptitude of aging is just plain baloney.

The prevailing wisdom is that those who can afford to want to retire.  But in a 2005 study of over 3000 baby boomers, the Merrill Lynch Foundation found that only 17% wanted that lifestyle.

Every time we “retire” someone, we lose their expertise.  Younger workers could be a lot better at what they do a lot faster if the “old pros” were serving as mentors.   We lose senior members’ understanding of the context in which the work got done, too–and the resulting problem-solving, negotiating, and customer support advantages.   We lose a ton of information about what works and what doesn’t across the spectrum of the jobs that older workers are retiring from–which is most of them.

The system we have in place, assumes our most experienced, skilled workers want and need to “disappear”  at a specific age.  We pay them to do so.   What’s the benefit of that?

Even worse, the consequences  of not having a purpose in life are dire. So we set those same capable people up for a downward spiral would could avoid just be asking them to use what they know how to do.  People who have a reason to get up in the morning stay a lot healthier and live longer.  It’s a double whammy for the country–first we pay them not to work and then we pay for healthcare they may not have even needed if they were working.

Worst of all though, we are each setting ourselves up for this same frustrating decline into perceived uselessness by letting the system continue as is.

There a few things we need to accept:

  • Every person in society deserves a purpose and needs to be encouraged to claim it.
  • Not all important jobs are full time.  Some aren’t even paid.
  • “Old” is not a disease.   Wrinkles don’t erase competence.
  • Things don’t improve by having capable people sitting around doing nothing.

The idea that youth and progress are the only things that have value  has been around since the Second Great Awakening that began around 1825.  It’s time to let go of this outdated thinking and grab onto something more innovative. The challenge is not in chosing between young and old. The true test of our mettle as a nation, as business entities, and as individuals is in becoming a culture that values–and uses–both the freshness of its youth and the wisdom of its elders.