My dad is a GM retiree.
Where do your thoughts jump when you read that statement?
I was in a coffee shop recently where two men were talking about legacy costs…paid out to people like my dad. These were both younger workers, and the opinion seemed to be that people like my dad are an unnecessary tax on the system.
One guy said, “Those people should have saved more money. If they’d saved, they wouldn’t need that pension.”
I know that immediately many people who read this will think my dad is part of the reason GM went bankrupt. He receives a generous pension, has health care coverage and lives comfortably. He’s relatively young still and I hope he lives for a long time. That means that his benefits will continue to weigh on the company.
No Savings? Why Not?
My uncle also is a GM retiree. Around the year 2001, as the stock market experienced day after day of unnerving free fall, I happened to be standing next to him at a funeral.
Uncle: The stock market sure is all over the place. Your job can’t be easy right now.
Me: No, it’s not. Lots of people with 401k plans out there taking a beating and looking for advice.
Uncle: 401k plans?
Me: Yeah, like the one you have at GM.
Uncle: You know, I’m glad I never bothered with that. Look at all the money those people lost. I’ll stick with the pension.
At first, I thought poorly of my uncle. But for him and many others working in industry, a 401k plan was always considered “icing on the cake.” He also receives a generous pension and has health care coverage. Why should he risk hard won dollars in investments that could tank?
Because he didn’t invest online, mainly to practice internet safety for seniors, he’ll now be a burden on the system for years to come. However, the course he chose was a viable option at the time.
Reworking the Implicit Deal
This article at Timeless Finance recommends (among other things) that older Canadians should be forced into retirement by age 60. According to the author, this will energize the workforce and help young people get jobs….all at the expense of older workers.
Would this really work as intended? Will it help?
Before we tackle that argument, let’s evaluate the historical situation: it was a different game for my dad than it is for many of you and I. He worked in an era of “work for a large company to care for your family for 30 years, and then the company will take care of you.”
It was an implicit deal.
Now the deal has changed, and there’s a push to change it further. I’m sure many older workers wish the deal had been explicit.
You have to be a moron to not understand the shaky economics of our world financial situation.
- There’s more fallout to come from the housing crisis.
- The student loan bubble is about to pop.
- European states are ready to topple like dominos.
But do we have to immediately jump to changing the deal for people who played the game “correctly” only to find the rules changed later?
Will Eliminating Older Workers Help?
I only told you half of the story about my dad and uncle. The other half is that both my uncle and dad are gainfully employed at the moment. They both play by the rules (their income is low enough that it doesn’t affect their guaranteed income stream from Social Security or their pension plans).
It isn’t just good for my relatives; it seems it’s good for business. According to this Entrepreneur magazine article, companies that hire older workers reap benefits as wide-ranging as:
- Higher quality work
- Punctuality
- Listening skills
- Organizational skils
- Honesty
According to the Timeless Finance author, both my dad’s and uncle’s part time jobs should be handed to younger workers.
But I’ve seen my uncle and dad work at their jobs. Young coworkers ask their opinion frequently. In fact, the owner of the golf course where my dad works often consults him about overall operations. Customers gravitate toward them, thinking these men know what they’re doing. Both of these men possess tons of insight and knowledge help their employers succeed.
My opinion: If I still had my boner of the week segments, this Timeless Finance article would have been on it. While some of the suggestions make sense to me, and we clearly need change, I believe that we should look elsewhere for money rather than eliminate experience for youth. I also think it’s a mistake to penalize people who played by the rules as they knew them until we’ve looked under other stones.
Okay, everyone….your thoughts? Do we treat seniors fairly? Should we have a mandatory retirement age?
(photo credit: Hubert Elliot in the Rowan County Maintenance Yard Office: NCDOT Communications, Flickr)
I don’t know if we treat seniors fairly or not, but I would tend to say that we don’t. Seniors are definitely stubborn asses (as am I) and annoying sometimes, but they do have strengths and can add value to a company if put in the proper positions.
Also, we definitely shouldn’t have a mandatory retirement age. If we did that then there would have to be increased Social Security benefits (you know, that system that we can’t afford now) which would only create further financial problems for our country.
I’m with you, Jason. Although I understand where some of the advice is coming from on the site, this mandatory age 60 retirement plan baffles me.
Wah, wah. I’ll take the pension as well. Wait, very few companies offer pensions these days? Crap.
I’ve seen it where “Senior” workers milk it too. They know they need a couple more years and they just lay low and let it ride. And my local favorite, retiring in place. You know, where you retire on Friday and are re-hired on Monday in the exact same position without cleaning out the desk. But this time, you draw a salary and your pension. People should be able to work themselves into the grave if they want. With companies wanting to cover your healthcare benefits in retirement less and less, I suspect companies will start to shoo the “senior” workers towards the door when things start to get really expensive.
Well, Bichon (awesome moniker, btw…), when pfblogwatchdog becomes a huge enough site, you can offer your own pension 😉
I’ve had clients in the position you describe, and I’m going to blame that one on the company they worked for. I can’t think of one time that my client was the one who suggested letting them go then hiring them back on as a “consultant”…my client just took advantage of it when the company offered. As their advisor, I was ecstatic.
…and I agree with your insurance pool analysis. I don’t think companies will admit they’re cleaning the healthcare pool, but they’ll find other work-arounds….
Very interesting ideas. I don’t know of many companies that still offer pension plans, but I agree that if older workers were advised in the past to work for the pensions, we should honor that now. Otherwise, we will have seniors with no savings who will struggle to get by — that’s a terrible situation all around.
Now, where can I get me one of those pension-type jobs…
Find one for me, too, Christa! That was my point…I’m not defending my uncle for not saving and by today’s standards it’s pretty awful that he didn’t….but that was a different game. I like your phrase “honor that.” Want to write all my articles? Momvesting@AverageJoe.com? It has a ring to it, eh?
I think that any of the older workers that were able to garner a pension or other perks should try and take full advantage of them. It is the leadership in the various organizations that allowed for agreements that created too much of a burden in companies and governments. Unfortunately that was caused by thinking short term and simply not caring about the future. But at the same time, older workers need to be prepared to have benefit cuts thrust apon them. Is that fair? No, but they are likely to happen if the benefits are too rich. Yes, they made the best decisions available at the time, but they’ll need to adapt just like everyone else. You can’t over-burden another group just to meet promises of the past. In the end, there will likely be some type of compromise that will be fair to neither the older workers nor the younger ones.
Wow, do I completely agree, Karl…and I’m too old to suck up to any commenter…. my point was mostly this: we shouldn’t reach for those benefits FIRST. OG and I were talking about that earlier and he mentioned that if you decided to cut MY social security….fine. I didn’t expect it anyway and it’s FOREVER until I receive it. Cutting a senior who can’t make moves now over cutting SS for older people would be a mistake. That didn’t make the article (because I don’t think fast enough to include all the good stuff).
The flipside is that in lieu of saving, these people probably spent the money right into the economy, creating jobs and economic development.
A mandatory retirement age sounds like a horrible idea. Maybe we could offer lump sum payouts from Social Security to seniors who voluntarily shoot themselves in the head?
Sometimes I wish there was a magical machine where people could see an alternate reality where their ideas become real.
Ha! Think of the savings and the potential gun sales! I just rung the bell….funniest comment of the day….
The comedian Brian Regan has a piece about the “alternate reality machine”…maybe you’ve heard it….he’s talking about how in chess people leave their hand on the top and that means they can “take it back.” Wouldn’t it be cool to test stuff out and be able to take it back just by leaving one hand on your head the whole time?
I currently work for an employer that offers a pension, and I will say that I am a huge fan of the pension system. However, there are a few people that milk the last few years.
Personally I plan to take advantage of a pension as well as investments. Try to reap the best of both worlds.
I’ve seen the milkers, too. People who say “I can last just another year or two.” That thought process is clearly the pension program’s fault, because they’re so BACK LOADED! Working 15 years for a company barely makes a difference to your pension, but the difference between year 28 and 29 is HUGE. I wish my uncle had tried to reap “the best of both”.
Really good article, Joe. Very thought-provoking. Mandatory retirement age is one of the dumbest things I’ve ever read, and at age 60? What are they thinking?? I think, in general, we don’t respect older citizens like we should. The article says that younger workers can get things done faster, but is that really better? I’ve worked with older people before and this is ridiculous. My older coworkers were some of the hardest working people I’ve met! They’re never whiny about the less desirable office jobs or late to meetings, or texting instead of working. One thing we all should remember the next time we see an older person; Inside every old person is an young person wondering what the hell happened.
So true, Michelle. My older co-workers were some of the best people I’ve worked with. Another thing they do well…they usually stayed out of the office gossip pool. They didn’t have any time for it and didn’t care to get involved in the cluster of misery. By the way, I’m not old, but I wonder what the hell happened every day 😉
30-and-out, those were the days, eh? Imagine starting at GM right out of high school at age 18. Retire at 48 with a full pension and benefits! There is a guy in my neighborhood who did just that. He passes time by working part time jobs at places like auto parts stores, and most recently a party store.
As a trucker, I love interacting with older workers. Whenever I get the chance, I try to pick their brains about the “way it used to be,” and get their opinions on how the job landscape has changed. Talking to young people only gets you opinions. Older people have been there, and they are filled with knowledge from experience.
It’s funny that 30-and-out is even a phrase, Matt! That’s how ingrained in our culture the pension system was at one time. Your comment about picking older workers’ brains is spot-on. I’d encourage people to get older people talking sometime. You’ll hear some pretty pointed stories, but also some of the funniest stuff you’ve ever heard. I’ve never laughed so hard….
I don’t believe in a mandatory retirement age. I think that many seniors feel young and alive by staying active. And being able to work helps them do that. And many people do turn to them for advice because of their years of experience.
Yester day the new Federal Canadian budget was rolled out and one of the announcements included increasing retirement age from 65 to 67. It will be done over a period of time. Today on the news all the financial analysts are discussing the pros and cons of the decision.
I know of several people working well into their sixties and seventies, and being productive enough ( not manual labor, though). Mandatory retirement is a waste of resources. Even with manual labor, where an older workers are unable to make a physical contribution, the experience gleaned over decades can be passed to on to younger generations through mentoring. That’s what’s meant by “wise elders”.
Or, we could just leave them behind for the lions and hyenas.
Ha! Imagine, 101, if we did that with “old bloggers”……